Friday, October 31, 2008

Oakland: Where Property Taxes Soar And The City Burns

My advice to the prospective Bay Area homeowners: Don't move to Oakland.

Or, if you can't tear yourself away from the prospect of horrible schools, murder as a way of life and a mayor who looks and sounds like Ronald McDonald in grayscale, at least make sure you read the fine print.

As October ends, we unlucky Oakland homeowners receive our annual property tax assessments. They read like a comedy routine -- as if the government designed them to cause the gap between amount paid and services received to be as wide as possible.

Actually, now that I think about it, that is exactly the objective of liberal government, and Oakland does it well.

Let's take a look at some aggregate numbers and then dive into the specifics of Oakland's annual property extortion. This information is all available at the Alameda County property tax site. The numbers provided are for a typical house, and they do vary from house to house.
Ad Valorem tax rates:
Berkeley - 1.26%
Oakland - 1.33%
Piedmont - 1.17%
Fremont - 1.11%
Hayward - 1.10%

Parcel taxes:
Berkeley - $1,183
Oakland - $740
Piedmont - $3,407
Fremont - $355
Hayward - $205

These tables are pretty self explanatory. Most other East Bay cities have numbers that look similar to Fremont and Hayward. By choosing to live in Berkeley or Oakland, a homeowner is paying an outrageous and indefensible amount of tax.

There is no reasonable explanation for why these cities need to tax citizens so much more than other cities -- no explanation other than pure shameless liberalism, that is. The only tax with some explanation is the high parcel tax rate in Piedmont, which pays for one of the country's best public school systems and is well worth paying for.

How do Berkeley and Oakland get away with this? Simple. Because many higher-income residents choose to live here to be close to their jobs in San Francisco or on the peninsula, those cities can charge a higher tax without providing them any return on investment. Think of it as a toll or an entry fee.

The situation becomes even more absurd when looking at the specifics of Oakland's parcel taxes:

  • $80 annually goes to pay for one of the Bay Area's worst library systems -- one which still doesn't even have free wi-fi.

  • $110 goes to the "LLAD" which is a well-known fraud and slush-fund for local politicians to grease their supporters.

  • $200 goes to schools through Measure E. Residents would do just as well to light two hundred dollar bills on fire. Oakland schools are garbage.

  • $88 goes to the Violence Prevention tax. As far as I can tell, they should rename this the "Violence Promotion Tax." Evidently, the more we pay, the more they rob and murder us.

  • If you live in the hills area, $65 goes to pay for your own private fire department, because the city government refuses to pay for those pesky middle-class people's fire protection.

The 1.33% ad valorem tax is one of the highest in the state (if not the highest -- I haven't had time to check). Along with the real estate transfer tax, it helps ensure that Oakland real estate remains depressed. That tax is so high because city agencies -- schools included -- have managed to max out their credit cards on bonded projects which, as usual, haven't managed to help any of the city's obvious problems.

Meanwhile, Mayor Dumbledore and his buddies continue to lobby for even higher property taxes. It's an ugly situation, and one which should discourage anyone from buying a house in Oakland.

One piece of advice for homeowners just receiving their tax extortion notice. Each parcel tax has a phone number next to it. I strongly suggest you call each one to verify that you should in fact be paying that tax. I own a vacant lot in the city which Oakland repeatedly attempts to tax for items which specifically exempted vacant lots.

I have reason to believe this practice is widespread. And why not? It makes the city plenty of money.

So, call those numbers and demand a refund if the taxes have been levied in error. If the taxes are accurate, at least you've wasted the time of someone in city government.

A minor victory indeed, but at least it means you'll have received some sort of service from the city. Just don't get used to it. Pay your taxes and shut up. This is Oakland.

Thursday, October 30, 2008

Want Free Bart Rides? Just Take The Elevator

I know election season is in full swing, with other local bloggers offering endorsements of the various propositions. I may do so before the election next Tuesday, but in the meantime I want to discuss something that has a more direct impact on my everyday life.

From time to time, I need to ride the Bart elevator to get from street level to the platform. In certain stations -- generally those without a mezzanine section -- this requires first entering into the paid zone and then getting on the elevator. Not so in stations such as those along Market Street in San Francisco.

In those stations, probably to save money, the elevator runs from the street level, to the mezzanine and straight through to the Bart platform. This means that someone who rather not pay to ride Bart can simply take the elevator.

I'm sure my readers know what's coming next. I sometimes encounter honest users of these elevators -- those who take the time to stop on the mezzanine level and run the Bart ticket through the reader before proceeding to the train. However, more often I get on the elevator to find someone riding straight to the platform level, obviously not intending to pay.

I'd say this happens more than 50 percent of the time I use the elevator on Bart. I've noticed a similar experience with Muni in San Francisco. Needless to say, a casual inspection of these criminals reveals common threads. Most are young males, and none of them appear either to notice or care that they're doing something wrong.

I've asked a few friends why they think these people are so oblivious to the clear criminality of their actions. The response I found most compelling was simply that they have nothing to fear from society.

What if they find a police officer waiting for them on the platform? Well, so what. They'll probably get a ticket which they'll then refuse to pay.

What if they then are arrested? Well, so what again. Maybe they'll spend a few days or weeks in jail.

To me, this behavior is an excellent indication of the Bay Area's need for stricter enforcement of day-to-day "quality of life" crimes. Not only do these criminals deprive Bart of revenue; they send an exteremely negative message to everyone else about what we are willing to tolerate.

Essentially what toleration of this behavior says to the average citizen is the typical liberal message: Everyone must abide by the rules except for certain classes of the "downtrodden," defined by economic circumstance or ethnic background. This then demoralizes those who follow the rules, and it attracts children who might be attracted to the anti-social lifestyle.

