The Tax Man Cometh

This week's Oconee Enterprise has a front page story on the tax assessor's office and the 640 protests it received that defies belief. Check out this quote and the excerpt that follows:

"People thought that with the economy on a downslide, their taxes would go down. Only house values have held, so taxes have remained much the same or edged up," Skinner explained. These days it is possible to buy a house in Oconee, which many could not afford before, because developers are reducing the prices on new houses considerably and homeowners, eager to sell their property, are reducing prices." In other words, Oconee County houses are holding their value.

What? The story just said that in the market, prices are being lowered, and this is obvious to anyone who is looking at new homes in Oconee. The only one who sees the value holding is the government.

A quick look at the handy Q-public site shows that the houses that are selling are indeed doing so for more than they were a few years ago. This makes sense. Only someone who is desperate is going to sell their home for less than they paid for it.

But overall, sales are down (according to the Enterprise, which cites this as one of the slowest years for real estate sales in a long time) and that is the key. There is nothing that I can find in the assessor's office methodology that measures how many people either 1) choose not to sell because they don't think they can get the value out of their homes 2) have to leave their house on the market for a long time to get the value out of it or 3) put their homes on the market and never sell it because they can't get the asking price.

Here's my example. Earlier this year, a rental property I own in Watkinsville was reassessed aggressively for the second year in a row. The first year it was understandable -- I had made significant improvements to the property, particularly inside. The housing and rental market were strong.

The second year, I had done little to the house and there was noticeable softening in the local market. I sent a letter of protest referencing the busy street it was on, an abandoned home next door, and the lack of comparable product. The tax assessor's office promptly sent someone out to look at the property and guess what -- they "discovered" a patio that had been there since the home was built more than 30 years ago, and they actually increased my assessment. Unbelievable -- I was punished for protesting!

When I talked to the assessor, he asked if I thought I could sell it for the assessed value. The year before, sure. Now, with tight credit, conservative banks, etc? I told him I doubted it.

Look, as a city councilman I understand the pressure on local governments in a very real way. The state is basically abandoning local governments at almost every level, whether it is education, infrastructure, etc. The latest target is transportation, where the GDOT board has decided that rather than lay off any of its bureaucracy, it would rather abandon the Local Area Road Paving (LARP) program, which is critical for local goverments. Thank goodness legislators are declaring that idea DOA.

In short, the pressure on the board of education, county, and city to maintain a certain level of service is tremendous. But the assessments in Oconee, in my opinion, are out of control.

The most plausible reasoning I have seen for holding the line on assessments was in the Dallas Morning News last spring. Their point is that the impact of declining property values runs about one year behind because assessors pull previous years comps to establish values. These lower prices are then reflected on the next year's assessments.

But I don't think we'll see lower prices in Oconee. I think we may have a market that stays quiet until prices come back. And this should be taken into account in assessments. It isn't about what sells, it's about what isn't selling.

Local leaders -- or state legislators if need be -- need to consider a change in methodology to account for a lack of buyers in the market, or expect an even larger taxpayer revolt -- next year, 640 protests may be a drop in the bucket.

Sad News

Word arrived today that Jim Shearon had passed away. I was shocked.

I didn't know Jim as well as many in Watkinsville. I do know that he along with Dave, Mario and Louise have been wonderful additions to our community and truly have made a difference on so many levels in Watkinsville and the region. Jim's gift for design was amazing and evident if you ever stayed at Ashford Manor or visited Maison Bleu or Sweet Retreat. His creativity and work ethic were also a constant -- simply put, Jim was a force! I remember him being one of just a few to ever make it through an entire city council budget hearing and still being awake enough to offer support as well as outside the box ideas for improving Watkinsville. We often heeded Jim's advice.

Julie Phillips wrote a nice piece on Jim here. Two things that struck me about her piece -- Jim was definitely a straight shooter. You always knew where you stood with him. And he and the rest of the Ashford Manor bunch also have the wherewithal and talent to work anywhere in the world. Our community is a much better place because they choose Watkinsville.

Jim, we miss you already and know that you are now in a wonderful place. God bless and rest in peace.

Failout

This is why people are so jaded about politics. The Senate has the courage to actually pass the bill, and then we learn it is full of crap like tax breaks for makers of wooden arrows and rum producers in Puerto Rico and the Virgin Islands. Unbelievable.

Don Smith Exhibition Coming to OCAF

Artwork of the late Don Smith, one of this region's most talented local artists, will be on display at OCAF starting on Friday. Don's son Kirk is a good friend of mine (Kirk is also probably mortified to be mentioned in a post so close to one about David Brooks), and I love his Dad's stuff -- eclectic, classy, and often truly emblematic of the unique culture of Athens and the surrounding community. Don also collaborated with Watkinsville artist Roy Ward on Churches, one of several great local books that Dr. Ward has been involved with.

Anyway, find out more information here, and be sure to stop by and check it out. There is an opening reception Friday night.

