As was bound to happen, our Ponzi scheme of a housing market collapsed, and the resulting domino effect is continuing:
First, housing prices declined. Then property and sales tax intake declined. Now, the California state budget is taking a hit. The result is that the state will most likely be sending less money back to the local governments and schools. So the next domino in line to fall is a hit on local government and school budgets.
To deal with the possible (and probable) reduction in money, the Irvine Unified School District recently proposed a $16M cut to next year’s budget. The proposal includes eliminating some positions, reducing special education costs, decreasing some class sizes, and decreasing the length of some classes. You can read the complete list of the proposed cuts on the IUSD website: “IUSD Budget Watch.” You can also give your opinion on this at the public meeting that will be held on Tuesday, March 25 at 4 pm. Location is 5050 Barranca Parkway in Irvine (the school district office).
An additional action by the Irvine school board is most likely another falling domino resulting from our housing collapse: The board approved fee increases on new developments. The fee of $2.63 per square foot on new residential development will increase to $2.97 per square foot. The fee of $0.42 per square foot on new commercial/industrial development will increase to $0.47 per square foot. My guess is that the school board is feeling the need to make up some of that lost revenue.
The dominos keep falling. Any guesses which one will be next?