The states and local governments are going to see horrific shortfalls thanks to the housing crash. Tax revenues are going to plummet even as spending rises, causing massive budget deficits, and eventually tax increases and slashed spending.
The housing crash will bankrupt the builders, the banks and the REIC-related industries. But it may also bankrupt your state and your city, who enjoyed the free housing bubble loot when it was pouring in, but stupidly spent it like it would never end. And then it did.
Get ready. No surprises for HP'ers.
Schwarzenegger Will 'Declare Fiscal Emergency' In Weeks
Gov. Arnold Schwarzenegger said Friday he will declare a "fiscal emergency" in January to give him and the Legislature more power to deal with the state's growing deficit.
Schwarzenegger made the announcement Friday after meeting with lawmakers and interest groups this week to tell them California's budget deficit is worse -- far worse -- than economists predicted just a few weeks ago.
The shortfall is not $10 billion, but more than $14 billion -- a 40 percent jump that would put it in orbit with some of the state's worst fiscal crisis, those who have met with him said.
California is struggling with shrinking state tax revenue from the meltdown of the subprime housing market and the credit crunch on Wall Street.
State spending also has increased by more than 40 percent since Schwarzenegger took office after the 2003 recall of then-Gov. Gray Davis.
December 15, 2007
And then, right on schedule thanks to the housing crash, the states started blowing up. First up: California
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Housing-addicted Arizona will be especially ugly to watch...
http://kvoa.com/Global/story.asp?S=7475047&nav=menu216_3
Arizona budget presentation paints grim picture
PHOENIX (AP) - Depending on how Arizona erases its current projected budget shortfall of nearly $1 billion, the state's shortfall next year could be nearly twice as big.
It's already been reported that the Legislature' budget staff projects the current year's $10.6 billion budget's shortfall at just under $1 billion.
But a new presentation to the Legislature also looks at the fiscal year starting next July 1.
The presentation says that shortfall would be $1.8 billion if changes to be made to balance the current budget don't reduce spending or provide more revenue next year also.
The budget staff says economic conditions have had a widespread impact on state revenue collections.
http://tinyurl.com/365m2f
Another good article on the mess on cnn
States Facing Budget Shortfalls As Housing Slump Hits Tax Take
Homeowners aren't the only ones squeezed by the deepening housing market crisis.
So are schools, prisons, crisis hot lines and even Florida manatees.
State and local government coffers are getting hammered as income dries up from taxes and fees stemming in large part from the once booming housing market.
Budget shortfalls mean lawmakers must cut back services and programs. In Florida, for instance, that will mean fewer fish and wildlife officers to enforce speed zones in manatee areas to skimpier health benefits for employees in North Miami Beach.
Belt tightening will impact many parts of the country, says Robert Kurtter, managing director of public finance for Moody's Investors Service.
"Lower revenue and collections puts pressure on services such as schools, roads and parks," he said. "And it potentially puts pressure on property tax rates to rise."
The impact is only now hitting home, since most states started their new fiscal year July 1, when they still had healthy reserves carried over from the boom years.
Hey Keith,
The desperate flippers are trying a new tactic in the S/E states.....check this out:
Suspicious Fires Destroy 3 Fayetteville Houses
Posted: Today at 6:41 a.m.
Updated: 24 minutes ago
Fayetteville — Officials said that fires that hit three houses on the same street in Fayetteville are considered suspicious.
Calls about the fires at three houses on Rivercliff Road came in around 2:51 a.m. Thirteen fire crews labored until at least 5 a.m. to get the fires under control.
Five police officers also responded. No injuries were reported in the fires, but the houses were destroyed.
All three two-story houses were brand new, unoccupied and owned by the same person, officials said. Two of the houses were beside each other, and the third was six houses down.
Officials said they did not yet know the cause of the fire, but the blaze appeared to be suspicious.
Another crew was to relieve firefighters later Saturday morning and continue fighting the blaze.
Man...it has really hit the fan. Thing is just a few months ago Realtors around here would take you to the mat swearing the bust had no affect on this area...
Anyone voting yes on opening more Indian Casinos to create revenue for CA?...
Opening manufacturing plants would be a better idea. This state needs to create jobs so folks actually have money to spend...
Not to brag and boast or to be contrary, Keith, but Florida was first. You posted it here last week.