Brooks Beast

David Brooks is one of my favorite columnists, along with Tom Friedman. Many thanks to reader Leanne who pointed me back to David -- I have had a busy two weeks and have not had time to read his columns lately. I did so tonight, and was struck by the wisdom in each of them.

In his column today, he calls out and explains in clear detail the necessity of a bailout plan, and more importantly, the necessity for true leadership in Washington. He correctly analyzes that most house Republicans somehow think they will benefit if this thing doesn't pass, and says that they "have once again confused talk radio with reality." Amen.

One of his earlier pieces takes a close look at McCain pre-campaign. While the odds against Sen. McCain seem to increase everyday (especially in the wake of his failed gamble on the bailout package), this column reminds me why I liked him in the first place.

The other earlier piece is a forward looking piece that describes the financial markets and challenges America faces down the road as we work to get out from under the piles of debt we have sold as we have run up deficits. Since I am in the middle of Homestead right now, much of it rings true. Lets hope we aren't too strapped financially in the wake of bailouts for whoever wins this next election to step up to the plate.

The fact is, it is 2008 and America has yet to really get ready for this century. Our economy, our educational system, our infrastructure (transportation especially), and our energy situation desperately need a tune up, and perhaps an overhaul.

I have often said that perhaps hard times will force America to make these necessary changes -- however, as hard times loom this doesn't seem very appealing. Do we still have the strength, the wisdom, the steel in our spine to make hard choices and compete? To be the best? Because this century we are truly competing -- with the whole world.

Or will we choose to be soft, to depend on a benevolent government and to be content with mediocrity in our institutions, our governments, our businesses, our childrens' education?

I don't think most Americans are content to settle. I know most people in Oconee County aren't content to settle, and will work hard in their own way to support their community and their nation. But I do believe most Americans want a leader who will challenge them to do more than spend money to support the economy, who doesn't shy away from asking them to sacrifice, who will inspire them to greater heights, and inspire pride in our nation once again.

Momentum

Congress doesn't get it. There are times you don't listen to Rush, Hannity, and even your constituents (especially when they are whipped into a frenzy by the aforementioned talk show hosts and they know less about the details than you do). There are times when you show leadership. Today was one of those times, and they missed the boat.

While people may have been concerned about the nature of the bailout, I pity congress when people begin to blame them for job losses and decimated 401(k)s. To be sure, there were flaws in the bill. On any bill this size, there will be. It was rushed, and perhaps more time should have been allowed for review and vetting of the bill.

The focus now has to be on a better bill and better communication. Here's my six step formula for success:

1) Don't make promises in terms of timing for a new bill; this just sets up unrealistic expectations and messes with the market.
2) Don't align the bill with President Bush (or Nancy Pelosi, for that matter).
3) Don't give the Tresury Secretary cart blanche.
4) Don't trust leadership to deliver the votes.
5) Listen to the people and address their key concerns.
6) Explain how this crisis will soon impact everyone's pocketbooks in ways much more significant than a tax increase.

The downside of allowing this economy and our banking infrastructure to slide further is tremendous. The downside on this bill -- while potentially large -- is unknown and frankly far in the future. Congress needs to do something. History will not look kindly upon them if they do not get their act together soon.

Perhaps more information will emerge in days to come that will change my mind about the need for action -- I certainly am not a fan of rushed decision making except when absolutely necessary, and I hope congress is right and I am wrong in this instance. That said, I certainly hope that Congress is hard at work in the meantime to come up with a new bill and that investors in our momentum driven market hold together until then.

P.S. Leading the charge for classless communication on this effort was our own Rep. Paul Broun. While some of his points may be valid, his graphic imagery strikes one as anything but classy. I'm so glad my own representative is unwilling to eat cow feces (yes, you have to read it to believe it).

Suspension

Talk about backfiring.

While his shot in the dark VP choice Sarah Palin obviously gave him a lift, Sen. John McCain's most recent gamble just comes off as silly. While I see the logic in trying to seem presidential and serious about the economy, the reality is that most Americans would agree that bringing the two presidential candidates back to D.C. for a few days of "hard work" in the Senate would do nothing but distract from a critical effort to work through an incredibly complex bailout plan. The plan itself is necessary on some level to stabilize markets, but it is critical it be structured in such a way (if possible) that it doesn't bail out people who borrowed more than they could and banks who irresponsibly gave them the money. Whether bundled mortgages can be "unwound" and cleaned off the balance sheets of financial institutions without ending all sense of personal and corporate financial responsibility, I have no idea.

And given McCain's history with bank regulation, I don't really think he's the expert you need on hand to deal with the issue. I have been a lukewarm supporter of McCain through this campaign. But the reality is only a few hail mary passes are going to turn out to be completions, and he already had one. This one has fallen incomplete.

McCain desperately needs a compelling message at this point beyond Sarah Palin. He has to find a way to communicate around a few winning issues, articulate a responsible economic plan, and get back to what made him a special candidate -- his willingness to advocate ideas outside the norm for Republicans, find the middle, and not try to appeal to the "dittoheads" and Hannity fans out there. He got them in the fold with the Palin selection.