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>California is perhaps the greatest - and most well documented - example of this, both at the state and local level. California's problem is mostly because of
by cube13 13y ago
>California is perhaps the greatest - and most well documented - example of this, both at the state and local level.
California's problem is mostly because of their ballot propositions, especially the effects of prop 13, which limits property taxes to 1% of the original sale price.
There are many additional propositions which have passed that increase spending(especially for schools and other services), which make it pretty much impossible for the budget to be balanced, because the state and municipalities have almost no way of increasing taxes, nor can they realistically cut spending.
- dragonwriter 13y ago> California's problem is mostly because of their ballot propositions, especially the effects of prop 13, which limits property taxes to 1% of the original sale price. The limit is to 1% of the current assessed "full cash value", not the original sale price. However, there is also a limit that the assessed "full cash value", despite the name, can increase no more than 2% per year excluding new construction (and quite a lot of classes of improvements are expressly excluded from counting as "new construction") and changes of ownership (and certain changes of ownership don't count, as well.) The net effect of which is that the property tax base can fall rapidly with real estate market collapses, but expands only slowly with real estate market booms (and, particularly, that property that doesn't change hands frequently tends to be taxed at a low nominal rate applied to a value that is vastly below its actual market value.)