Sunday, February 07, 2010

It's started - doom and gloom if Toledo doesn't get more tax dollars from its citizens

The front page of today's paper attempts to scare readers into thinking that if we don't support the current proposals to raise our taxes, doom and gloom will result.

That's the only outcome one can expect from saying that today's budget deficit for the city is very much like 1982. And don't forget, back then we had a massive - and perhaps, illegal - strike that burned property and resulted in the death of a bus driver.

Back then, a Republican and a Democrat got together and promoted the idea that the only solution was to approve a 'temporary' .75% increase in our payroll income tax. That 'temporary' tax was approved and has been 'permanent' ever since.

Now, Mayor Mike Bell is saying that his proposal for a temporary .25% tax is really temporary. But if that's the case, then why does the ordinance provide for a renewal?

SECTION 1. That subject to the approval of the electors of the City of Toledo, as provided in Section 718.01 of the Revised Code of Ohio, Chapter 1905 of the Toledo Municipal Code be amended as provided in this Ordinance to provide for the levy of a one quarter of one percent (1/4%) temporary tax on income for the period commencing June 1, 2010 and ending December 31, 2012 unless renewed by the electors. Subject to the approval of the electors of the City of Toledo the additional 1/4% temporary income tax shall be allocated for Police, Fire, and other Safety Department responsibilities. (emphasis added)

If everyone were really serious about this being only for two years, there would be no such renewal provision in the legislation.

But take a good look at The Blade article. What you see documented are the same problems we're facing today. Back then, the costs of labor contracts had skyrocketed and unions didn't want to have any cutbacks, costs of government had skyrocketed and politicians said they'd cut everything they could. The only solution was a temporary increase in the amount of money the city government took from its citizens.

Here we are, in 2010, with the exact same problems: contractual labor obligations that cannot be sustained, increased costs in government with politicians telling us there's nowhere else to cut and a mounting campaign to make us think that the only solution is to take more of our money so government can continue to grow.

It worked so well in the 1980s - why not repeat it again today?

But look at what actually happened. If we have the same problems today as we did in back then, the solution to increase taxes did not solve the problem. If it had, we wouldn't still be grappling with it now.

Raising taxes is NOT the solution, in fact, it's part of the problem.

The focus on finding a 'solution' to the deficit means that politicians and the Mayor's Citizens Special Investigation task force are asking the wrong questions. And if you ask the wrong questions, you get the wrong answers.

Everyone is looking for ways to get more money to the city of Toledo because the city doesn't have enough to pay their obligations. Of course, if your task is to raise revenue to the city, your best solutions will be tax increases, fee increases and maybe some cuts in spending.

The major issue Toledo faces is not really the deficit. In fact, the problem isn't that the city doesn't have enough money. That's only a symptom.

Our city is in decline and is taking everything along with it. As a result, we have fewer residents, fewer businesses, less employees and lower wages in the remaining businesses, declining property values, a declining school system, more bankruptcies, more home foreclosures, more people dependent upon welfare and food stamps and other government handouts, less of a tax base and less funds going into the public coffers.

The only answer being suggested is to take even more money from the citizens and businesses who are already suffering so. But that 'solution' will, not surprisingly, lead to more people leaving, more businesses failing (due to less customers), more unemployment, further decline in property values and even less money into the public coffers.

The very solution they promote contributes to and hastens the decline they seek to arrest.

So rather than ask the wrong question (how do we get more revenue to the government?) they should be asking 'how do we help promote the growth of the city?'

If we're interested in promoting growth, we do the exact opposite of what is being proposed: we LOWER taxes. We reduce regulations; we reduce fees; we cut government - which is a drain on the economy - to the bone; we make it easier and more profitable for businesses; we try to put more money into the pockets of citizens rather than into the government; and we encourage the private sector, not the public one.

These are the things that lead to the growth of a city and, subsequently, the increase in tax collections the city is so interested in achieving.

But if no one is asking the right question, we'll never get the right solutions - and we'll continue to face these same sets of circumstances over and over and over again.

6 comments:

Jill said...

Maggie, I'm going to feature this post of yours on my city council blog, In The Arena. And so I would really like to ask you this with all the good will we've built up/had for each other over time: here's the thing:

I can agree with you about what tax cuts can do. I have no problem arguing that they can do all the things you say they will do. And for the long-term, I get that.

But how do cities deal with the absolute, immediate crisis of paying for current, present, on-going, operational expenses that function to provide even the most basic services - like gasoline in the snowplow that only gets 1.5 miles to the gallon?

As a brand new city council member, I am in a unique place to ask these questions because I've been uninvolved in how we got here.

But what do you say to council members like me facing what my city and Toledo and so many others are facing?

In my situation, the fulcrum seems to be the love the residents have for their services and how much more, or less, do they love paying for them. Which is to say - would they prefer to pay more and have no personnel cut, or refuse a tax increase and risk a decline in service provision?

