7 ms·

California Cities Keep Declaring Fiscal “Emergencies” and Investors Are In On It

101 points by hyperrail 8y ago

pietroglyph 8y ago
It seems silly and potentially dangerous to limit when a city can legislate democratically (even with the Fiscal Emergency exception.) Is there any good argument for this, other than people not liking taxes?
- dfee 8y ago
  If you read the article, you might’ve missed that the culprit is a 1978 decision to pass Prop 13 - a resolution that only allowed property tax hikes to be passed on election years, and then in 1996 proposition 218 that limited tax raises in general - outside the loophole that a county can declare an emergn y and run a tax hike vote anytime (without negative consequence, and perhaps with positive consequence).
  - bobthepanda 8y ago
    The historical fact of how it got passed doesn't make it not silly or dangerous, though.
    - r00fus 8y ago
      It's a logical consequence, regardless of it's danger or silliness.
    - dmix 8y ago
      Isn't the emergency loophole protecting it from being 'dangerous'? I get it being highly inconvenient for people who prefer to allow lawmakers to do tax hikes and increase spending at arbitrary times. But I don't see how this could interfere with primary government functions in terms of law enforcement, courts, shelters, etc when responding to unexpected events... aka in an emergency, where it could be dangerous.
- smolder 8y ago
  Short answer is no. It's one broken measure against other broken measures. Taxes get raised because the budget goes up, but the budget goes up for more stupid reasons (greed and corruption) than good ones, and spending is woefully misallocated.
  - throwaway2048 8y ago
    a huge reason is because of Proposition 13 cities cant tax properties at their actual skyrocketing values, but they still have to pay all the other costs associated with it.
    - bmelton 8y ago
      What are the other costs associated with it? It costs the same to provide a building with electricity, water, sewage, etc, whether the building is privately worth $10,000 or $10,000,000. Also, isn't that exactly the point of Prop 13? If I bought a house for $500k, and it's worth $5 million tomorrow, I'm liable for the tax increase whether or not the increase is affordable. I thought the point was to allow homeowners the luxury of limiting the insane tax increases to the points of sale, when value was realized.
      - throwaway2048 8y ago
        It absolutely does not cost the same, more expensive real estate means you have to pay people significantly more on average to do jobs (nobody is interested in working jobs that cant make rent), it also means more expensive land purchases and easements for public works projects. Taxes arent meerly defered until sale, they are allowed to rise to market value after the sale is complete, but the government never gets those years of back taxes they would have gotten otherwise.
      - closeparen 8y ago
        You can't pay the 1978 cost of living to a new teacher in 2018. Most things the government buys are vastly more expensive because the workers involved have to live somewhere without the benefit of grandfather status.
- gweinberg 8y ago
  The idea of constitutional limits on government sounds "silly and dangerous" to you?
  - _vertigo 8y ago
    Instead of responding to a question with yet another question, why not answer the question (why place a limit on how often a city can put a tax increase on the ballot)? That’s much more productive. To answer your question, one could argue that it’s not the idea of constitutional limits that sounds dangerous, but what this exact law is limiting that feels silly and dangerous.
  - deleted 8y ago
    [deleted]
  - bobthepanda 8y ago
    What exactly is the limit here that is reasonable? It's a limit on referendums; without the limit, voters would still have to approve any hike. If it is so against the public interest, why not let the public decide, by voting?
  - greglindahl 8y ago
    Constitutional limits like the Bill of Rights sound awesome to me. As a Californian, all of our crazy constitutional limits on taxes are less awesome. After many years of unequal taxation, similar buildings in the same city pay wildly different amounts of tax, and the difference will only grow over time. People are less likely to move for a new job, businesses get less for selling commercial buildings because a tax benefit is lost when a building is sold. It's one of the worst aspects of California's direct democracy system.
- gaius 8y ago
  Is there any good argument for this, other than people not liking taxes? If there were an equal number of ballots on lowering as well as raising taxes, sure. But this is a ratchet that goes only one way. I don’t think most normal adults in a functioning democracy oppose taxes per se. But it is the right and the duty even of every taxpayer-voter to ensure that the common purse is managed efficiently and for the good of the community, and that’s the heart of all of this. The question is “if you can’t spend what we’ve given you already responsibly, why should we give you more?”
  - dlp211 8y ago
    Why do you presuppose that the money was spent irresponsibly?
    - gaius 8y ago
      Because if The People were seeing the value, they wouldn’t be fighting it. Consider the Swedish model, taxes are high but the government is visibly doing a lot of stuff. Whereas the California model is taxes are high and no one is really sure where the money went.
