Our New State Budget: The Feds Giveth as California Taketh Away

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Easy come, easy go.  Last Tuesday, the 17th, we heard the latest economic stimulus will bring $800 in Federal tax savings this year for married couples ($400 for single).  Three days later the California budget stalement was settled, bringing with it a variety of "temporary" tax increases.

California's budget has grown by $50 billion in 10 years (from Gray Davis' first budget in 1999-2000 to Arnold's budget today).  But revenues haven't kept up, to the tune of $42 billion.  Part of the plan to make up this difference is to 1) raise income taxes, 2) raise sales taxes, 3) reduce dependent tax credits, and 4) raise vehicle license fees.  OUCH x 4!

Let's see how much this is gonna cost us:

1. Income Taxes:  Increases .25% immediately. But if the state gets $10 billion in Federal stimulus funds, the increase halves to .125%.  The median household income in Ventura County is $85K...which translates into a tax increase of $106 to $212 per year.

2. Sales Taxes: Effective April Fool's Day (no joke), sales taxes increase by 1 percentage point, from 7.25% to 8.25% in Ventura County (our friends in the L.A. County portion of Westlake Village, Agoura, etc. will chew on a meaty 9.25% sales tax).  For a typical family spending $20K/year on taxable products, say buh bye to another $200 per year.

3. Dependent Tax Credits:  This one hurts families and single parents.   The Dependent Tax Credit on your California tax return has been sliced from $300 to $100 per dependent.  Thus a family of 5 like Conejo Joe's clan is nailed for another $600/year in damage.  Heck, I guess I shouldn't feel so bad...the OctoMom, with her 14 kids, is down $2800 in tax credits!

4. Vehicle License Fees (VLF):  Effective 5/19/09, the VLF increases from .65% to 1.15% of your car's value.  So let's say you have 2 cars with a value of $20K apiece.  There goes another $200 down the drain.

So overall a California family of five with $85K in taxable income will be down by $300 to $400 per year, even with the one-time Federal stimulus.  This is not stimulating.

But hey, what about that new Federal New Car Sales Tax Deduction!  Buy a new car by 12/31/09, you get to deduct sales taxes on the car.  So let's say you buy a new car for $25K.  If you buy it before 4/1/09, you owe $1812.50 in taxes in Ventura County.  At a 25% income tax rate you will save $453 in Federal taxes.  That's not too shabby.  But if you wait until after 5/19/09, your sales taxes increase by $250 and your VLF increases by $125, rendering the Federal new car stimulus pretty meaningless.  Bottom Line: If you buy a new car this year, consider buying it on 3/31, the last day of the 1st quarter...when dealers are hungriest to sell AND you avert the coming tax increase(s).

California Home Buyer Tax Credit: California did come out last week with an interesting home buying incentive.  Buy a brand new, never occupied home between 3/1/09 and 3/1/10, take a 5% income tax credit, up to $10K!  There are NO income limits and you DO NOT need to be a 1st time homebuyer!  There is some fine print on this however: 1) the tax credit is spread out over 3 years from the date of purchase, 2) the house must be your primary residence for 2 years, and 3) the state has allocated $100 million towards the credit.  First come, first served, once the $100 million (or roughly 10,000 new homes costing $200K or more) is used up, the credit is gone.

Brief Overview of How the Latest Stimulus Package Can Help You and Me

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The $787 billion American Recovery and Reinvestment Act (ARRA) of 2009 was signed into law by President Obama today, February 17th. For full details about this 1100 page act, visit www.recovery.gov.  I'm impressed that this website was up and running so quickly.  The site indicates it will provide detailed, transparent information about where the stimulus funding goes.

So we've seen how the bank bigwigs got their fat bonuses from previous stimulus packages.  How will this latest stimulus impact us regular guys, gals and bunnies?

