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alstry (35.41)

State Tax $$$ Magically Disappearing in June...just wait for July

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August 05, 2008 – Comments (3)

From Mish's Blog and now effecting Washington State(a non housing bubble state):

Gov. Chris Gregoire did Monday what families and businesses have been doing for months: She ordered cuts in travel and buying gasoline, a hiring freeze and a lid on major purchases for most state agencies.

The effort is expected to save $90 million, making up for an unexpected $60 million drop in revenue in June. The lost income came from a slowdown in the housing market and lower business taxes than expected.

http://globaleconomicanalysis.blogspot.com/2008/08/eight-states-in-deep-fiscal-trouble.html

There was a dramatic slowdown of revenues to states in June from tax collections.  My guess is that July is likely worse.  The fact that the Governor of Washington is already taking very significant steps seems to support rapidly deteriorating collections.

A number of companies have also indicated similar observations.  Two department store chains declared bankruptcy in the past week.  Priceline reports tonight that airlines are making significant capacity cuts this fall further slowing hotel and T&E revenues going forward.

At the end of the day...revenues will have to come from somewhere or more cuts will be forthcoming....just what America needs falling into a recession.

 

 

3 Comments – Post Your Own

#1) On August 06, 2008 at 12:31 AM, DemonDoug (72.49) wrote:

hey al, I see this as the real trigger for the downfall of commercial RE, and with it a lot of the banks that were involved in commercial lending, whaddya think?

(ps i know i keep asking, but when the hell is SPF going to go under already.)

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#2) On August 06, 2008 at 4:55 AM, alstry (35.41) wrote:

Commercial RE???  How about a downfall for everything...

As you know, I use the condo association as an example of what could happen to all if enough tax payers can't or don't pay taxes...again from Mish's blog tonight....he and I must be tracking on this issue????:

Only 17 residents remained in the 51-unit Cedar's Point building along Northwest 15th Street and 16th Avenue after the housing market went bust, and those living there were left to try to manage the building on their own.

"Trash is one major problem. That trash goes all the way up to the fourth floor," said Miami Fire Rescue Lieutenant Ignatius Carroll. Garbage trucks and crews were able to clear the mess of garbage before the end of the day.

But the trash, which had piled up in a garbage chute of the edifice, was just the beginning of these homeowners' problems. "The elevator is shut down. The garbage was not picked up for like four to five months. The water was not paid, it's going to be turned off any minute now," said Toledo a day before the building was officially condemned. Even part of the building had no power whatsoever.

Empty units had their appliances stolen and homeless people broke in and began living in abandoned units, vandalizing the building. The homeowner's association could not afford to pay the management company with so few residents paying maintenance for the building.

City of Miami Commissioner Angel Gonzalez said he expects to see other communities suffer similar fates. "This is going to be happening all over Dade County pretty soon, with the foreclosures and people not being able to pay for their mortgages," he said.

A hat tip to for this story goes to Dave who writes:

I wonder how many of these people will be forced to walk away from their mortgage even though they can afford to pay, but can't make up for all the other condo owners not paying monthly dues because of foreclosure. I wonder if anyone has calculated this out in their models?

I have a friend at another condo whose monthly association fee just went up 35% due to non payers and there is nothing anyone can do about it.

Remember what I said in previous posts regarding the impact on a state if enough people stop paying taxes....it looks like others are starting to pick up on the condo analogy.

Demon, that is why it is not too diffiulct ot look a few months out and see where this is going....either way whether the government starts printing without limits or money keeps on contracting through credit destruction....the result will be the same...its just more people will be hurt much quicker with rapid inflation.

 

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#3) On August 06, 2008 at 6:17 AM, zygnoda (27.26) wrote:

Wow, that the condo story is awful.

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