Budget Woes in One of America's Wealthiest Cities

[KamaAina]

http://www.theatlantic.com/business/archive/2016/02/budget-woes-in-one-of-americas-wealthiest-cities/470877/

And yet, San Jose, which has the highest median household income of any major city in the country, at $77,000 a year, and is home to billion-dollar companies such as Cisco and Adobe Systems Incorporated, also has some of the worst roads in the country, a shrinking police department despite a growing population, and, until the city shut it down, one of the largest homeless encampments in the nation.

As companies in this city and in surrounding Santa Clara County, which encompasses Silicon Valley, have raked in billions over the last few years, the city of San Jose has been trying its hardest not to go broke. In 2012, the mayor put a controversial pension-reform proposal on the ballot, saying he couldn’t cut services or staff any further. It passed, but was then challenged in court. Police and firefighters have agreed to pay cuts and staff reductions, and the city employs some 1,700 fewer people than it did in 2001, although it has added 100,000 in population. The city has a billion-dollar backlog of deferred maintenance costs for infrastructure, according to a city spokesperson, and may ask voters in June to approve a sales-tax increase to raise more money for basic city services. ...

Part of the problem is the unique nature of taxes in California. In 1978, California voters overwhelmingly passed Prop. 13, which rolled back property taxes to 1976 assessed values and limited property-tax increases to 2 percent a year as long as the property was not sold. Prop. 13 has meant that as real-estate values in California have skyrocketed, longtime homeowners have continued to pay extremely low property taxes.

This has hit San Jose especially hard. The city has traditionally been a bedroom community, with more homes and fewer jobs than surrounding areas such as Palo Alto and Cupertino. For every 100 employed residents, San Jose has just 87 jobs. San Francisco, by contrast, has 138. Without big employers downtown or in many of its business districts, San Jose has failed to develop the thriving commercial districts that generate sales tax and revenue for a city, said Stephen Levy, the director of The Center for Continuing Study of the California Economy (CCSCE).

[olddots]

1. tunnel vision

or screen vision ?

[elleng]

2. Awful to see this.

Just posted this, in several places:

In an Improving Economy, Places in Distress
http://www.nytimes.com/interactive/2016/02/24/business/distress-cities-counties.html?

[elljay]

3. Median Income of 77k in the Bay Area

Someone might have trouble even finding a rental apartment with this income. $77,000 for a family doesn't go far at all in the Bay Area. The median price of a house in San Jose is "only" $900,000. I just found out that the one bedroom house (800 sq ft, 4500 lot) across the street from me on the Peninsula just sold for 900k. Speculators (both American and, increasingly, Chinese looking for a safe haven for their savings) are snapping up properties left and right, raising housing costs dramatically. When people are paying most of their income for housing, the rest for food, that doesn't leave room for much else.

What I'd like to know is how much Cisco and the other large companies are paying in property taxes. They all filed to have their assessed property value reduced in 2004, when the economy was depressed and real estate values were relatively low. If Prop 13 means that that have kept that 2004 assessed value with only a 2% increase per year, they are saving an absolute fortune with today's real estate values!

This situation is not sustainable- if we don't change the rigged system, it will implode.

[KamaAina]

4. Well, there is a proposal to update San Jose's business tax

http://www.democraticunderground.com/104012704

[elljay]

5. Business Income

I used to work for Cisco. They cut employee benefits and reduced janitorial services because they didn't have the cash.

Well, to be clear, they had about 21 billion in the bank at that time, but that was kept overseas to avoid paying U.S. taxes. I guarantee that any attempt to tax their income will result in their having none. Funny how that works for big business.