Discussion: State & local finances
in: PG; PG > 2009-06-04
Jun 5, 2009 9:31 AM
#
We'd be interested to learn how large "mammoth" might be. Your concern prompted me to download Chicago's 2009 budget...it makes interesting reading. Illinois may have some stupid politicians, but they've apparently hired some good PR.
Interlarded with beautiful pictures of the City, are the cold facts that the city budgeted a 13% revenue shortfall this year, even tho 2400 city workers were furloughed, and spending only increased 1%. I'm sure that this picture has become more grim each week, as layoffs continue and the need for public support increases.
However as a result of a "taxpayer revolt" ten years ago, my property taxes have actually been coming down every year...and are now lower than they were 20 years ago. I wonder if other towns and cities are confronting such dichotomies?
Interlarded with beautiful pictures of the City, are the cold facts that the city budgeted a 13% revenue shortfall this year, even tho 2400 city workers were furloughed, and spending only increased 1%. I'm sure that this picture has become more grim each week, as layoffs continue and the need for public support increases.
However as a result of a "taxpayer revolt" ten years ago, my property taxes have actually been coming down every year...and are now lower than they were 20 years ago. I wonder if other towns and cities are confronting such dichotomies?
Jun 5, 2009 7:09 PM
#
Property taxes going down? What a concept. In my city, Worcester, Mass, they split the tax rate so that the residential rate is at the low end of the range ($13.50 per thousand) and commercial/industrial rate is higher ($28.72/K).
They can very easily speak out of both sides of their mouths, that they've lowered the tax rates (while silently increasing assessments, in order to net sufficient bucks to run the gov't).
I can't recall in the 20 years I've been in Worcester that the rates have gone down. The best they've done is stayed constant. Even in a down real estate market, the assessments decline, at most, modestly.
They can very easily speak out of both sides of their mouths, that they've lowered the tax rates (while silently increasing assessments, in order to net sufficient bucks to run the gov't).
I can't recall in the 20 years I've been in Worcester that the rates have gone down. The best they've done is stayed constant. Even in a down real estate market, the assessments decline, at most, modestly.
Jun 5, 2009 8:59 PM
#
PG:
"Mammoth" is a number that might equal the petty cash fund of the mayor's office in Chicago or Worcester, but in Sunderland it would translate into a 15-20% increase in property taxes.
The problem results mainly from a couple of things that are beyond our control. First is the fact that state aid to cities and towns (i.e. returning a portion of the state-wide income and sales taxes and lottery income to the cities and towns to pay for local services) will be cut significantly since tax collections have tanked. Final numbers are not set yet, but this may be at least 200-250K. Second is the fact that we belong to two regional school districts, one for 7-12 and the other for vocational ed, and the state formulas for allocating costs to the member towns has changed and each case our share has gone up, total for the two about 250K.
A few other smaller factors -- on the revenue side, fewer people buying cars, so the excise tax on that is down, less interest income on bank balances. On the expense side, COLA increases (not excessive, but not trivial) in union contracts. Plus less in reserves available to help balance the budget.
So with virtually nothing spent on capital needs, the town is looking at a gap of about 600-700K. Since we raise about 3.5M in property taxes right now, adding that would be significant. And the ability to do that depends on a vote to allow it. My guess is such a vote right now would be defeated.
And if you have to take 600-700K out of the budget, there are lots of things you can't touch (lots of fixed costs, plus the 2 regional schools), so it would be very ugly, especially for the elementary school budget.
Not sure how this will play out, but it is not likely to be fun. I don't have an official role in this these days (used to run the budget back in the 90s), but as an unofficial town elder on such matters, I can't help but be involved.
The problem results mainly from a couple of things that are beyond our control. First is the fact that state aid to cities and towns (i.e. returning a portion of the state-wide income and sales taxes and lottery income to the cities and towns to pay for local services) will be cut significantly since tax collections have tanked. Final numbers are not set yet, but this may be at least 200-250K. Second is the fact that we belong to two regional school districts, one for 7-12 and the other for vocational ed, and the state formulas for allocating costs to the member towns has changed and each case our share has gone up, total for the two about 250K.
A few other smaller factors -- on the revenue side, fewer people buying cars, so the excise tax on that is down, less interest income on bank balances. On the expense side, COLA increases (not excessive, but not trivial) in union contracts. Plus less in reserves available to help balance the budget.
So with virtually nothing spent on capital needs, the town is looking at a gap of about 600-700K. Since we raise about 3.5M in property taxes right now, adding that would be significant. And the ability to do that depends on a vote to allow it. My guess is such a vote right now would be defeated.
And if you have to take 600-700K out of the budget, there are lots of things you can't touch (lots of fixed costs, plus the 2 regional schools), so it would be very ugly, especially for the elementary school budget.
Not sure how this will play out, but it is not likely to be fun. I don't have an official role in this these days (used to run the budget back in the 90s), but as an unofficial town elder on such matters, I can't help but be involved.
Jun 5, 2009 11:26 PM
#
Oy. I used to be the Fort Lewis rep to the city of Dupont's city council meetings back around 2003. It was educational, to say the least. I remember how budget issues used to result in some emotional debates back when there was money - I can't imagine what they're like now when there are only hard, painful decision to make. I don't envy you those discussions...I'm sure they're going on across the country, too.
