More worries on the subprime crunch: property taxes

Now Texas does not have a state property tax, unlike some states, but local cities and school districts do. So, the fact that Florida will have state tax revenuesdrop for the first time since the 1970s energy crises should get government officials everywhere to pay attention.

Plus, sales taxes get affected:

New home sales nationally fell in February to the lowest rate in seven years, and homeowners who tapped into plentiful home equity and spent extravagantly during the real estate boom have started to cut back.

Those events not only threaten revenue streams for things like building materials and labor, but also affect spending on big-ticket items like cars and furniture, which many homeowners financed with home equity lines of credit. …

In one hint of how much Floridians were relying on property wealth during the real estate boom, 16 percent of new car purchases here were being made with home equity loans in 2006, compared with 7 percent nationally, according to CNW Marketing Research, an automotive research firm in Bandon, Ore. In California, the percentage was even higher — about 30 percent, said Art Spinella, the firm’s president.

During the last few years, families in much of the country have relied on the cash from mortgage refinancing, made possible by rising house values, low interest rates and a bevy of creative new loans, to make up for stagnant wages. From 2001 to 2005, even as the economy was growing at a healthy clip over all, the pay of most workers failed to keep pace with inflation. Now the housing slowdown is making it more difficult to take equity out of a house, and an improved job market is finally causing wages to rise.

I’ve heard educated people say they’re not worried about this issue. I keep telling them: start worrying.