California Tax Proposal Upsets Wealthy Residents
California Governor Gray Davis has proposed taking property taxes allocated for local schools from Palo Alto, upsetting homeowners, real estate agents, and economists. Palo Alto residents and real estate agents are worried that the resulting school budget cuts could cause housing prices to slide. Palo Alto is known for its excellent schools and many homeowners are willing to pay higher real estate prices in order to send their children to the local schools. The attractiveness of Palo Alto public schools can even be a draw for recruiting new faculty at Stanford University. Davis' plan could mean a 25 percent reduction in the district's budget, which could lead to substantial cuts in school programs and staffing levels.
"Housing values are high because outsiders are willing to pay a premium to live here, and that excess will taper off," noted Henry Levin, William Heard Kilpatrick professor of Economics and Education at Teachers College, who served on the Palo Alto Unified School District board in the 1980s. "I would not be surprised if a cut of 20 percent in the budget of the PAUSD led to a 20 percent reduction in housing values. I think that would be in the range of expectations."
The article, entitled "Many fear threatened school budget cuts could affect real estate
values" appeared in the April 9th edition of the Palo Alto Weekly.