Link: Bloomberg.com: U.S..
Think of it! A city of 117,000 people in the San Francisco suburbs is filing for bankruptcy!
The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it near insolvency. ...
Police and firefighting salaries, pension and overtime consume almost 80 percent of Vallejo's $89 million general fund budget. Cities in California on average spend about 60 percent of their budgets on firefighter and police salaries, according to the League of California Cities. ...
Vallejo, on the San Francisco Bay, was home to the West Coast's first shipyard, which was shuttered in 1996. The area has been one of the hardest hit in Northern California by the housing market slump. Home prices in Solano County, where the town resides, dropped 19 percent in January from the year before, according to DataQuick Information Systems, a firm which tracks real-estate markets in the state.
Well, I've got news for them. The housing slump is not the problem. The problem is of California's own making, and the problem is celebrating its 30th birthday this year.
Think of how much land value a city of 117,000 people within commuting distance of San Francisco must have!
Thinking about it is about the best we're going to do. Under California law, the County Assessor is not permitted to attempt to calculate that figure. His or her job only involves keeping track of when and at what price a property changed hands, and to increase its assessed value by no more than 2% per year, even during years -- decades -- when actual property values rose by 10% or more per year!
Vallejo is sitting on an awesome amount of land value, which it is not permitted to tax at more than 1% per year, and can only collect a tiny fraction of 1% from those who have owned their property since the time it was worth 10% of what it is worth today.
California's Proposition 13 created this. I have no sympathy for those who instigated such a travesty 30 years ago, and understand that today's Californians, as bright a group as they might be, are not bright enough to correct this travesty. Their education system has avoided telling them the source of their problems, and maybe Google does not permit the information to be displayed in their state.
The logical revenue source lies under their feet, and they aren't permitted to tap it except very lightly. They must rely on taxes which burden their economy, burden the poor, burden the entrepreneur -- anyone but the fellow who has grown rich while he has slept: the landholder.
End Proposition 13. Treat everyone as if they were created equal, and as if the products of their labor belonged to them and the products of community investment belonged to THE COMMUNITY! There would be plenty of funds to pay for the services the community finds valuable, and there would be accountability at the local level. And if economic justice and fiscal stability weren't reason enough, would ending sprawl be sufficient to persuade them?
Taxing land value, and treating that tax as our primary revenue source, is the route to solving many of our most vexing problems.