Did You Know…
We are now seeing a double whammy hit our communities and states.
First, there is a loss of sales tax revenue as consumers and businesses cut back to the bare bones on spending, lower retail sales means less tax revenue. History tells us and the current political climate warns that raising sales tax and fees is not the answer and will not be well received.
The only answer to this dilemma is to stop expansion and radically cut back on services, thus pulling expenditures in line with revenue.
Municipal Bonds have long been a favorite on Wall Street and Main Street, a sure investment. Sure, low return but safe haven because of government’s ability to raise taxes has been the honey for investors. This security is now tarnishing from the recent years of over spending and falling revenue. Bonds are being downgraded and returns are being hiked making them a more costly source of funds for local, state and federal levels.
Secondly, sales tax revenue is going to lag behind consumer spending and private sector job creation.
Finally, we are seeing déjà vu. As the value of property slips so does the value base for property tax revenue. This tsunami has yet to hit the appeals process in most communities but when it does, watch out. This austerity will have a dramatic impact on all publicly supported institutions and services including public works, improvements and schools. The tax base may follow years behind any commercial and housing recovery.
It is going to take serious time for a full economic recovery and life will be different on the other side.
And thank you for making me Your Orange County Real Estate Connection.
Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI
2007 President, Orange County Association of Realtors (949) 753-7900