By the way, I've noticed a very strong Bart Police presence throughout the system. This is probably an overreaction to supposed terrorist considerations. But what a shame it is that no one can be bothered to make sure everyone plays by the most basic of rules -- paying your fare.

Friday, October 24, 2008

Why All Our Cities Are Bankrupt

Article after article has hit the wire in the past couple months about cities in distress forced to cut budgets. Pundits frame the issue in a variety of ways, but by and large people are of the view that after this period of belt-tightening, things should return to business as usual.

I am pleased to see localities finally forced to live within their means, and I am doubly happy to see them not immediately look for new sources of tax revenue. But I do not agree with the standard assessment of the problems' roots. I believe government has reached the outer limits of largess and will be forced to trim back time and again to avoid Vallejo's fate.

Actually, I think many cities will fail. There will be more than a few bankruptcies.

The standard line is that we have a revenue shortfall due to a decrease in consumer spending, falling house values and less real estate turnover. There is no question that this state of affairs has brought governments' problems to our attention, but it is not the core of the problem.

As things stand today, most cities are effectively bankrupt, as is the state of California. Consider this: The Wall Street Journal reported recently that the California retirement system (CalPERS) lost 20 percent of its money in the recent stock market turmoil. That means the pension plan is only 68 percent funded.

But it gets worse. That 68 percent figure is based on assumptions about future performance of the assets in the retirement system. According to Pensions & Investments magazine, the retirement system expected to generate a going-forward rate of return of just over 9 percent per year the last time it revised its asset allocations in December of 2007.

Will they accomplish this objective? Possibly not, if the current recession drags out as long as many think it could. As one economist describes the situation, "CalPERS must pay out hundred-cent dollars to meet its obligations, and as things stand they just don't have the money."

This situation is not unlike what has destroyed the American auto industry. Everyone criticizes General Motors for selling big SUVs -- and rightly so. What people ignore is the fact that GM must do this because those are the only vehicles which generate sufficient profit to pay its massive retirement-system obligations. One amazing thing about GM that most people don't know is that they have nearly 10,000 employees they pay not to work. It's called the "Jobs Bank," and it should sound very familiar to anyone who has witnessed the explosion of social programs in recent decades.

GM's coming bankruptcy is a consequence of insane union contracts -- the exact same type of contract which is only now beginning to lay low cities like Oakland and states like California.

The city of Oakland has employees who, upon serving the city for 30 years, will receive 100 percent of their retirement-level pay for the rest of their life. So, someone who becomes a fireman at age 25, works until age 55 and lives until age 85 will spend as much time being paid not to work as he did working.

So, while it's nice to see the Oakland City Council cutting its own salary by 5 percent, they really are just rearranging chairs on the Titanic, as usual. As I've mentioned previously, I expect to see a slew of large tax increases sometime soon.

I also think it's possible citizens will refuse to go along. Perhaps if the media spent some time educating about the preposterous deals unions have negotiated at the state and municipal level, they will make the right decision.

So what happens then? Sadly, I think the best course of action is bankruptcy. That's the only situation in which these terrible bargains can be renegotiated. I think it's very telling that the unions were the major opponents of Vallejo's bankruptcy. They knew that allowing the city to go bankrupt would be perhaps the only situation that could threaten their sweetheart packages.

Unions have a long history in our country of bleeding companies and municipalities as dry as possible. They very frequently refuse to negotiate even with companies on the brink of bankruptcy -- witness the frequency of bankruptcies in the airline industry. Ironically, they accuse their employers of greed as they take the greediest position one can possibly take: "I would rather kill you than receive every penny I can get from you."

So it is with our cities and states. The years to come will not be pretty, but we can hope the coming rash of insolvencies will spell the end of the evil government employee union.

Thursday, October 23, 2008

Oakland Schools and their 'Bill For Nothing'

I've returned to the blog world from days spent lamenting the coming taxation apocalypse. Luckily, the turmoil in financial markets is providing much-needed opportunities to purchase stocks that one can hold for the long term, thus escaping Mr. Obama's taxation tsunami.

In my absence, the East Bay looks none the better, except for the nascent victory glow coming from Liberals who mistakenly believe the coming years will be brighter as a consequence of the coming election.

Amid this situation, I couldn't help but chuckle at the Oakland Tribune's "expose" on the profligate ways of the local school district. My favorite part of the piece was not the total of $840k which allegedly has been misspent.

No, it was the reference to the school system's purchase of documents from an attorney that were, according to the article, "virtually identical to forms ...  received from the city of Piedmont."

This might be the first time I've ever seen anyone doing anything with the Oakland school system mention the existence of Piedmont. That city's mere existence appears to be a pox on Oakland -- demonstrating that a school system with similar pay, similar weather and a similar location can do quite well, so long as it is blessed with better prepared students. And, by better prepared I mean those with families who prioritize their education.

I've railed several times about Oakland's unwillingness to bring together the best prepared students in the city into some sort of magnet program. To my knowledge, the school district still refuses to even consider the idea, sticking instead to outdated notions such as busing and "diversity."

Well, one careful reader brought to my attention that there is one school in the district making a stab at such a thing. I wanted to give it credit where credit is due, and I wanted to encourage the district to broaden its scope.

The program I'm referring to is the Paideia program at Oakland Tech. Several things stand out about this program. If you take a look at the program's website, you'll see that they actually publish their former students' colleges. That's very helpful information, as it demonstrates that the program has done an excellent job placing several of its students.

On the downside, the program appears only to have around 40 graduating kids per year. I'm certain a city like Oakland has 10 or 100 times as many students who could fit into such a program. Why doesn't the district set aside a school for this purpose? Everything I've read suggests they have plenty of extra facilities, considering the rate with which they've lost students.