Some Money Back in Our Pockets

Well those of us who still have jobs will be eligible for the cleverly named "Making Work Pay" tax credit, which will give us Federal money back of 6.2% of our 2009 wages up to a maximum of $400 (single) and $800 (married).  The credit phases out if your earnings are between $75K and $95K (single) and $150K to $190K (married).  You get the money back either by reducing your tax withholdings or by taking a credit on your tax return.  Seemed odd that the unemployed don't get this credit, but they get their own stimulus (below).

THE CALIFORNIA 2009-2010 BUDGET HAS BEEN SIGNED, WHICH EFFECTIVELY RENDERS THE FEDERAL "MAKING WORK PAY" TAX CREDIT FUTILE AS MOST OF US WILL SPEND OUR TAX SAVINGS ON CALIFORNIA TAX INCREASES.  BUMMER!  CLICK HERE TO READ MORE.

Helping the Unemployed

The unemployed will receive some help from ARRA.  Unemployment benefits will temporarily increase by $25 per week.  The first $2400 of unemployment payments will be free from Federal taxes in 2009.  Unemployment benefits will be extended for longer periods for many people (I don't have the details on this as of yet). 

Lastly, anyone who has been canned from their job between 9/1/08 and 12/31/09 is eligible for a subsidy of 65% of the cost of up to 9 months' COBRA medical insurance premiums.  It phases out if your income is $125K to $145K (single) and $250K to $290K (married).  This is a nice benefit but, with all due respect, does a family earning $250K a year really need this subsidy?  Our tax dollars hard at work.

First-Time Home Buyer's Credit

Well this is quite a nice incentive to buy a house!  $8000 refundable tax credit if you buy a house between 1/1/09 and 11/30/09.  Technically the credit is 10% of the purchase price of the house, up to $8,000.  CLARIFICATION; This credit is for anyone who has not owned their own home for 3 years up to the purchase date of the new home.  This is an outstanding incentive to buy a home this year and basically get most of your closing costs covered by a tax refund!  The credit phases out when your income reaches $75K to $95K (single) and $150K to $170K (married).

Last year's 1st timer tax credit was $7500 and it has to be paid back like a loan over a 15 year period.  Oddly, the period for that program (4/9/08 to 6/30/09) overlaps the new credit.  So any of you who took advantage of the "old" credit last year, you're out of luck and will not be eligible for the new credit.  That's the breaks I guess.

Help With Education

The American Opportunity Education Tax Credit is a tax credit of up to $2500 a year for tuition and other college expenses in 2009 and 2010.  You claim 100% of the first $2000 spent and 25% of the next $2000 to receive the full credit.  This phases out for incomes over $80K (single) and $160K (married). This tax credit replaces the Hope Credit for the next 2 years unless it is extended past 2010.

Tax Preparers' Economic Stimulus

I've just covered some of the key aspects of ARRA above...there's a lot more!  Probably the biggest recipients of this latest economic stimulus package are professional tax preparers, who no doubt will be busier than ever interpreting and implementing the new tax laws.  Any of you watch the stock market today?  It was down 4% but H&R Block was only down 2%...hmmmm...maybe a safe haven stock for these Stimul-laden times.

$250 One-Time Payment to Social Security and Other Federal Benefits Recipients:  CLICK HERE

Link to a 1,474 Megapixel Photo of Obama's Inaugural Address

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Click here for a link to an incredible panoramic picture of President Obama's inaugural address last Tuesday.  David Bergman, the New York City based photographer who made the image, did it using a Gigaspan Imager that allowed him to patch together 220 Canon G10 images over a 6 1/2 hour period for a file that is almost 2 gigabites and about 60,000 x 25,000 pixels. 

The picture has a Gigaspan Viewer that allows you to zoom in and discover very small details, kind of like an "I Spy" book.  Take a look and see if you can find Supreme Court Justice Clarence Thomas apparently sleeping, a guy with a Green Bay Packers cap, Aretha Franklin with her very uh, unique green cap, sitting behind a man missing half his head (an apparent small imperfection in the photo patching process), Denzel Washington wearing a blue cap and standing, Yo-Yo Ma taking a picture with his iPhone and if you scroll closely enough, you can almost make out the notes on the sheet music of the Marine Corps band.  Take a look at this amazing picture!

