> In states like California with regimes like Prop 13, the problem is
> even worse. Economic growth with anything other than retail is
> actually a net loser for local government, since it generates more
> demands on local services without the new revenue needed to service
> it.
-Except of course in large parts of California you've had soaring -property values and lots of real estate turnover, so Prop 13 doesn't -look so bad anymore. -In fact, if I wasn't thinking clearly, I'd say the California real -estate bubble might be a plot by local governments to raise tax -revenues :-) -I switched houses this year, and I am _not_ looking forward to my new -tax bill . . .
But your last comment hit the problem on the head-- even if property values soar, the local government sees no real revenue gain unless it switches hands. Over two-thirds of the benefits of Prop 13 goes to businesses who can see their property value rise with economic growth, but pay essentially nothing more in taxes.
That's another reason retail is just a focus of development in California-- not only does it deliver sales taxes but there is more of a churn in businesses in retail sectors, meaning property taxes will be reassessed more often.
-- Nathan Newman