The California Legislature Increased Sales Taxes and Accelerated The Payment of Income Taxes Earlier This Year
31 October 2009
Additionally, the state vehicle registration fees were increased a few months ago. The Franchise Tax Board decided to change income tax brackets, which is the second time it has taken this action over the past 30-years. The tax board lowered the income tax brackets to a point where each one begins which bumps most taxpayers into a higher category. Officials “explain” this unusual phenomenon as a result of the lack of inflation because the rate of growth was a negative number for the fist time since 1983.
In a little-known legal maneuver, the nation’s largest school district, Los Angeles Unified School District, has proposed to sharply raise property taxes. The recession has substantially reduced property tax revenues that the school district claims must be restored to pay existing school bonds. This unusual action by the district is explained as necessary when property tax revenues are insufficient to pay bond installment payments. So what is the good news for property owners?
The current rate of $123.00 per $100,000 in assessed value is below original projections. And what is the bad news? The new rate may be above $200 per $100,000 in assessed value by 2012. The recession has also caused a cash-flow shortage for the school districts construction program as well. Of course, the state could owe LA Unified about $1 billion in construction funds by the end of the year which most experts do not expect to see for obvious reasons.
Don’t expect any of the approved bond issues that were approved by the electorate to be sold either because when property values drop, so does the bond debt limit. One of the solutions to pay for ongoing expenses at a time of declining revenue is for LA Unified to propose a parcel tax. The tax would have to be approved by two thirds of the voters, which will face an uphill battle. I just love the quote of one Mayor in a city in Northern California saying that he is not worried about the claims of police, fire, public health, and most every other department running out of money. He thinks that the claims are “wildly premature.”
This statement was made just a couple of months after the city had to deal with a revenue shortfall of hundreds of millions of dollars. On the other side of the equation, the household and business side, do you think it is time for government to start paying attention to the financial ability of families and businesses to pay the new or increases in taxes? I am not sure that government staff and elected officials have read that California posted the third highest foreclosure rate in August, one in every 144 housing units received a foreclosure filing.
To put it in real numbers, 92,326 properties received a foreclosure notice of some sort. Six metropolitan areas documented foreclosure rates among the top 10 in August. Stockton posted the nation’s second highest foreclosure rate with one in every 74 houses receiving a foreclosure notice. Merced was number three in the nation with one in 78 homes in foreclosure. Should we talk about the Central Valley unemployment rate being between 35 and 40 percent? Should we talk about bankruptcies being at an all-time high?
Don’t you find it a bit ironic that government is increasing fees, taxes, fines, and are busy creating or expanding services at the same time our earnings are shrinking?
Ron may be reached at:
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