There was a run on the Florida government's money market account two weeks ago, Keith. The reason for the run was that the municipalities found out the fund was invested in MBS's, SIV's and CDO's and raced to take out their cash, at 100% of value whilst the fund's investments tanked. The 50% of the money which remained was frozen. Many Florida counties and city's were left broke when the fund was frozen after it was depleted from 27 Billion to 14 Billion. The cities left 'holding an empty bag, had to take out loans to pay the school teachers and Firemen last Friday because they couldn't make payroll.
Now the cities and counties in Florida that are trapped in this fund are only allowed to get 15% of THEIR tax money or 2 million for Government business, roads etc. out, whichever is greater. Some are unable to service their day to day debt.
The SIV's were quarantined for a year.
Jeb Bush is the funds 'consultant'.
It was the first "Bank Run" in the USA since the Great Depression.
I would say Florida blew up first, California was second.
Just my humble opine and in the big picture doesn't really matter.
HP link; http://tinyurl.com/3dvxuw
Illegals conservatively cost the state 10 billion dollars annually.
why should taxpayers bear the brunt of this insanity? Why doesn't Mexico pick up the 10 billion dollar tab their people inflict upon us?!
You're all wrong. All real estate is local and the bubble was restricted to the coasts. My realtor told me so.
re: Fayeteville fires
Realtors are STILL telling people there is no bubble in Georgia. And the sad thing is people for the most part believe it. I have more or less stopped trying to reason with anyone on the topic. I get too frustrated.
If people want to go ahead and buy a $500K 1 bedroom condo in mid-town, fuck em. Let them commit financial suicide.
Arnold = George Bush in training...
Sieg Heil!
The home arsonists have been popping up. Here is one from September...
Michigan Firestarter
>> So are schools, prisons, crisis hot lines and even Florida manatees.
Regarding prisons, there's a simple way to cut their spending in one day: execute EVERYONE on death row, nationwide, in one day. Not only will it save millions of tax-payer dollars, but it will FINALLY send a message to would-be murderers and rapists, a message that anti-death penalty LibTards say was never getting across...
Don't worry they'll just raise taxes more. Here a 3% raise in taxes for the casinos is in the bag and there will probably be more in a few years.
Kablooeeee!.............Rat tatatatatat..Pow pow...Kerraasshh bang clank.Boom kapoww clank Bonk bang scrreeeeeeeech!BaBooooooommmmm!Splat,Wwwaappp!crunch crunch.
Why do Republican led governments always crash & burn?
I am through trying to prevent this thing, now I want maximum pain. Intense, relentless, excruciating pain. I hope the dollar crashes, I hope California can't pay for anything. Screw them, screw them all.
...agonizing, gut wrenching, writhing...
Those idiota in Clownifornia still voted in favor of the bonds for all those spending bills in 2006. Clownifornia went on a spending spree with the excess cash they had from the dotcom ponzi scheme, thinking it would last forever. They did the same thing with the RE ponzi. Government only knows how to spend more, never cut back.
The democrats are suggesting a bill that charges sales tax on professional services....and, drumroll, CONSTRUCTION services!
1.) Construction is over
2.) Making services more expensive in California will make local professionals more expensive compared to other states..or southeast Asia. So the professionals will see less or no income, generate less or no state income tax, and probably just leave the state to the illegals.
2 years to go and I am out of here.
Scum of the earth government unions down here in florida are lobbying against property tax relief....meanwhile cops down here are given a car. They take it home at night, it sits idly while they aren't on the clock in my parking lot at my condo. The damn thing is always parked out there. I don't know when that guy works. And he lives in my building...on the beach, on a cops salary. He probably went through 12 whole weeks of training to get that job and make a salary where he can afford to live at the beach.
There is your budget problem.
The city idiots where I live keep bragging that their tax receipts are up 10% compared to the same period last year. Well duh, if retail prices go up 10% then so do sales tax receipts. Of course they're too dim to realize their expenses for running the city have increased 10% as well.
told everyone end of last year or earlier this year that there would be a lot of bankrupt cities, now it is coming out. next suicides said that a year or so ago. the people who want your money (stock market players who want more dividends, if i own stocks in chevron why should i suffer because the price of gas is going out of the roof, i deserve the dividends they should have bought stocks)ceo's who want multi million dollar paychecks, crooks, con artist, banks (30 dollar bounced check fee betcha there were be more bounced checks coming from bofa you missed your deposit deadline by 1 minute)grocery stores, gas stations, 7 elevens, your insurance company hell everyone has their fingers digging around in your pockets like scrooge at christmas time.
