Idiocy Comes Home To Roost
Bloomberg (h/t Paul Krugman):
“Just $5 million of work is needed to complete a new California Court of Appeals building in Santa Ana. The state may not have the money, and come July judges may be writing opinions in their living rooms.
“I’ve been on the bench for 23 years, and I’ve never seen anything like this,” said David G. Sills, the presiding justice for the Fourth District Court of Appeals, Division Three, in a telephone interview.
California’s worst budget crisis has held up $3.8 billion in spending on public works, possibly including the courthouse adjacent to Santa Ana City Hall. Sills and his seven fellow jurists had planned to move in before the lease on their temporary offices expires June 30.
“Everyone will have to work from home,” said Sills, 70, “and we’ll have to rent a place for when we hear arguments.””
As Krugman says, this is exactly the opposite of what’s needed right now. But the problem isn’t just the economy, and California’s need to balance its budget. It’s Proposition 13. Proposition 13 was cleverly designed to make it virtually impossible for California to raise taxes. Any tax increase requires a supermajority. Property taxes are fixed at 1% of assessed value, and assessments themselves are fixed at the time of purchase, and can rise only very slowly thereafter.
This leads to all sorts of idiotic consequences. Back when I lived in California, one of the few ways of raising taxes available to cities and towns was to increase the sales tax by some fraction of a percent. Result? Cities and towns did this, and then tried desperately to induce people to set up car dealerships and other places where people sell big, expensive things. Did it make sense to have so many car dealerships? Who cares! It’s revenue!
Likewise, people in California don’t always sell their houses when it would normally make sense to do so, because as long as they stay in their existing house, the assessment will not rise much and their taxes will stay low, whereas if they buy a new house, it will be assessed at its purchase price, and their taxes will go up.
“Free markets”, indeed.
My favorite Prop 13 anecdote: while she was alive, my grandmother lived in a wonderful house that she had (I believe) designed herself in the 50s or thereabouts, and built on what was then an undeveloped hillside. As time passed, however, that property became much, much more valuable, which makes sense since it was on the border between LA and Beverly Hills, on a delightful secluded street that ran up the hillside and dead-ended at the top. Phil Spector lived next door, and Eartha Kitt lived up the street.
Meanwhile, I had a good friend who lived in a house in a terrible neighborhood (as in: there were shootings nearby on a fairly regular basis.) The only famous person who lived near her was Rodney King. Her house itself was great, but it was also in a state of considerable decay when she bought it, and needed a whole lot of work.
Guess who paid the least in property taxes, by a considerable margin? My grandmother, of course. Having a cap on property assessments in place for decades will do that.
The result, of course, is that California has been deferring maintenance for a very long time. Now their judges will be working from home, their schools will fall further into decay, and their bridges will continue to crumble. With any luck, Obama’s stimulus plan will help out with the worst of it; my only regret about that is that it will postpone the day when Californians have to confront the idiotic tax policies they put in place.