Tuesday, September 12, 2006

Where do your tax dollars go?

From Bloomberg (No Link):

New Jersey, Running Pension Deficit, Tackles Double Dipping

As a municipal court judge in Asbury Park, New Jersey, Mark T. Apostolou spends two days a week settling traffic summonses and disorderly conduct offenses. For that, he makes $52,000 a year.

Add on six municipalities where he sits in a similar capacity, and his earnings balloon to $235,816, based on a list of the 50 highest-paid public employees in New Jersey who have more than one government job. If Apostolou, 52, retired now, he would be entitled to a pension exceeding $80,000 a year, under a formula from the state treasurer's office.

New Jersey leads the U.S. with the most workers receiving incomes or pensions from multiple public jobs, which is banned in many states. For more than 50 years, measures to prohibit the practice have died in the Legislature, where 19 of 120 current members hold another government job. The issue is being revived again as lawmakers seek cost savings after promising to cut property taxes that are the highest in the nation.

``Higher property taxes, lawsuits, bankruptcy, a completely defunct public-employee benefits system and ruined lives'' may result if the system isn't fixed, said Assemblyman Thomas Giblin of Essex County. He is a member of the legislative panel working on the problem.

The state is spending $1 billion this year, out of a budget of $31 billion, to pay pensioners, Treasury spokesman Mark Perkiss said. Governor Jon Corzine and the Legislature authorized putting $1.1 billion into the system for future pension
obligations, about 58 percent of the amount needed.

The system is $18 billion short of being fully funded, after lawmakers tackling budget gaps made only partial payments in recent years. Still, the $1.1 billion contribution is more than in the past 10 years combined. New Jersey, the 10th-most-populous state, has more than $30 billion of debt.
...
In most states, holding more than one public office is illegal, unconstitutional or just not done, said Jon Shure, president of New Jersey Policy Perspective, a nonprofit organization in Trenton that researches state issues. In a June report, the group said New Jersey had the most politicians holding multiple offices.

A 2004 report by the Center for Public Integrity, in Washington, showed that 33 percent of New Jersey legislators received income from another government agency, a third more than the second-ranked state, Delaware, he said.

17 Comments:

Blogger grim said...

Thanks to the reader who sent me this story.

jb

9/12/2006 09:58:00 AM  
Blogger grim said...

From Marketwatch:

Greed, speculation helped overheat housing market: Toll CEO

Toll Brothers Inc. Chief Executive Robert Toll said the U.S. housing market got ahead of itself due to greed on the part of buyers and sellers, and that it now likely faces the highest level of speculative inventory ever. Toll said the current downturn is unique in his experience because it wasn't driven by a "macro-event" although interest rates have risen steadily. "Every day there's an article about how lousy housing is now and how dumb you have to be to buy a house now," the CEO said Tuesday at the Credit Suisse Homebuilders Symposium. "I don't know what it will take to turn this market -- it could take two years, or it could take someone getting quoted in the New York Times saying the market has hit bottom."

9/12/2006 10:46:00 AM  
Anonymous dreamtheaterr said...

What a disgrace... these guys who milk the state coffers need to be expelled from office and put to work on a potato farm to 'work and earn' a living.

9/12/2006 10:48:00 AM  
Blogger Richie said...

Uhh; isn't Toll one of those speculators as well?

9/12/2006 10:49:00 AM  
Anonymous Anonymous said...

On a similar note, In August the NY Times reported that there is a $49 billion shortfall in NYC's pension fund.

9/12/2006 10:58:00 AM  
Anonymous Anonymous said...

Does anyone disagree that
the NJ taxpayer has been
sucked dry by these
low life pols?

They prayed on the property
owners,who pay for most of this.

This is just another example
of NJ in action . Can you imagine
as you get into detail on
these people.

Why did they not just get a gun
with a skimask ?

9/12/2006 12:44:00 PM  
Anonymous Anonymous said...

Is it any wonder the state
has a white flight and company
flight problem.

9/12/2006 12:46:00 PM  
Anonymous Anonymous said...

how can municipalities even cosider paying someone 52000/yr for a two day a week job which is probably only 4hrs each day if that. For the most part a paralegal can handle the complexities of a majority of the issues taken up in small municipal courts.

9/12/2006 01:00:00 PM  
Blogger MaxedOutMama said...

Given that lack of affordability is what first drove the growth of exotic mortgages, and now is driving the housing market down, higher property taxes directly impact the price of NJ houses.

First, they drive retirees out of the state and increase the home inventory on market. (NJ is going to be paying some of those high government pensions to increase growth in other states.)

