For better or worse, in rich times and poor, one of the things that government does is to offer incentives in order to encourage desired behavior.
While there's a tendency to overuse -- and overspend on -- incentives, there are some that we believe in quite strongly.
One is the Williamson Act, the 1965 law that provides a tax break to farmers and ranchers who agree to keep their land in agricultural uses and open space. In tough times such as we're in now, the Williamson Act can be the difference between barely making a living and losing the farm. And agriculture is the backbone of the valley economy and essential to the state.
Under the act, the county keeps property taxes at a lower rate and the state reimburses local governments for lost tax revenue. Last year, the governor slashed the $28 million in reimbursements to the local entities, leaving only $1,000 as a placeholder to keep the program alive. The administration is proposing $1,000 again this year, saying that the state can't afford the reimbursements until the economy improves. Some Democrats say it's a tough sell to restore funding when they'll have to make painful cuts in human services and other programs.
As we've said before, they should find the money. In the big picture of a $20 billion budget hole, the money is a relative pittance. Yet, it has an outsized impact, both symbolically and in encouraging a good policy.
Meanwhile, state lawmakers have overwhelmingly approved an additional tax credit for people who buy homes. Assembly Bill 183 would amount to a $200 million tax giveaway for the real estate industry.
The stated goals of the bill are contradictory. On the one hand, it seeks to reduce the glut of new and existing homes already on the market by giving people additional incentives to buy. But, to generate construction jobs, the bill also seeks to stimulate the construction of new homes, which increases the housing glut. While proponents claim AB 183 will "get jobs going," the bill analysis states that "no formal jobs analysis has been conducted."
This is an excellent time to buy a home, with prices and interest rates low. Furthermore, homeowners already enjoy substantial tax benefits -- from the home mortgage to property tax deductions -- and the federal government recently provided home buyer tax credits as part of its stimulus plan.
This state measure would give homeowners an additional $10,000 credit over three years. California would give money to people to do something they likely were going to do anyway.
The sum of $200 million is not chump change. Such money could be used to maintain adult day care services, to help schools -- or to preserve worthwhile programs such as the Williamson Act.