remember that term from the 90's negotiate a salary don't settle for less than 6 figures remember you are worth every dime. then they sent your job to india and got work permits for people smarter than you from india and they came to the states and took your job and they said 5 figures is okay for me as long as it is above 50 thou. Thanks to you greedy people you can get ready to kiss that all good bye. that is why greed is one of the 7 deadly sins, and what did one gain from it nothing.
the point is the absolute greed from the housing market has all but ruined this country and anything that has anything to do with it (stocks) and the desire to have much and more (bumper sticker: whoever dies with the most toys wins)they all wanted to live the MTV lifestyles of the rich and famous and it has all fallen apart. Perhaps Swartzenegger can rally all his movie star friends and pull a hail mary out of his tailored suit pocket is that the same issue present in how he stole California from Gray Davis, california getting ripped off by ENRON and now it will come back to haunt him. Perhaps now people all over the state will have to pay 5 dollars to cross bridges not just the unfortunate few who happen to live on the wrong side. Tax the shit out of them they have money isn't that what everyone THINKS. If they could buy a 600,000 house they have money.
This all a mess mess mess and there isn't enough money to fix it.
Anonymous 2:05pm said:
"Illegals conservatively cost the state 10 billion dollars annually.
why should taxpayers bear the brunt of this insanity? Why doesn't Mexico pick up the 10 billion dollar tab their people inflict upon us?!"
he/she has no basis for this.read the the grace commission report for example.seriously, has anyone been listening to Ron Paul or harry Schultz? they(illegals) live and work in this country,they pay sales and property taxes which are the taxes that actually pay for education and health care, etc. income tax gets diluted in bureaucracy on the hill(bailouts and foreign aid to Israel and other "allies"),and all that comes back to our communities is less than 12 cents for every dollar paid on income taxes.DO NOT fall for this old trick politicians and the main stream media play on you to create division and therefore make you take the eye off the ball. if you really want them to go back so badly,vote for a candidate that will end NAFTA and any treaty like it anywhere in central-America that have devastated their crop growing and farming industries.the majority of immigrants, legal and illegal would choose to be back in their country of origin, it's not that they don't want to be integrated into the American way of life, they don't even want to be here, but financial hardship forces them to be here in "higher ground".ignorance and misinformation will not bring positive change.
"Why do Republican led governments always crash & burn?"
Dumb comment! For starters, Arnold is a very weak Republican with s state legistlature that is controlled be Mexican socialists.
Not to bore people with numbers, but lets just run a few to give you an idea of how screwed things are about to get.
California has 14 million households, a 56% homeownership rate and a median household value of around $500,000. That means the housing stock in California is worth about $4 TRILLION dollars. Yes, trillion, that's not a typo.
Prices have more than doubled in the last 7 years and experts are calling for rather reasonable 25% to more aggressive 40% drop in home values in California. Pretty reasonable when you consider California average income statistics.
That would result in a net household value loss of $1 TRILLION to $1.6 TRILLION dollars.
Man it is going to get U-G-L-Y in 2008.
I am through trying to prevent this thing, now I want maximum pain. Intense, relentless, excruciating pain. I hope the dollar crashes, I hope California can't pay for anything. Screw them, screw them all.
I agree. I think it's the only hope for the US to recover as a great republic some day down the road. The US public is unbelievably ignorant when it comes to world affairs still believing that they're the beacon of hope and democracy in the world. Meanwhile, the US military machine delivers a continuous wave of death and destruction on innocent people in the Middle East in the name of spreading "freedom and democracy".
The US public flaunts it's credit fueled wealth believing the economy is at all time highs. Meanwhile, the clueless population is unwittingly fleeced of their wealth through hidden inflation and high taxation and will soon discover how truly poor they are when the credit spigot runs dry and their home equity evaporates.
The criminals are at the wheel of the bus - let's hope the bus crashes and kills the drivers but not the majority of the clueless passengers.
Anonymous says that we should kill all the people on death row. What a shocker he can't 1. think up a name or 2. use a name but has to be anonymous. This is the biggest hurdle we as a nation have, all of these semi retarded knuckle dragger's who are anchors on our society from their stupidity. How am I suppose to talk to someone like this, when he thinks killing everyone on death row is going to resolve the problem? I mean seriously this moron sat down thought hard and typed it out and this is what he came up with? If I were to tell him about all the innocents he wouldn't care, if I told him that we could legalize drugs and get rid of all the people in there on stupid drug charges...he wouldn't want that either. This is the problem we have, working with semi retarded citizens who just don't use their brains and simplify things to this point, they are mentally lazy and just a drain on our society and keep us from moving forward.
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