Here is the entire editorial:
Click on image for link.
Other articles keep popping up in local papers describing how the nation's credit crunch is affecting working and middle class families like the ones that live in Mt Lebanon (kudos BlogLebo for finding that story). While I personally believe that Mt Lebanon, and Pittsburgh more generally, will be spared the worst of the housing downturn, that does not mean we will escape unharmed. With so much of the nation's economy dependent upon consumer spending and that spending supported in large part by ever increasing home prices in recent years, the downturn we are experiencing now could last until home prices rebound. Many economists are now predicting housing prices to continue to drop into 2009 before stabilizing This means it might be some time before we see a true recovery.
This housing recession will have an impact on all local economies as well. We have already seen a number of states, including most of Pennsylvania's neighbors, cut back severely on spending or raise significant taxes to fix budget shortfalls. Please see the following paragraph in the linked article from the Center on Budget and Policy Priorities:
"The bursting of the housing bubble has reduced state sales tax revenue collections from sales of furniture, appliances, construction materials, and the like. Weakening consumption of other products has also cut into sales tax revenues. Property tax revenues have also been affected, and local governments will be looking to states to help address the squeeze on local and education budgets. And if the employment situation continues to deteriorate, income tax revenues will weaken and there will be further downward pressure on sales tax revenues as consumers become reluctant or unable to spend."
While Pennsylvania does not make the list of 29 states in the above article, our latest State budget included adding new debt. Debt service payments increased by over $35 million annually in this latest budget to a grand total of $905 million per year.
The point of all this is to say that we are embarking on a project of a grand scale, no matter what option is chosen, and that we must consider where we are headed as a community economically when discussing what we could, should, and must do.
As always, I welcome your feedback to james.fraasch@gmail.com
James