Second, borrowers qualify for mortgages based on total monthly payments/gross monthly income ratios, and if your property taxes go up by $200 a month, that means a prospective borrower can qualify for a mortgage on the house of approximately $32,000 less (30 year fixed at 6.5%). This is not a subtle effect. How many homeowners in NJ have not seen increases of at least this much lately? I heard that in parts of Mercer, some people's property taxes went up over 30% this year.

I don't think this is good public policy and I think it presages a severer downturn in RE values in NJ than most economists would expect. I think it's time for a tax revolt in NJ.

9/12/2006 01:09:00 PM  
Blogger MaxedOutMama said...

PS: I also understand that tax rates are sometimes much lower just across the Delaware in PA. If that's the case, you are driving your home prices down and inflating PA's. Why are NJ taxes so high in comparison?

Just a thought, from a GA gal who was just bitching and moaning about her own RE taxes. Of course, mine are only $250 a month on a farm, and net about $120 monthly (after farm proceeds).

9/12/2006 01:14:00 PM  
Anonymous Anonymous said...

Now is it corzine
who lent the money to
the preachers? Humm

Maybe he should have lent
the money to a municipality
to cover a pension or two.

9/12/2006 01:40:00 PM  
Anonymous dreamtheaterr said...

Off topic but:

I am trying to determine the 'real' interest paid for a 30 year fixed mortgage. Real as in inflation-adjusted terms, since it is apparent that the monthly interest I will be paying 15-18 years from now will be lower than today, and even lower after adjusting for inflation. Is my assumption flawed?

Any excel calculator out there on the Web, or an Excel function I could use?

9/12/2006 02:33:00 PM  
Anonymous UnRealtor said...

To illustrate how bubble-fied things have become in NJ, try this nifty calculator, which uses 'normal' standards to determine how much house you can afford:

http://cgi.money.cnn.com/tools/houseafford/houseafford.html

Short link:
http://tinyurl.com/gb5fo


.

9/12/2006 03:37:00 PM  
Anonymous Anonymous said...

Unrealtor:

The calculator is amazingly accurate--I plugged in my numbers and it came out within $75 of my monthly outlay. Of course, I bought my house in 1998, and refinanced my mortgage at a significantly lower rate in 2002. If I were buying today, I'd have to increase by 100% the monthly outgo.

Obviously, something's gotta give: Either house prices will come down, or we're all going to have to get jobs that pay twice as much.

Neat parlor trick!

-Jamey

9/12/2006 04:09:00 PM  
Anonymous UnRealtor said...

Sounds like you bought at a good time, at a fair price.

9/12/2006 04:44:00 PM  
Anonymous Anonymous said...

"Obviously, something's gotta give: Either house prices will come down, or we're all going to have to get jobs that pay twice as much."

Jamey,
You nailed it. I've said all along that the only way the current prices can be sustained is if everybody received a 50-100% pay raise.

BC Bob

9/12/2006 05:15:00 PM  
Blogger Shailesh Gala said...

The PDF files kept on Senate site regarding today's hearing give what some folks with talk about. Here is the link & some excerpt.


The Housing Bubble and Its implications for the Economy


From OFHEO Chief Economist:
OFHEO’s national House Price Index has never fallen over a period of a year or more, but it has come very close, and inflation-adjusted prices have fallen significantly, by 11 percent in the early 1980s and by 9 percent in the early 1990s. In the first instance, it took nearly 8 years for inflation-adjusted prices to regain the past peak and in the second case, almost 10 years. Certainly, a similar event is quite possible now.

From President of NAR
After five years of outstanding growth and being the driving force of the U.S. economy, the housing market is undergoing a period of adjustment. I have experienced this first hand as my prior home has been on the market, in Northern Virginia, for over a year.

Contrary to many reports, there is not a “national housing bubble.” NAR understands that the housing sector could not maintain a record setting pace indefinitely. A soft landing is certainly possible and under the right circumstances likely, but that soft landing is critically dependent upon policies that support a transition to a more normalized market and mitigate changes in local markets in the availability of mortgage financing and other essential elements to homeownership.


From President of NAHB:
The downswing in home sales and housing production should bottom out around the middle of next year before transitioning to a gradual recovery that will raise housing market activity back up toward sustainable trend by the latter part of 2008. This extremely favorable financing environment fueled buying activity in the interest-sensitive housing sector, pulling some demand forward in the process.

The surge in housing demand quickly put substantial upward pressure on house prices, aided and abetted in many parts of the country by land-use constraints that limited the amount of supply that builders could bring onto the markets in short order. In retrospect, it was the finance- and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom.


Cheers !!!

9/13/2006 10:39:00 AM  

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