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How did the recent crash in real estate values affect California city revenues...

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xnoe323x | Student, College Freshman | Salutatorian

Posted October 19, 2010 at 11:37 PM via web

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How did the recent crash in real estate values affect California city revenues collected from property tax?

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brettd | High School Teacher | (Level 2) Educator Emeritus

Posted October 20, 2010 at 2:03 AM (Answer #1)

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I'm going to assume you mean as a result of the recent crash in housing values in California.  Because California has a large population, with a huge economy and any number of large industries, property values in big cities have been higher than the rest of the country for years, and in the last five years, considerably higher.  The benefit of this is that property taxes, even if collected at the same rate, would generate a lot more revenue for the cities and state to pay for everything from schools to law enforcement to fire departments.

The drawback is that housing bubbles burst, and as services had been developed to match the amount of revenue that could be spent, when the values dropped, the revenue did also, and sharply, which meant that existing services had to be cut.  These cuts were sometimes drastic, and we even saw some counties and municipalities declaring bankruptcy.

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