Jun 6, 2009 1:52 AM
#
Just a quick glance through the annual report and it looks like there isn't much flexibility. Yep, it is going to be interesting and unpleasant.
I take it the mill levy can't be increased without a vote because of state law. Would the voters support a levy devoted to the library system?
Trash fees? I can't tell from the annual report if there are fees. If not, adding them would be an unpopular but reasonable move.
I also wonder about revenue options through Cow Chip Bingo!
I take it the mill levy can't be increased without a vote because of state law. Would the voters support a levy devoted to the library system?
Trash fees? I can't tell from the annual report if there are fees. If not, adding them would be an unpopular but reasonable move.
I also wonder about revenue options through Cow Chip Bingo!
Jun 6, 2009 2:22 AM
#
PG:
I take it the mill levy can't be increased without a vote because of state law.
What state law limits is the amount of property tax that can be raised on property that existed the previous year, the limit is 2.5%. The mill rate (or tax rate as we call it) can increase more, for example if assessments go down, or the tax rate may go down if assessments go up a bunch. Whatever, the town is limited to a 2.5% increase in the amount of tax raised, plus a figure representing "new growth" that covers either new building or subdividing of land into more valuable lots.
The town can vote to "override" Prop 2.5, as it's called, either a general override, or a menu of specific smaller overrides. The passage of either kind is a permanent increase in the amount of tax that can be raised.
There is also another kind of Prop 2.5 override, a debt exclusion, voting to do this allows you to increase taxes as much and for as long as necessary to pay off the debt on a capital project. We do this on all major capital projects that require borrowing.
The problem with a menu approach is that historically either all fail or maybe one or two of the smallest ones pass and the rest fail -- everyone votes for the one or two items they like, against all the others, and nothing gets a majority, plus politically it sets up different interest groups against each other, not usually a good idea in a small town. So putting an override on the ballot specifically for the library is unlikely to be done.
Trash fees? I can't tell from the annual report if there are fees. If not, adding them would be an unpopular but reasonable move.
We instituted trash fees a year ago. There is free curb-side pickup once a week for trash and recyclables, but the trash has to be in trash bags bought from the town. The cost is figured to offset the tipping fees. It's worked well. One of the opponents at the time, the town moderator, came up to me at the first session of town meeting last month and said it had surprised him how well it worked. Last year he and I had been the primary people on opposite sides of the issue.
I expect the fees will be increased, probably substantially.
There seem to be somewhat reasonable options if the gap was in the 100-200K range. Not at 600-700K.
Cow Chip Bingo would certainly be the answer if the gap was 600-700.
I expect at Town Meeting that we will pass the full budget contingent on the passing of a Prop 2.5 override, that vote to be held in July. Right now I don't think any override will pass (times are hard, etc.), in which case the town meeting vote is meaningless and we will have to go back and slash the budget. So I think my effort for the first meeting will be to force consideration of what those cuts will be to raise awareness of what the 2.5 vote means.
But, who knows, never really know how these things will play out.
What state law limits is the amount of property tax that can be raised on property that existed the previous year, the limit is 2.5%. The mill rate (or tax rate as we call it) can increase more, for example if assessments go down, or the tax rate may go down if assessments go up a bunch. Whatever, the town is limited to a 2.5% increase in the amount of tax raised, plus a figure representing "new growth" that covers either new building or subdividing of land into more valuable lots.
The town can vote to "override" Prop 2.5, as it's called, either a general override, or a menu of specific smaller overrides. The passage of either kind is a permanent increase in the amount of tax that can be raised.
There is also another kind of Prop 2.5 override, a debt exclusion, voting to do this allows you to increase taxes as much and for as long as necessary to pay off the debt on a capital project. We do this on all major capital projects that require borrowing.
The problem with a menu approach is that historically either all fail or maybe one or two of the smallest ones pass and the rest fail -- everyone votes for the one or two items they like, against all the others, and nothing gets a majority, plus politically it sets up different interest groups against each other, not usually a good idea in a small town. So putting an override on the ballot specifically for the library is unlikely to be done.
Trash fees? I can't tell from the annual report if there are fees. If not, adding them would be an unpopular but reasonable move.
We instituted trash fees a year ago. There is free curb-side pickup once a week for trash and recyclables, but the trash has to be in trash bags bought from the town. The cost is figured to offset the tipping fees. It's worked well. One of the opponents at the time, the town moderator, came up to me at the first session of town meeting last month and said it had surprised him how well it worked. Last year he and I had been the primary people on opposite sides of the issue.
I expect the fees will be increased, probably substantially.
There seem to be somewhat reasonable options if the gap was in the 100-200K range. Not at 600-700K.
Cow Chip Bingo would certainly be the answer if the gap was 600-700.
I expect at Town Meeting that we will pass the full budget contingent on the passing of a Prop 2.5 override, that vote to be held in July. Right now I don't think any override will pass (times are hard, etc.), in which case the town meeting vote is meaningless and we will have to go back and slash the budget. So I think my effort for the first meeting will be to force consideration of what those cuts will be to raise awareness of what the 2.5 vote means.
But, who knows, never really know how these things will play out.
This discussion thread is closed.