      - dmix 8y ago
        Indeed, this was still the result of 'legislating democratically'. It was a self-imposed limitation by elected officials, it didn't come about arbitrarily but as a response to some political environment or consequences of actions. All bad laws were started with good intentions. That should never be what defines a law's value, only cause & effect to the best of our current understanding (and hopefully backed by data). Note: I'm not saying this is a bad law as I'm not familiar with the local political environment which motivated this nor the particular negative consequences it objectively has.
    - blackflame7000 8y ago
      Have you ever been to the DMV? Or the Social Security Administration? The VA? The Post Office? Waited for the IRS? Waited for Zoning Commissions? ... Any government beyond the microscopic level can't maintain efficiency. Too many hands in the cookie jar.
saghm 8y ago
> Because of rules designed to limit tax increases, cities can get proposed tax hikes on Tuesday’s primary ballot only by declaring a crisis. At least two have done so this year, following at least 50 since 2008. That doesn't seem like a particularly informative year to use as a cutoff; 2009 would have been the first year of primaries during the recession, so it's not inconceivable that there were a number of municipalities in a financial crisis then.
blackflame7000 8y ago
"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before." - rahm emanuel
kyledrake 8y ago
Why don't they declare an emergency on the actual problem, chronic shortages of housing supply, and reform their zoning and tax/rent entitlements to fix it? It's hard for me to take anything California government does seriously right now while they're ignoring the 10 ton elephant in the room that's causing almost literally every other problem. If they don't start addressing this with a significant attack plan extremely soon, their tax base will leave the state in droves, and they will never raise taxes enough to make up the difference. It's an emergency, declare it one and do something real about it.
- dragonwriter 8y ago
  > Why don't they declare an emergency on the actual problem, chronic shortages of housing supply, and reform their zoning and tax/rent entitlements to fix it Because chronic shortage of housing supply is not a problem for local government[0], it's a deliberate and rational response to the demands (including binding constraints like Prop 13) placed on local governments by the citizens of the State. [0] the institutional government, at least; California is a direct democracy with limited delegation from the citizenry to the institutional government, and this is a problem for the citizenry-as-government, of course.
  - johnnyfaehell 8y ago
    > Because chronic shortage of housing supply is not a problem for local government[0], it's a deliberate and rational response to the demands (including binding constraints like Prop 13) placed on local governments by the citizens of the State. This is why America is by many people considered fucked.
    - bequanna 8y ago
      Not sure I follow. Are you referring to this specific piece of legislation or the ability for states to regulate local governments?
- roel_v 8y ago
  "their tax base will leave the state in droves," Man that place is a dump, nobody goes there - it's always too busy.
kelnos 8y ago
I don't really have a problem with this. Declaring a "fiscal emergency" doesn't allow the city to enact new taxes, it just lets them put new taxes on the ballot for people to vote on. They're just using a loophole that let's them get around what is IMO a silly law. (Then again, if this loophole didn't exist, perhaps this would encourage them to fix the actual problem with the law.)
- dragonwriter 8y ago
  They (local government bodies) can't fix the problem; it's a state Constitutional rule that can only be altered by the citizenry. The State legislature—but not the impacted local bodies—could propose a fix, but can't enact one.
notMick 8y ago
Why don't they reduce spending? Surely there are expenditures deemed "being nice" which isn't a real neccessity for the local citizens?
- nordsieck 8y ago
  > Why don't they reduce spending? There is strong selection pressure applied to politicians to get re-elected. There is essentially no selection pressure for them to do a good job (as long as who to blame for the bad job is ambiguous, which it almost always is).
- dragonwriter 8y ago
  > Why don't they reduce spending? Because the citizenry doesn't want that. Oh, sure, in abstract terms they do, but when it comes to any specific set of concrete cuts, they tend not to.
  - nikanj 8y ago
    The citizenry reliably supports any cuts that don't affect them personally.
    - dragonwriter 8y ago
      > The citizenry reliably supports any cuts that don't affect them personally. That's not true, either; plenty of spending programs that directly effect < 50% of the population will face more than 50% opposition if cuts are proposed.
- sushikokk 8y ago
  And pensions. Pensions funds have not been allowed to grow like expected, because of the artificially low interest rates. So to avoid the funds being emptied the solution is more tax. It will get worse.
  - specialist 8y ago
    By pensions you mean boomers. I'm prone, content to blame most of our current problems on the boomers.

