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Comment by tomcam | Hacker News Reader

Wait, developers should pay for schools? What are property taxes for?

Thanks to the vagaries of prop 13, schools (and other municipal services) tend to get a lot better-funded from commercial real estate than housing. So we see cities prioritizing office space and not building enough housing to hold the people who will be working in those cities. It's pretty ridiculous.

Property taxes pay for the schools that already exist. It's hard for a district to 'save up' because, well California, and 'surplus' money should be returned to the taxpayer. If developers don't cover the cost a district usually issues a bond but that's hard because, well, California, and direct democracy rarely votes to raise property tax mil rates whatever it would cost to cover the bond. And doesn't California basically freeze assessment values? Because why should the people who already live there pay for services for newcomers? It's all very hostile and backward.

A state shouldn't need a per-value increase in taxes to cover anything that scales with the number of residents, which would include schools; the additional revenue from the new residents should cover that. (Unless they've utterly failed at economies of scale, but that should not need repeated fixes.) The cost of accommodating growth for new capacity should be factored into the ongoing existing costs. The people already there aren't paying for it; the new people in the new development are.

The hostility is built up of years of expecting each new increase to be the last, and yet continuing to receive urgent demands for more, all with the plaintive "for our schools and our children" exhortations that try to suggest only an absolute monster would dare to say "enough".

I would suggest you never move to California. You will learn just how badly an entitled generation can behave.

Where does it say that property taxes pay for schools that already exist? I have never seen that mentioned on any of my $22K/year property tax documents.

Forgive my ignorance, but are taxes really earmarked in the US? As far as I understand, in most of Europe the government and municipality just collect their dues and spend according to an approved budget with no earmarking whatsoever.

...in most of Europe the government and municipality just collect their dues and spend according to an approved budget with no earmarking whatsoever.

If this system were used in USA, our shameless politicians would regularly just completely fail to fund schools. The fact that some money goes directly to schools means that most of them can at least keep the lights on.

They really are. At least in California.

One of many ways in which local government here is fucked up.

More like a common gripe for people who don't understand the role of government or the fungibility of money. My first political season spent in California I was shocked at how in the discourse some people used the phrase "general fund" as shorthand for political wrongdoing without any further elaboration. Ok, they pool the money, so what? If they spend the money for something else, we the people are still receiving government services in exchange for our taxes as allocated by our duely elected officials, so I see no harm, no foul.

I am sure some fake-libertarian HNer who wants the shrink government to the size of a bathtub drain will tell me I am wrong.

Oh I didn't mean that this phenomenon addresses the fucked-up-ness; I meant that allocating specific taxes to specific programs is no way to run a government.

Most of my fellow classical liberals don't have an issue with state populations choosing to grow state governments, just the federal government (this fact is often overlooked by people who have not taken the time to understand the classical liberal point of view).

Common misconception- usually what happens is we are promised that funds from a new tax will be earmarked for something, then it winds up going in to the general fund, or spent somewhere else.

Taxpayers have a real blind spot to the whole 'money is fungible' concept.

Generally speaking, the money that gets earmarked goes where it belongs. It's all the other money that wasn't earmarked before-hand that gets pulled out.

The political promise is usually "Hey, we'll implement a lottery and earmark 100% of the taxes towards education -- that'll be $20 million a year!" to which everybody thinks that $20 million will be added to the $30 million already being spent. But what happens is the $20 million lottery gets added, then the $20 million non-earmarked funds get pulled to pay for <insert other thing here>, such that the schools don't end up with any more or less than they had.

Past that, "earmarked for schools" is also a way to reframe over political opponents against the lottery as "voting against education".

This isn't a misconception in California; the literal text of the law in some circumstances effectively earmarks funds. For example, take the first proposition from the last election — which happens to be about schools — Prop 51 from the November 2016 general election:

> A fund is hereby established in the State Treasury, to be known as the 2016 State School Facilities Fund

> no disbursement shall be made from any funds required by law to be transferred to the General Fund.

> Bonds in the total amount of nine billion dollars ($9,000,000,000) […] may be issued and sold for the purposes set forth…

(This proposition was approved by the voters.)

Right, but if you were paying schools $x from the general fund, then a special law gives them an extra $y, you can reduce the payment from the general fund by $y.

Thus the schools are receiving the $y, just as promised. Only they aren't any better off, and the general fund has an extra $y in it now.

Where I live the developer has to pay an "impact fee" per unit as part of the permitting process that is supposed to offset the cost of road and school construction. Right now it is about 4500 for a single family home (in semi-rural Maryland).

In California, under the Prop 13 tax reform, property tax values were rolled back and frozen at the 1976 assessed value level and only allowed to raise at 2% per year.

Property values (and therefore property tax receipts) vary relatively modestly with the economic cycle, but income tax receipts are fully exposed to the booms and busts of the stock market. What this leads to is school funding that is somewhat directly tied to the financial markets :( So if you're in school during a recession, it sucks

Prop13 values reset on a sale. So the geriatric couple living in a million dollar cracker box might have low property taxes, but the next owner is in for a surprise.

Property taxes pay to run the schools, barely. The obvious problem with paying for building new schools from property taxes is that it gives every single existing resident a financial incentive to block new development: they have to pay for all the supporting infrastructure, whilst all of the financial benefits go to the property developers. If there's no provision that says otherwise, they'd probably even have to pay to buy the land for the schools off the property developers.

I think what they are talking about is the resident who will move in that need schools (and will pay property tax), not the developers. He developers can't build the residencies without having enough schooling for families moving in.

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