Let me also state very clearly: the suggestion of a tax increase is 1000% not coming from me. I'm respecting my mayor's role as city manager who is in charge of all administrative functions as well as a committee that is supposed to come up with recommendations to City Council for how to deal with the shortfall and so am not comfortable saying more about that option, but once we begin to discuss it in public, I will.

Thanks - I am KEENLY interested to know what you might do if you were in my shoes (the process of cutting nonpayroll expenses is of course ongoing as are other efforts related to the problem).

Roman said...

One of the things threatened in the early 80's, to pass the "temporary" 3/4% tax, was bi-weekly trash pickup. I voted against the tax and purchased a trash compactor. It worked great. The tax is still with us.

As many people have said, the problem is not too little tax, but too much spending. Government on all levels provide many services that should be left to the individual citizen to decide if it is necessary, or just a luxury that is not needed. Swimming pools, sport venues come to mind. A very small percentage of the population use these at all.

If it is not in the City Charter, US or State Constitution, do not provide it, no matter how great the idea is.

I have read in One of the Country's Newspapers, that taxes have not been raised in a long time, as if increasing taxes is something that is "normal". Why do taxes have to go up?

Raising taxes is just too easy, and is the first thing considered. When the only tool in you toolbox is a hammer, all of your problems look like nails.

Maggie Thurber said...

Jill - I posted an answer to you, but don't know what happened to it...so I sent you an email, too.

* don't present the option of 'how do we pay for gas for snow plows'...but rather 'shouldn't we pay for gas for snow plows first before we pay for ____?' and fill in the blank.

* many things are mandated, but some of the mandated items in your budget are mandated by yourselves. In Toledo, council passed a law creating the Board of Community Relations. It's nice, but not a necessity, especially because it has no power whatsoever to do anything other than be a sounding board for issues. Without power, all it does is cost the city money - in 2009, around $185,000. While the BCR might be important to some in the community, it's not as important to all as having their streets plowed of snow.

Take a look at your mandates and see which ones can be repealed.

* Do a comparison of how much the city pays its employees vs. what the private sector in the city pays for similar type of work. Don't forget to include benefits, health insurance, pensions, sick days, vacation, holidays, overtime, etc.. I'm certain you'll find that government compensation is higher than what the taxpayers are getting, yet they are paying for those higher benefits for the government workers.

Once you have the comparisons, you can go to the unions with them and start working on what have become unsustainable compensation packages. Public sector unions often believe the public won't go without staff to do things, but if you've already gotten the public on your side with your comparison of wages, they'll help bring the pressure to bear on the unions.

* as I said in my email, involve the public in setting the priorities. Every group that gets some sort of funding from the city will tell you not to cut their program. If you ask them what they'd be willing to go without in order to have their particular program, they'll tell you that making those kinds of decisions is your job. Of course, that gets them out of the position of having to make tough decisions.

If you can get the type of survey I detailed in the email, you will find which of the city programs are of least interest to the majority of residents. That should help with decision on what to cut.

Special interests always advocate for their own program, but asking them what's more important (their program or police, for example) means you'll help them to recognize that the majority of residents need the essentials.

Hope this helps!

Maggie Thurber said...

Roman - even if something is in the city charter, it doesn't mean that it isn't a nicety rather than a necessity.

For instance, the city passed a law creating a board of community relations. Other than pay for things like hip-hop concerts and Easter egg hunts, it has no authority whatsoever to do anything other than spend public dollars. In 2009, their budget was around $185,000.

The law requires it, but Toledo politicians created the law. Those same politicians can repeal the law and instantly save a bunch of money.

What's more important: keeping police, fire and true necessities or keeping a feel-good board without any authority to affect change?

These are the kinds of things that need to be looked at. If Toledo created a mandatory 'service,' it can repeal it as well.

Jill said...

Thanks very much, Maggie - if it's okay with you, I'd like to graft your comment from here to In The Arena. I apologize for the comment trouble - you are not the first to mention it but I'm not sure what's going on! I will look into it.

A few of these things have started to happen and others not. But definitely some to pursue that I haven't yet seen pursued.

I do still believe that at the end of the day, the voters must make a decision about which choices they want their electeds to make: literally laying off and seeing just how bad it may (or may not get) in terms of service provision, or deciding that it's worth it to them to keep what we have and increase what they pay.

I know how I feel for myself, as a resident. But I don't feel that it's my city councilperson job to impose that on anyone. It's my city councilperson job to do what's best for the city. Figuring THAT out...hmmm... :)

Thanks for your thoughts and time - sincerely appreciated.

Maggie Thurber said...

Jill - would be honored by the inclusion on your blog - thanks!

I agree that as a council person you have to do what's in the best interest of the city and represent what the citizens want. I don't envy you the position of trying to educate them on the options or in making those decisions...makes me glad I'm no longer in elective office.

Good luck - and I'm glad I could help!

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