101 points by hyperrail 8y ago

It seems silly and potentially dangerous to limit when a city can legislate democratically (even with the Fiscal Emergency exception.) Is there any good argument for this, other than people not liking taxes?

dfee 8y ago
If you read the article, you might’ve missed that the culprit is a 1978 decision to pass Prop 13 - a resolution that only allowed property tax hikes to be passed on election years, and then in 1996 proposition 218 that limited tax raises in general - outside the loophole that a county can declare an emergn y and run a tax hike vote anytime (without negative consequence, and perhaps with positive consequence).
- bobthepanda 8y ago
  The historical fact of how it got passed doesn't make it not silly or dangerous, though.
  - r00fus 8y ago
    It's a logical consequence, regardless of it's danger or silliness.
  - dmix 8y ago
    Isn't the emergency loophole protecting it from being 'dangerous'? I get it being highly inconvenient for people who prefer to allow lawmakers to do tax hikes and increase spending at arbitrary times. But I don't see how this could interfere with primary government functions in terms of law enforcement, courts, shelters, etc when responding to unexpected events... aka in an emergency, where it could be dangerous.
smolder 8y ago
Short answer is no. It's one broken measure against other broken measures. Taxes get raised because the budget goes up, but the budget goes up for more stupid reasons (greed and corruption) than good ones, and spending is woefully misallocated.
- throwaway2048 8y ago
  a huge reason is because of Proposition 13 cities cant tax properties at their actual skyrocketing values, but they still have to pay all the other costs associated with it.
  - bmelton 8y ago
    What are the other costs associated with it? It costs the same to provide a building with electricity, water, sewage, etc, whether the building is privately worth $10,000 or $10,000,000. Also, isn't that exactly the point of Prop 13? If I bought a house for $500k, and it's worth $5 million tomorrow, I'm liable for the tax increase whether or not the increase is affordable. I thought the point was to allow homeowners the luxury of limiting the insane tax increases to the points of sale, when value was realized.
    - throwaway2048 8y ago
      It absolutely does not cost the same, more expensive real estate means you have to pay people significantly more on average to do jobs (nobody is interested in working jobs that cant make rent), it also means more expensive land purchases and easements for public works projects. Taxes arent meerly defered until sale, they are allowed to rise to market value after the sale is complete, but the government never gets those years of back taxes they would have gotten otherwise.
    - closeparen 8y ago
      You can't pay the 1978 cost of living to a new teacher in 2018. Most things the government buys are vastly more expensive because the workers involved have to live somewhere without the benefit of grandfather status.
gweinberg 8y ago
The idea of constitutional limits on government sounds "silly and dangerous" to you?
- _vertigo 8y ago
  Instead of responding to a question with yet another question, why not answer the question (why place a limit on how often a city can put a tax increase on the ballot)? That’s much more productive. To answer your question, one could argue that it’s not the idea of constitutional limits that sounds dangerous, but what this exact law is limiting that feels silly and dangerous.
- deleted 8y ago
  [deleted]
- bobthepanda 8y ago
  What exactly is the limit here that is reasonable? It's a limit on referendums; without the limit, voters would still have to approve any hike. If it is so against the public interest, why not let the public decide, by voting?
- greglindahl 8y ago
  Constitutional limits like the Bill of Rights sound awesome to me. As a Californian, all of our crazy constitutional limits on taxes are less awesome. After many years of unequal taxation, similar buildings in the same city pay wildly different amounts of tax, and the difference will only grow over time. People are less likely to move for a new job, businesses get less for selling commercial buildings because a tax benefit is lost when a building is sold. It's one of the worst aspects of California's direct democracy system.
gaius 8y ago
Is there any good argument for this, other than people not liking taxes? If there were an equal number of ballots on lowering as well as raising taxes, sure. But this is a ratchet that goes only one way. I don’t think most normal adults in a functioning democracy oppose taxes per se. But it is the right and the duty even of every taxpayer-voter to ensure that the common purse is managed efficiently and for the good of the community, and that’s the heart of all of this. The question is “if you can’t spend what we’ve given you already responsibly, why should we give you more?”
- dlp211 8y ago
  Why do you presuppose that the money was spent irresponsibly?
  - gaius 8y ago
    Because if The People were seeing the value, they wouldn’t be fighting it. Consider the Swedish model, taxes are high but the government is visibly doing a lot of stuff. Whereas the California model is taxes are high and no one is really sure where the money went.
    - dmix 8y ago
      Indeed, this was still the result of 'legislating democratically'. It was a self-imposed limitation by elected officials, it didn't come about arbitrarily but as a response to some political environment or consequences of actions. All bad laws were started with good intentions. That should never be what defines a law's value, only cause & effect to the best of our current understanding (and hopefully backed by data). Note: I'm not saying this is a bad law as I'm not familiar with the local political environment which motivated this nor the particular negative consequences it objectively has.
  - blackflame7000 8y ago
    Have you ever been to the DMV? Or the Social Security Administration? The VA? The Post Office? Waited for the IRS? Waited for Zoning Commissions? ... Any government beyond the microscopic level can't maintain efficiency. Too many hands in the cookie jar.

