KeNo's Housing and Economic Portal: Saturday June 19 Housing and Economic stories

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Miami Budget Begging for Bankruptcy - (www.nbcmiami.com) Please click on the above link to see a very interesting video. The video is not embeddable.
Partial Transcript: The city of Miami is in such financial dire straits that commissioner Marc Sarnoff is using the "B" word, bankruptcy. "We are not the only city, municipality to be going through this. It looks like Los Angeles sometime next week or the week after will be going bankrupt. It looks like there will be 30 more cities following suit." Increases in public worker salaries is one of the main reasons why the budget is so tight. The average salary for a Miami city employee is $76,000. The average salary for a Miami city resident is $29,000. Employee pensions are choking the budget too. In 2000, pension payouts cost taxpayers $16 million. In 2009 that number spiked up to $70 million. Should the city go into bankruptcy, the commissioners and their politics would no longer be in charge of city finances, the judge would be. [Sarnoff] "You no longer have 5 people making political solutions. You now have one person who is looking after the best interest of the taxpayer of the city of Miami, without any politics getting into his or her way." The Judge could order union contracts be renegotiated. He or she could decide what creditors get paid or not get paid. ....
Commissioner Sarnoff offers 3 options to avoid bankruptcy.
1. Renegotiate those union contracts
2. Layoff about 800 city workers
3. Raise your property taxes

Glut of bank-owned foreclosures means prolonged agony for California governments - (www.contracostatimes.com) Tens of thousands of homes in the East Bay are in foreclosure or are owned by banks. Some sit empty; a few are boarded up. Beyond the squatters and overgrown yards blighting neighborhoods, the glut of bank-owned homes means years of decline in the property taxes on which cities, schools and the state of California depend. So local governments that already have sent out layoff notices by the hundreds may be forced to make more cuts. For those losing their homes to foreclosure, the end of the line comes when banks reclaim the house keys. For governments, that is just the beginning. Foreclosed houses do not obtain lower property tax assessments until banks sell them. So tax revenue will keep falling until banks sell all the houses they end up with, creating a long-term lower tax base. In the East Bay, banks own more than 10,000 homes, only a fraction of which are listed for sale. Another 20,000 are in foreclosure, headed toward bank ownership, according to data from RealtyTrac.com. About one in 20 houses in Contra Costa County is either in the foreclosure process or is bank-owned, according to the data. "There is no question government services at all levels are going to suffer because of this," said Contra Costa County Assessor Gus Kramer. "It's just one of the trappings of the economy we're in."

New Jersey Assembly Approves Fresh Bait For Housing Trap - (www.builderonline.com) The New Jersey Assembly on Thursday voted in favor of a bill that would allocate $100 million in tax credits to buyers who purchase a new or existing home in the Garden State this year. The bill, A-1678, would give individual home buyers, on a first-come first-serve basis, tax breaks up to $15,000, or 5% of the selling price of the house, whichever is less. The credit would be distributed over a three-year period, starting in 2011. There are no income limits for eligibility. The bill sets aside three quarters of the $100 million for buyers of newly constructed houses, and 25% for buyers of existing homes. “People will look at this as the last ingredient that goes into their equation that it’s a great time to buy a house,” Joseph Riggs, group president at K Hovnanian, New Jersey’s largest home builder, told the Asbury Park Press. “This legislation is about job creation, and about putting money back into people’s pockets so that they, in turn, can help stimulate New Jersey’s economy,” said Tom Critelli, president of the New Jersey Builders Association, which helped craft this legislation and solicited elected officials to sponsor it. “The housing industry is an economic driver. Without a healthy housing industry, there will be no sustained economic recovery.” He estimates that every home built in the state impacts 100 related jobs and creates three new permanent jobs. “The stimulative effect of this legislation will generate revenues in excess of what it will ‘cost’ in terms of personal income tax credits,” Critelli told BUILDER.

New Jersey Careening `Toward Becoming Greece' as Costs Rise, Christie Says - (www.bloomberg.com) New Jersey Governor Chris Christie said the state is “careening our way toward becoming Greece” and can’t afford the cost of benefits and pensions for current workers. The governor, speaking today to members of the Manhattan Institute, said his state must reduce its tax burden and control government spending. He has proposed a constitutional amendment to cap growth in property taxes, the main source of funding for schools and towns, at 2.5 percent a year. “Higher taxes are not going to solve the problem,” said Christie, a Republican who took office Jan. 19. “We’ve got to change the course.” New Jersey’s tax revenue will fall $767 million short of targets over the next 13 months, the state Legislature’s chief budget analyst told lawmakers today. The $29.3 billion spending plan Christie proposed in March for the fiscal year starting July 1 “will have to be modified to respond to this reality,” analyst David Rosen said. Christie’s treasurer, Andrew Eristoff, predicted lower shortfalls of $325 million in the current year and $115 million next year. He said the state will address this year’s gap by canceling scheduled expenditures and reducing planned supplemental spending. The state still will finish the year with a $501 million surplus, he said.

Private pay shrinks to historic lows as gov't payouts rise - (www.usatoday.com) Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds. At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010. Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs. The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.