Thanks for sticking with us through the slower holiday period. We’ve got a great 2008 planned so stay tuned.
To start the year in the blog, I came up with the Top 10 issues to watch for in 2008. I didn’t want to be left out of the frenzy of year-end reviews, lists and predictions. So, one by one, one post after another, we’ll lay them out. They are somewhat in order from bottom to top. But this first one will affect much of the rest of the list.
10. The Effect of the Housing Market Plunge on Government Coffers
The housing market’s swift switch from bull to bear has caused foreclosures to explode and left many people staring a new, less appealing, summaries of their net worth. But it’s starting to affect governments as well. With fewer houses selling and many selling for less than they were during the housing boom, governments are collecting fewer taxes and fewer developer impact fees from new housing starts. Not only that, but houses are no longer serving as their owners’ ATMs. Fewer home equity loans taken out by homeowners mean fewer purchases of things like boats and cars, which will affect the sales taxes that governments collect.
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| Not a pretty sight for City Halls. |
Gov. Arnold Schwarzenegger declared a fiscal emergency for the state after announcing that revenues this year were billions short of what beancounters expected to flow into Sacramento. Chula Vista’s leaders said they were on the path toward insolvency without cuts.
What happens in the coming year will be telling. The city of San Diego suffered a financial crisis when the housing market and government revenues were booming. What will happen when the opposite is occurring?