Economy
The Apple Is Smaller, Bite The Same
October 19, 2009 
Everything we oldtimers learned in economics classes seems to be as applicable to current events as film is to photography in this digital age.
When interest rates go down, stocks go up. NOT! It pays to save–not when you get less than 2% for a CD. The list goes on.
Talking to an Idaho government type recently and he bemoaned the fact sales tax collections were down and said, “We have cut as much as we can. The fat is all gone, we can’t cut more without eliminating programs. We don’t anticipate raising taxes.”
Meanwhile, Boise City has increased its budget from property taxes 3%–the maximum allowed. To their credit Ada County has not taken the 3% budget increase. Then comes United Water with a monopoly on domestic water supply in the area asking users to pay the French company $5.6 MILLION more than they currently take from the community.
What all these people seem to forget is regardless of how much of a bite they take from the “apple,” the apple is smaller. We have record unemployment, businesses are folding left and right, Butch is paying Micron $5 million from the pockets of taxpayers, and “takers” are soon about to overtake the “givers.”
Old rules are out the window with “stimulus” funds, extended unemployment benefits, bailouts to pay million dollar bonuses to insurance, stock, and bank brokers. Then of course there is the oft stated and unchallenged rule, “The cost of health care has gone up.”
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Comments & Discussion
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Oct 19, 2009, 9:40 am
I have lived places where we have a one policy fits all system. Good times, raise taxes and spend…bad times, raise taxes and spend. I hope Idaho is not the same…
Oct 19, 2009, 10:33 am
When I have a budget that is more than my paycheck I know that I am working it backwards. I have always looked at the paycheck then figured out my budget, then kept within it. And I have always been able to take a few bucks out at the beginning for savings. Since the city has developed a habit of raising property taxes each year I am wondering if, after all of these years, I will have to sell my home because my income is not keeping up with the rate of inflation.
I may not be able to afford to pay the taxes on it. It’s paid for, so one would think that it would be no problem. Yeah, one would think. But that is the problem… the elected ones are failing to think.
To most of us it was obvious that with job loss income tax revenue would drop. To most of us it was obvious that people would be cutting spending so sales tax would drop. To most of us it was obvious that gas sales would drop. Why is it that it was not obvious to the people running the government? What are they going to do when people, en masse, stop paying their property taxes?
EDITOR NOTE– Answer to last question: Put a tax lien on your house!
Oct 19, 2009, 11:08 am
Is Boise City’s 3% increase an increase of 3% in the levy rate or in actual dollars of tax?
EDITOR NOTE–The 3% is increase in property tax portion of BUDGET…which results in an increased LEVY rate. They end up with close to the same dollar figure or a little more than previous year.
Oct 19, 2009, 12:03 pm
Great story, excellent!
Here’s a real joke about government. They talk about bring in jobs to Idaho but they are not doing it to see the citizens have jobs or better jobs. They are doing it for greed of being able to tax a new private sector company. The raw truth of this is very clear, tax feeders do not try and bring in jobs for the right reasons. Idaho could be a state that is made up of small to med. size businesses that come here because of the low taxes and small government. Sales tax on food, property taxes on businesses and the state income tax need to be stopped. Also building codes need to be reduced and by a lot. This will mean that many tax feeders will be out of a government job because government will become much smaller. After all why not do this because government is there to serve the basic needs of the citizens and not the other way around.
Oct 19, 2009, 12:21 pm
There are many reasons we are in the mess we are in. Among them:
President Bush borrowed money to finance his wars in Iraq and Afghanistan. Had he raised taxes to pay for these wars, we wouldn’t have the national debt that we have today. (And Congress may have refused to raise taxes and denied him the ability to wage war.)
Presidents and Congresses of both parties deregulated the banking industry and financial markets.
Presidents Bush and Obama bailed out the banks and AIG needlessly. They should have been allowed to fail.
Then this whole mess cascaded down to the state and local levels. Governments at all levels have failed us.
Oct 19, 2009, 1:11 pm
The basic problem here Sam is that when THEY have a budget that is greater than YOUR paycheck, it is of no concern to THEM! After all, it ain’t THEIR money! When they say we all pay the same, that isn’t quite true. When THEIR budget exceeds THEIR paycheck, THEY just give themselves a RAISE! The part they miss is that WE are still paying for it.
Oct 19, 2009, 1:14 pm
This is why it is time for a new city council. Now is the time to balance the attitude on the council. The incumbents tax at the highest allowable rate. The attitude is take it, even if we don’t need it, because we won’t get another chance at that money later. The county got it right, they worked on the same principle the voters have. If times are tuff, tighten the belt. Elect a new council that understands that. Bring back common sense, TAKE BACK BOISE! Dan Dunham and Lucas Baumbach.
Oct 19, 2009, 1:22 pm
The G man scores A++s as a photographer and civic watchdog. As an economist not so good.
In the last year the fed cut the discount rate from above 3, to zero, and the Dow rebounded from about 7,000 to about 10,000. As for saving, a 2% CD works out to 4% interest if you include the -2% inflation rate. Not brilliant, I admit, and savings rates always stink, but 4% is still better than the interest rate you get from putting it under the mattress.
