Florida's legislature began a special session this week to once again address the serious budget shortfall. Where do they cut next? While I hate the idea of them cutting important programs, I also realize that the budget mushroomed almost to the point of absurdity during the boom times.
Some of the cities and counties were spending money in unbelievable ways. Like the City of Altamonte Springs planting new flowers in all the flower beds every month for years. Or Lake Mary High School having a water bill 3 times higher than Sea World during 2008. Or Seminole County building a multi-million dollar lakefront fire station. Then there are people like Orange County Tax Collector, Earl K. Wood, making $150,000 and 2 pensions while working from home and basically never going into the office. You can read about so much of this wonderful government waste right here.
I posted in my blog last week about my predictions in 2009 of seeing some municipalities filing bankruptcy. That isn't a pretty thought for sure, and several people contacted me privately questioning this. I am going to show some stats as to why I think this could happen.
This condo in the city limits of Orlando was assessed on 1/1/2008 for $181,800 yet it sold in October 2008 for a mere $65,900. That basically cuts the value by 64% which means the tax revenue will also drop by around 64%. Multiply that times 400 units in a condo complex and how much revenue is lost. There are probably 50 other condo complexes in the city limits that are in basically the same situation.
That was a condo and everyone knows how tough the condo market is in Florida, so here is another example. This house is in unicorporated Orange County. It was assessed on 1/1/2008 for $114,154 but sold in October for just $47,000 which is 59% less than assessed value. Multiply that times hundreds of houses in the neighborhood.
I can go on and on with these figures and find thousands of examples. The property appraisers are trying hard to avoid using foreclosure properties for comparables. But the reality is that in most areas of Florida that is ALL that is selling, period.
Places like Orlando, Ocoee, Altamonte Springs, Seminole County, and others raised millage rates in 2008 to compensate for budget shortfalls. The State of Florida also raised the millage rate for their portion of the schools. Well all I can say is that you can only raise millage so much. Orlando made major headlines and is facing political backlash because they raised the millage 14% in 2008. How do they ever expect to cope with assessed values dropping by over 50% in many areas? They can't expect to get away with raising millage rates by 50%. Something has to give here. The citizens can barely pay what taxes they owe right now.
I said it before that I see a massive train wreck coming in the near future unless some major fiscal responsibility starts happening in Florida's government.
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Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.
ABR, CPL, CRB, CSP, GRI, Managing real estate broker, Notary Public
407-389-7318 / 1-877-389-7318 www.SDRhouses.com We Buy Houses Florida
We sell foreclosures, short sales, and bank owned REO properties throughout Central Florida. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available.
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