Solving the California state budget crisis just got that much tougher. Estimated tax revenues came in nearly $3 billion less than expected wiping out a steady stream of months where things seemed to be improving at least on the revenue front. And this should come as no surprise. California has done very little to wean itself off its dependence on real estate. So it should come as no shock that with real estate still in the doldrums, that income is reluctant to pick up. California takes in nearly half of its revenues through payroll taxes and with a 12.6 unemployment rate, a revenue short fall is mathematically expected.
Since California is so dependent on real estate, I wanted to track trends in construction employment and housing prices for three large metro areas. We’ll look at Los Angeles, San Diego, and San Francisco over 23 years.
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