Subprimal scream 

By Ed Muir

In California alone, fewer than 13,000 homes foreclosed in 2006. Last year, there were 84,000. And the pace appears to be quickening. The crisis is particularly severe in California, but foreclosures are rising everywhere. In Massachusetts, for example, foreclosures more than doubled in 2007. The crisis is the result, in part, of people being able to take on mortgages they simply cannot afford, thanks to a variety of "exotic" features such as adjustable rates and interest-only loans. For some, it's the result of an economic boom that has done more for corporate profits than for the earnings of working families. For AFT members, the effects are twofold.

First, members who have stretched to buy a family home now find themselves in danger of not being able to meet their mortgages. In too many of our cities over the past several years, including many in California, an experienced teacher or professor who is the sole family provider has been priced out of much middle-class housing.

Second, for public education and other services funded by property-tax dollars, the crisis presents another problem. Local governments typically have large amounts of cash on hand, and many try to make good short-term investments with this money. It's a way of making the taxpayers' dollars go further. But in a few places, these investments have included funds that hold large numbers of bad mortgages. This has hit Florida particularly hard.

The housing slump also means lower assessments of housing values and hence lower property-tax revenue. At the same time, state legislators looking to show their compassion are pushing all manner of further cuts in property taxes.

Some examples:

• Potential ballot initiatives to cut property taxes in Arizona, Florida, Montana and Oregon.
• Proposals for tax caps in Connecticut, New Jersey, New York and Vermont.
• Proposals to swap property tax for other revenues in Georgia and Indiana.

Any of these would provide some relief to strapped homeowners, but none get at the root of the problem. Moreover, most of the plans provide help to wealthy homeowners who don't need it. And, where the proposal is to replace the property tax with a sales tax, we'd be moving from a tax that hits the poor and middle class harder than the wealthiest, to a tax that hits the poor and middle class even harder and leaves the wealthiest even better off. And we would be cutting services.

In contrast, Hillary Clinton's plan focuses on direct aid to people on the verge of losing their homes or who have been victimized by variable rate mortgages. It's a better approach than broad-based cuts in property taxes, because it helps those who need it while preserving funds for our schools, hospitals and roads.