Front Page Wall Street Journal: Housing Slump Strains Budgets of States, Cities

Posted by Kendall Harmon

Tremors from the housing market's slump are straining the budgets of state and local governments from coast to coast, sending officials scrambling to plug gaps.

Rising defaults on subprime home loans are boosting the inventory of unsold homes and driving sale prices lower. That's cutting into housing-related revenues from building-permit fees, taxes on contracting and recording property transfers, and even sales taxes.

As a result, legislators in Florida, which was at the forefront of the housing boom, plan a special session this month to consider deep budget cuts to offset a projected $1.5 billion funding gap. California forecasts a shortfall of at least $5 billion in next year's budget. And Chicago faces a $217 million gap in its $5.6 billion budget for 2008.

Read it all (subscription required).

Filed under: * Economics, Politics • Economy

7 Comments
Posted September 5, 2007 at 10:55 am [Printer Friendly] [Print w/ comments]



1. DonGander wrote:

ANYTHING that happens strains “the budgets of state and local governments from coast to coast”! They have more money than is immaginable to mere mortals. Their singular objective is to talk us out of our money and find ways of spending it to enhance their power to better talk us out of MORE of our production.

They have none of my sympathy.

September 5, 11:02 am | [comment link]
2. William P. Sulik wrote:

Knowing your interest in the mortgage bubble, I recommend reading this brief comment by Megan McCardle at The Atlantic:

http://meganmcardle.theatlantic.com/archives/2007/09/did_the_bankrupcty_reform_touc.php

Personally, I’m not persuaded that there is a causal connection, but there does appear to be a correlation.

September 5, 11:21 am | [comment link]
3. Kendall Harmon wrote:

I saw that, William.  Calendar correlation is not the same as causal correlation—I will need to see more data to be convinced.

September 5, 11:47 am | [comment link]
4. In Texas wrote:

Considering that my property taxes have jumped $260 per month this year, I’m not going to get too alarmed over the shortfall.  I’m looking forward to going in and getting the assessed value of my home dropped back down to a reasonable level, after the county was nice enough to raise it several tens of thousands in one year.

September 5, 1:08 pm | [comment link]
5. CharlesB wrote:

“. . . Meanwhile, the tiny town of Sultan, Wash., near Seattle, has had to lay off the janitor at City Hall, forcing office workers to take over bathroom-cleaning duties.”
Great!  They lay off what is probably a low-paid janitor and keep all the lawyers working.

September 6, 4:15 am | [comment link]
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