Obama, Bush, Clinton, Reagan, Kennedy, FDR Inauguration Addresses

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Obama gave a great inaugural speech today with appropriate tone - sober, yet still optimistic and reassuring to the American people.  There were no "Ask not what your country can do for you.  Ask what you can do for your country." or "The only thing we have to fear is fear itself." zingers, but it is worth watching, more than once. 

Given the historic significance of this day, I felt compelled to assemble the following collection of inauguration speeches, including Obama, Bush (2001), Clinton (1993), Reagan (1981), Kennedy (1961) and FDR (1933) for your viewing pleasure.

Grab Those Dancing Shoes and Have a Ball in 2009

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After tomorrow's Presidential Inauguration there will be quite a bit of dancing going on.  In fact, there will be 10 Inaugural Balls, including the Commander-in-Chief's Ball, Neighborhood Inaugural Ball, Youth Inaugural Ball (for ages 18 to 35, which sadly I am nowhere near eligible for), Obama Home States Inaugural Ball (Illinois and Hawaii only), Biden Home States Inaugural Ball (Delaware and Pennsylvania) and the Eastern, Mid-Atlantic, Midwest, Southern and Western Inaugural Balls.

So with all the dancing going on in Washington DC, why not consider local dancing options here at Conejo Valley Guide!?  You have no excuses not to kick up your heels in 2009.

Click Music, Art and Dance Groups and find links to all types of dancing groups, including:

  • Boots and Slippers Square Dance Club
  • Buckles and Bows Square Dance Club
  • Cam-a-Lot Round Dancers of Somis (more square dancing!)
  • Conejo Civic Ballet Company
  • Conejo Valley Cloggers (for those into wooden shoes)
  • Conejo Valley Folk Dancers
  • Country and Rhythm in Motions Dancers
  • Country Lovers Western Dance Club
  • Happy Squares Square Dance Club
  • Molecular Midriffs Tribal Belly Dance Troupe (hmmm, now this sounds interesting)
  • Moorpark Civic Ballet and Dance Theatre
  • Trail Dusters Square Dance Club
  • Ventura Bachelors and Bachelorettes Square Dancing Club

Is it my imagination or is square dancing extremely popular in Ventura County!?

Or how about learning how to dance at a local venue:

If you are aware of other dancing classes and venues not found on this site, Contact Us and let us know!

The Texting While Driving Party is Over in January 2009!

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Governor Schwarzenegger signed a law in September that prohibits text messaging while driving. The law takes effect January 1, 2009.

What is this state coming to?? First he outlaws using cell phones in cars. Then he says we can’t smoke when the kids are in the car. Then he outlaws trans fats from my fast food. Now no texting while driving? What’s next? No consumption of trans fat-free chili cheese fries while driving??

Sadly we need to legislate common sense at times, but this law should make the roads a little safer.  A number of Republicans, including local Tony Strickland, voted against the bill because they felt existing laws are sufficient to prosecute distracted driving.  Point taken.

The law, SB 28, indicates that a person cannot drive while using an “electronic wireless communications device” to manually communicate using text messages, instant messages or electronic mail.

OK, Joe Loophole has thought this through. The law says “electronic,” so whoever comes up with the first solar powered wireless device will find a way to get around this law!

The law goes says you are fine to simply read, select or enter a name or phone number or name in the device for purposes of making a call. How a cop will be able to tell the difference between texting and typing a name into a cell phone is beyond me!  Heck, what if you were typing the name Schwarzenegger into your phone!  That should be illegal!

Violation of this law will cost you a base fine of $20 for a first offense and $50 per offense thereafter.