Comments on: Higher down payments could be compromise Prop. 13 reform

By: Ed

Ed — Thu, 24 Jan 2013 03:22:28 +0000

If I recall history, in the late 75’s, Governor Jerry Brown and the democrats were spending and raising taxes like crazy. They cut funds to the counties, to balance the State Budget. The counties were forced to raise taxes every year to balance their budgets. The Taxpayers and Homeowners revolted in 1978, after property taxes doubled in a year. This also affected renters, as the increase in the property taxes were passed on to renters. The passage of Prop 13 included a 2/3 requirement majority vote to raise or pass new taxes. These two issues forced our elected officials to stop spending, stop raising taxes and balance the budget. Then along came Prop 98, which required 40% of the state budget for Education, leaving only 60% for balancing the State Budget. Year after year higher state taxes began to force businesses to leave the state, along with a failing state economy. Now the Democrats have a 2/3 majority and the ability to remove Prop 13 and increase taxes as they see fit and to keep spending… Bottom line; All they will do is hurt the economy and push more businesses and wealthy taxpayers to leave the state. It is a time proven fact… The Fed is now following in California’s footsteps. Our elected officials know that if they cut spending they will lose their elected seats. Bottom line; both have a spending problem that they do not desire to address. PS: The Republicans are almost as bad…

By: Richard

Richard — Thu, 03 Jan 2013 16:45:14 +0000

SkippingDog: Given that granny is on a fixed income that matched her expenses, how is she to pay the new loan she took out on her previously “free-and-clear” home to pay property taxes? Wait, I know… she’ll borrow more. And that will send up the mortgage payments. As will next year’s tax increases. And since this is obviously an equity line, not a fixed-value mortgage, and equity lines are variable rate instruments, when the high inflation of the late 70’s hit, the mortgage payments skyrocket… but no worries… just tap the equity line some more. And when the bubble burst in ’89, and the bank pulls the line of credit or granny hits the line’s limit, THEN what you propose will become self-evident. It was never granny’s house in the first place… the government was just letting her live there as long as she paid for the privilege.

The stability you claim existed when Prop 13 passed wasn’t stability for granny. It wasn’t even stable revenues for government. It was the “stability” of constantly *rising* tax revenues for Sacramento and county governments. These came at the expense of homeowners who actually were being taxed out of their homes. Now, there is an economic argument that letting granny stay in her home isn’t the highest and best use of the property from the point of view of the community at large (which gets back to the question of who really owns the property.) It’s even arguable that Prop 13 added to the bubbles in CA real estate. But don’t try to deny the very real effects of having granny (and everyone else) taxed out of her home before Prop 13 passed.

By: SkippingDog

SkippingDog — Thu, 03 Jan 2013 05:53:57 +0000

California had stable tax revenues for state and local governments before Prop 13 passed under the guise of protecting granny’s house. The only reason granny’s house was in any danger at all was because her house skyrocketed in value during the late 60’s and 70’s, making her much wealthier on paper than she had been. When her home was assessed at its much higher market value, granny screamed that she couldn’t pay the additional taxes. That was never really true, since she could have tapped the much expanded equity she held in her property to pay her still reasonable property taxes – those supporting stable revenues upon which the true Golden Years of our Golden State were built.

By: Wayne Lusvardi

Wayne Lusvardi — Thu, 03 Jan 2013 03:12:37 +0000

In retrospect the title of the article should have been “Leave 13 Alone: Raise Downpayments Instead.”

The point of the article is no compromise as far as Proposition 13 is concerned. The reforms proposed by the state legislature will do nothing but tax the symptoms and not the causes of protracted budget deficits and upside down mortgages. Growth management laws in combination with the package of housing affordability incentives (very low interest rates, mortgage deduction from income tax, local homestead exemptions, deferred second trust deed loans to finance down payments, or even putting down payments on credit cards) is a toxic brew that throws state and school school district budgets out of whack.

Imagine the electrical system in your house is hit by a large power surge which blasts out even the circuit breakers. Don’t blame the circuit breaker. Proposition 13 is a circuit breaker. Blame the power company that didn’t install a transformer able to handle the surge. A large down payment is analogous to a surge suppressor.

The enemies of Proposition 13 are also the enemies of stable tax revenues for state and local governments and school districts. They are also the enemies of full disclosure about the risks to homebuyers of low down-payment loans turning upside down. It is time for Democrats to give up their fake moral superiority about affordable housing and lack of tax revenues for public schools during recessions. Democrats are fully in power and government budget deficits are of their own making. The enemies of the enemies of Proposition 13 are your friends.

By: Rex the Wonder Dog!

Rex the Wonder Dog! — Thu, 03 Jan 2013 01:30:34 +0000

Funny, I just made a comment on another site about this yesterday, that the no skin in the loan game is one big reason we crashed, and Fannie Mae and Freddie Mac are both doing 3% down loans, which is 17% too low.