I was disapointed in the Wall Street Journal’s profile of San Jose mayor Chuck Reed in that, despite its focus on the public pension problems faced by the “capitol of Silicon Valley”, the article didn’t mention any attempts on the part of the city to raise additional revenues. All of the measures mentioned in the article involve cutting costs rather than increasing revenues, e.g. reducing the number of police officers, requiring that public employees contribute more to their own pensions.
The answer might be that the city might raise rates but it is unable to increase revenues. San Jose depends most heavily on property taxes and retail sales taxes. In California, due to its Prop. 13 requirements, you can increase the tax rate on real estate but it might take some time for that actually to increase revenues. Sales tax revenues in San Jose have been flat since 2006 (in 2006 they were $140 million; in 2012 they were $141 million).
The county recently increased the sales tax by a half cent and a new tax has been imposed on “pot clubs”. Neither is expected to bring in a lot of revenue. It could make an interesting experiment on the price elasticity of marijuana. There’s a summary of San Jose’s fiscal picture here. Like most such official publications, it’s like a fan dancer’s fan—apparently revealing while actually concealing.
The Golden State apparently has problems similar to ours: it’s a lot easier to bestow benefits and services than it is to pay for them.
“In California, due to its Prop. 13 requirements, you can increase the tax rate on real estate but it might take some time for that actually to increase revenues. Sales tax revenues in San Jose have been flat since 2006 (in 2006 they were $140 million; in 2012 they were $141 million).”
2006 was the peak of the sub prime market. Most bankruptcies indicate this as the year a home was either purchased or refinanced. Many homes were reappraised after the housing market crashed, lowering their property taxes for a time. However, with a new housing boom underway, generating new and higher property taxes, higher revenues are back into play, again — until the next housing crash. Nonetheless, many in CA attribute it’s fiscal shortfalls to an inability to manage and constrain it’s ever-growing spending appetite, rather than around inadequate revenues, in which there is the usual knee-jerk finger-pointing to the enactment of Prop 13 in the late ’70’s.