As for Boise City stupidly raising taxes in the middle of a recession, you don’t need an econ degree. Idiocy (or is it arrogance?) of this magnitude stands on its own.
Oct 19, 2009, 1:35 pm
Gotta agree that Risch’s tax shift didn’t help much in the recession, and hits the poor excessively. All of this was entirely predictable. Gotta disagree with the seeming premise that the answer to our woes is to stop spending. Herbert Hoover tried it and, as I recall, he got his hat handed to him in 1932 after spiraling the country into depression.
Not sure where you come up with this though–“the oft stated and unchallenged rule, ‘The cost of health care has gone up.'” Its been challenged many times as well as firmly documented. In 1987 it was 11% of the GDP, now its 16%. By 2017 it will be 20%. Speaking of challenges, I challenge you to find anyone who thinks they haven’t increased…substantially.
And speaking of stimulus hypocrisy check out this report by the Mountain Goat.
http://mountaingoatreport.typepad.com/the_mountaingoat_report/2009/10/give-it-back.html
EDITOR NOTE– Poor wording on the part of the GUARDIAN. We should have said “THE REASONS” for the increase are unchallenged…we just accept it as a given.
Oct 19, 2009, 1:56 pm
Erico49; the levy rate whent up about 14% to make up for the lower property values and to fund the 3% budget increase. I posted the Ada Assessors web site and instructions to view your property information earlier.
Oct 19, 2009, 2:02 pm
most disgusting is Bisterfelt’s comment about the budget:
“I voted for what we were allowed to take. If you don’t vote for it, you’ll never get it back. If you don’t need it, the next time, you can save the money.”
http://www.idahostatesman.com/boise/story/940080.html
Oct 19, 2009, 3:02 pm
As long as the city extracts tax revenue for an imaginary value, whatever they charge is simply extortion…
Oct 19, 2009, 8:45 pm
As long as the city extracts tax revenue for an imaginary value, whatever they charge is simply extortion…
JIMV, you have that spot on. The Idaho Constitution is the source for how property taxes are done. This was pass by Idaho lawmakers a very long time ago. At that time we were on the gold standard so home prices stayed pretty much the same value. Once off the gold standard we have had huge amounts of inflation so much of our taxes are paid on inflation and not the real value of the home/property. Had we not been on the gold standard at the time the this part of the Idaho Constitution was written. I strongly believe that the law makers would never have written property tax part of the Constitution as they did. Which has me wondering if the property tax part of our state constitution isn’t void at this stage of time.
Oct 19, 2009, 9:36 pm
It takes no talent to spend other peoples money. Every elected official forgets how much of a hit working people have taken in the last year in Idaho.
I am on Social Security and will get no COLA this year. Why then do elected officals think they should get more of our money? There is a serious lack of “testicular fortitude” with the current crop of elected officials.
I would eat more cake if I only had it to eat. Does it take a revolution for these jokers to figure out we are all beating the wolves away from the door.
Are they slowing down their spending or expectations? Does not appear so from where I have the view.
Oct 20, 2009, 6:32 am
United Water with a monopoly on domestic water supply in the area asking users to pay the French company $5.6 MILLION more than they currently take from the community.
Sorry these folks need their wings clipped. The’ve done nothing but raise rate time and time again. Isn’t it time to put a stop to this robbery we have allowed. Some one stop them, any one. Oh ya the PUC is suppose to do this. So where are they?
Oct 20, 2009, 10:06 am
Mr Watcher, in my case I was speaking of the Boise habit of valuing property for tax purposes above the actual sell prices of homes in the area…My story. I tried to refinance at a lower interest rate in March. The appraisal was way low (but still above what I owed) because 3 identical homes were sold at a cut rate to a speculator. OK…I then get my city valuation and it is $30K over the appraised value. I call them and they say that ‘distressed’ sales are removed from the tax valuation…so the city taxes me on $30K of imaginary value…I was not amused. It has the effect of a double hit..the real property value drops a lot and the city taxes the folk who have lost the most value at an inflated rate.
Oct 20, 2009, 10:54 pm
How come the whiners here never mention spending trillions on pointless wars? A peace dividend might be better for the economy than 2-4% dividend on your CD. Think about it.
Oct 21, 2009, 8:39 am
JIMV, you are on to an excellent point, thank you for taking the time to make it. The MLS is the private system the real estate sales folks use and it not only list property but also keeps track of what homes sell for and how much the square foots sell for in any giving area. The county does not use the MLS so they say, when prices were high. Now that prices are low and going lower they run from the MLS.
Here’s a fact, any sale is a sale of fair market value. What the country is trying to do is, turn a blind eye to the thousands of home that are on the market and don’t sell. So that they can go back and cheery pick the ones that have, no matter the amount of time the amount of time thats gone by and go with those prices. If what you say is true and they are not counting the short sells, that is cherry picking values to cheat citizens out of their money. That would be criminal and if what you say is in fact true, we need to find out who or whom is behind this and make sure we get them with criminal fraud charges even RICO charges.
Any time there is a quid pro quo in an open market we are looking at fair market value. End of story.