saghm 8y ago

> Because of rules designed to limit tax increases, cities can get proposed tax hikes on Tuesday’s primary ballot only by declaring a crisis. At least two have done so this year, following at least 50 since 2008. That doesn't seem like a particularly informative year to use as a cutoff; 2009 would have been the first year of primaries during the recession, so it's not inconceivable that there were a number of municipalities in a financial crisis then.

blackflame7000 8y ago

"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before." - rahm emanuel

kyledrake 8y ago

Why don't they declare an emergency on the actual problem, chronic shortages of housing supply, and reform their zoning and tax/rent entitlements to fix it? It's hard for me to take anything California government does seriously right now while they're ignoring the 10 ton elephant in the room that's causing almost literally every other problem. If they don't start addressing this with a significant attack plan extremely soon, their tax base will leave the state in droves, and they will never raise taxes enough to make up the difference. It's an emergency, declare it one and do something real about it.

dragonwriter 8y ago
> Why don't they declare an emergency on the actual problem, chronic shortages of housing supply, and reform their zoning and tax/rent entitlements to fix it Because chronic shortage of housing supply is not a problem for local government[0], it's a deliberate and rational response to the demands (including binding constraints like Prop 13) placed on local governments by the citizens of the State. [0] the institutional government, at least; California is a direct democracy with limited delegation from the citizenry to the institutional government, and this is a problem for the citizenry-as-government, of course.
- johnnyfaehell 8y ago
  > Because chronic shortage of housing supply is not a problem for local government[0], it's a deliberate and rational response to the demands (including binding constraints like Prop 13) placed on local governments by the citizens of the State. This is why America is by many people considered fucked.
  - bequanna 8y ago
    Not sure I follow. Are you referring to this specific piece of legislation or the ability for states to regulate local governments?
roel_v 8y ago
"their tax base will leave the state in droves," Man that place is a dump, nobody goes there - it's always too busy.

kelnos 8y ago

I don't really have a problem with this. Declaring a "fiscal emergency" doesn't allow the city to enact new taxes, it just lets them put new taxes on the ballot for people to vote on. They're just using a loophole that let's them get around what is IMO a silly law. (Then again, if this loophole didn't exist, perhaps this would encourage them to fix the actual problem with the law.)

dragonwriter 8y ago
They (local government bodies) can't fix the problem; it's a state Constitutional rule that can only be altered by the citizenry. The State legislature—but not the impacted local bodies—could propose a fix, but can't enact one.

notMick 8y ago

Why don't they reduce spending? Surely there are expenditures deemed "being nice" which isn't a real neccessity for the local citizens?

nordsieck 8y ago
> Why don't they reduce spending? There is strong selection pressure applied to politicians to get re-elected. There is essentially no selection pressure for them to do a good job (as long as who to blame for the bad job is ambiguous, which it almost always is).
dragonwriter 8y ago
> Why don't they reduce spending? Because the citizenry doesn't want that. Oh, sure, in abstract terms they do, but when it comes to any specific set of concrete cuts, they tend not to.
- nikanj 8y ago
  The citizenry reliably supports any cuts that don't affect them personally.
  - dragonwriter 8y ago
    > The citizenry reliably supports any cuts that don't affect them personally. That's not true, either; plenty of spending programs that directly effect < 50% of the population will face more than 50% opposition if cuts are proposed.
sushikokk 8y ago
And pensions. Pensions funds have not been allowed to grow like expected, because of the artificially low interest rates. So to avoid the funds being emptied the solution is more tax. It will get worse.
- specialist 8y ago
  By pensions you mean boomers. I'm prone, content to blame most of our current problems on the boomers.