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July 27, 2009
Things That Make You Go Hmmm
If you've been following California's state budget fiasco over the past several weeks, you've likely heard about the "IOU's" the government has been issuing to state employees, contractors, etc. because it doesn't have the cash to pay them. This situation reminds me of our pick-up poker games in college, when a buddy would take out a marker on a 'sure-to-win' hand, only to lose and be faced with a debt he couldn't immediately pay. Unlike California, however, I can't say we ever had a $19.5 billion dollar shortfall...

Anyway, my own state is already $195 million in the hole. I found this particularly interesting, especially when taking into consideration certain news stories commenting on the budget mess. The following is taken from a recent story on Washington state's shortfall:

"The nation's economy has been widely blamed for Washington's growing deficit. As financial markets continue to experience record measures of volatility, consumers aren't spending like they used to -- and that means sales and real estate taxes aren't pouring into state coffers."

Wait a minute. Let's look at that last sentence a little more closely. "...real estate taxes aren't pouring into state coffers." Huh? Why would that be? Doesn't someone still own every property in the state, regardless of whether it's gone through foreclosure or not? In fact, if a bank has had to foreclose, isn't that almost a better situation for county governments, given that (most) banks are better off financially than the homeowners on whom they foreclosed?

A visit to the Spokane County Assessor paints a rather rosy picture about the state of our current real estate market:

Mr. Rich Hadley, President and CEO of Greater Spokane Incorporated, reminds everyone of some sweet spots in the economy. Specifically, "Your home's value is holding up pretty well. While single-family home sales in Spokane County were down 28 percent in 2008, the average sales price fell only 3.5 percent, and the median price held fairly steady. Also, unlike many other parts of the country, home prices remained above 2006 levels.

I looked at the last five years of tax assessed values on my own home. From 2006-2008, my assessment increased by almost $100,000. This year, my assessment dropped about $20,000. So...from the height of the national real estate market boom to where we are today, my assessment has INCREASED almost $80,000. Hmmm...tell me again why our budget deficits are skyrocketing?

Yes, I understand that people aren't spending like they used to. Sales tax revenues are down, payroll taxes are down (less people working = fewer payroll taxes collected), etc. I guess I'm just irritated that the real estate market is shouldering some of the blame for lower tax revenues, when our own governmental websites REFUTE THAT FACT.

My property taxes went down $64.57 this year. That's about 1.6% of my tax bill the county will have to do without this year. However, it's still several hundred dollars more than they were getting from me just two short years ago.

Here comes Mr. Cynical...you've been warned. Governments paint a rosy picture about property values because they don't want to lower your property assessments, thereby lowering your tax liability. On the other hand, they bitch and moan about their deficits in the hope you'll agree to higher taxes, just so basic services will continue to be provided.

Don't believe all the B.S. I know how budgets are developed. YOU ALWAYS ASK FOR MORE THAN YOU NEED, because if you don't, that money will be allocated to another department. It has nothing to do with utilizing the resources available to the government and everything to do with grabbing as big a piece of the pie as possible.

What could you live without if you really had to? Cell phone? Internet? New cars every four years? Summer vacations? If your household is anything like mine, you could eliminate A LOT of things if you simply didn't have the money to pay for it. Why is it the government doesn't have to play by the same rules? Do we really need to spend over $1 million dollars on the Pierce County Anti -Methamphetamine Initiative? Or almost $2 million dollars to allow for new and improved fish passage on two of our dams? How about $237,500 for construction of a teen center?

I'm sure these are very worthwhile projects, IF WE DON'T HAVE ANYTHING ELSE TO DO WITH A SURPLUS OF BUDGET FUNDS. However, we don't have the money, so WE CAN'T FUND THE PROJECTS!!! Sounds simple, right???

Yes, I know California has a SERIOUS problem on its hands. I'm quite sure their real estate-related tax revenue has taken a nosedive. I simply can't seem to find a logical explanation for Washington state's mounting problems. This is probably true for a lot of the states that find themselves in a similar siutation to ours...if everybody whines loud enough, maybe they'll get a bigger piece of the stimulus money coming from D.C. Now where does that money come from, again???

Things that make you go hmmm...

Clint


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