Trading one tax increase for another

Today at Toledo City Council, Mayor Mike Bell said he no longer wants to put a .25% payroll income tax increase on the ballot. Instead, he wants to eliminate the reciprocity for Toledoans who work outside the city.

Currently, people who live in Toledo but work in another jurisdiction get credit on their Toledo income tax for what they pay to the other jurisdiction. Under Bell's proposal, those individuals would pay whatever is charged to them in the other jurisdiction and 100% of what is due to Toledo.

Additionally, he still wants permission from the voters to have complete control over how the .75% payroll income tax is distributed. Under current law, collections from that tax are split between the general fund (for police and fire and other daily operations) and the Capital Improvements Fund. The proposal to go before the voters would give the mayor and council the authority to decide how to allocate those dollars.

Last year, voters rejected Council's "Safety First" proposal to reallocate the income tax dollars. I sincerely hope the voters stand by their prior position that draining the CIP isn't the right way to run a city and reject this latest proposal as well.

Bell would also delay the scheduled reductions in the 'trash tax,' keeping them at the current rates, eliminate the Fourth of July fireworks, eliminate waivers for festival fees and implement a new entertainment tax.

In effect, he's trading one type of tax increase for another.

He still wants to eliminate all pension pickups for city employees and have them pay 20% of their health-care costs, but he has removed the 10% pay cuts from discussion.

The problem is that these items would address the 2010 budget deficit, but still do not address the more than $12 million carryover deficit from 2009.

I applaud him for the cuts he wants to make, but cannot support any increase in collections for the city - and especially oppose giving Toledo politicians the ability to determine how the .75% payroll income tax is allocated. If they get that authority, I don't believe we'll ever see those dollars going into the CIP in the future due to their reputation for spending every penny they have - and then some.

Bell's letter to Council, along with budget data, is viewable here.

Here is the press release from the Mayor's office:

Mayor Asks Council to Pull Ordinance Authorizing Tax Increase

At this afternoon's City Council Committee of the Whole meeting, Mayor Michael P. Bell recommended to members of Council that the proposed ordinance authorizing a ballot initiative to increase the city income tax be pulled from the agenda. The administration has made numerous other recommendations to resolve the 2010 deficit without increasing the income tax.

Among the items outlined in the plan sent to members of council and leaders of the collective bargaining units are a proposal to add positions to the law, finance and taxation department to pursue delinquent tax collections, negotiate vendor contracts and provide additional budget analysis for long term fiscal changes. Additionally, it eliminates the July 4th fireworks, assumes elimination of pension pickups and 20% employee contribution for health insurance for all employees in all funds. It does not include a 10% wage concession from employees. Further, the balanced budget would require sale of assets, delaying the recycling fee reductions, elimination of festival fee waivers, implementation of an events tax and would change the tax code to eliminate the 100% reciprocity for those working outside of the city of Toledo.

How is this a good deal for taxpayers?

According to the Journal of the City of Toledo, when city council approved Ordinance 373-09 (beginning on page 8), the contract with the Toledo Police Patrolmen's Association (TPPA), it also agreed to the following:

Other provisions - Grievance Settlement.
The City agrees to pay $25,000 to the TPPA to withdraw any and all outstanding grievances filed prior to June 24, 2009 with the exception of grievances on employee parking, eliminating of the tax officer position, on call compensation/payment for fuel, sergeant-at-arms position, permanent shifts, and layoff grievances.

Tax Payment. A one-time payment will be made by April 15, 2010 based on the sliding income tax collection schedule as follows: if the 2009 audited books reflect an income tax collection greater than $148 million, the employee receives 2% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $150 million, the employee receives 4.5% of his/her base rate; if the 2009 audited books reflect an income tax collection greater than $152.5 million, the employee receives 7% of his base rate; if the 2009 audited books reflect an income tax collection greater than $155 million employee receives 9% of his base rate.

So, let's get this straight: the city is going to pay the union - not the members, but the organization - $25,000 to get them to drop a bunch of grievances? Since when did taxpayer money get to be used to buy off settlement of grievances - many of which the union never should have had to file in the first place?

And how much are we really saving if the city has to pay up to 9% (based upon income tax collections) in a lump sum? Police - and firefighters who have the same terms in their contract - are going to be financially rewarded if the city collects more than it estimated? Of course, there is the chance that the city doesn't collect more than it budgeted in income, but history indicates the unions have a safe bet on this one. However, a lump sum is just a one-time payment so there is no cumulative effect on the base wage.

How 'bout if the city, after balancing the expenses based upon the project income, REFUNDS any extra income to the taxpayers who paid it in the first place, rather than pay off the unions????

Oh - but the city hasn't yet balanced the 2009 budget. Even with the 'savings' from these contracts, the mayor is still estimating an $8 million budget deficit for the remainder of the year - with no source of extra funds to the cover the shortfall.

And if the administration's projections for next year are even remotely accurate, there is no money to pay for 2010 basic services, much less a lump sum for police and fire fighters.

Yet council approved both these contracts with no idea whatsoever of how they were going to pay for the terms they agreed to.

Are taxpayers just supposed to hope that the city doesn't collect more than the budgeted $145 million in income taxes so we don't have to pay out the lump sum? And if we don't get more than that, we still have an $8 million budget deficit to pay for, which is why Carty Finkbeiner is asking council to increase the trash tax and eliminate reciprocity for people who live in Toledo but work in another city.

What it boils down to is this: the city has no money, but if it collects more money than it budgeted, police and fire will get lump sum payments (of up to 9% depending), reducing the amount of 'extra' money that could be used cover the deficit.

And city council and the mayor think this is a good deal for taxpayers???? I think we got screwed...

Toledo is broke but has money for a study?

Yes, of course we do! Can you say 'stuck on stupid'????

The City of Toledo - still - has a budget deficit. According to Mayor Carty Finkbeiner's July letter to City Council, it's just over $8.6 million. Yet last night, council passed Ordinance 383-09 "Appropriation for engineering & planning by Tetra Tech of Municipal Solar Field, $110,000 Water Improvement."

This is on top of the $65,000 they've already spent, but if they spend the additional money now, they might be able to get some federal dollars for this.

This is just more twisted logic. First they needed to spend the money to show that we're 'supportive' of the solar industry.

(I hate it when politicians think that 'being supportive' of an industry means they have to spend our tax dollars, rather than their own by purchasing stock or making a personal investment in these companies!)

The additional money is urgent, they say, because maybe, just maybe, we'll be able to get help from Washington for the project. So what happens if we DON'T get any funds from DC? Then what?

Council and the mayor will justify this expenditure by saying it's from the water fund, not the general fund, so the budget deficit is not impacted. What they fail to understand is that it's their philosophy of spending that's the problem.

First, the water fund is supposed to be solely for the water system and service. How, exactly, does a solar field fall under that limited use? It could only be by a good stretch of imagination, or perhaps a 'willing suspension of disbelief.'

Second, what did the $65,000 study buy us? Where is the report from the expenditure of those funds? Why hasn't that been released for all to see PRIOR to spending more money? Where is the analysis of the return on investment for this project? Where is the detailed listing of available funds to go forward, if that decision were to be made? Why would we spend more money for a study if we don't have the money to build it when the study is done?

And third, if this is such a fantastic idea, why don't they put their own money toward the project? Let them 'invest' their dollars, rather than our tax dollars. What, you say, they wouldn't do such a thing? It must not be such a good idea, then, is it?

Our Toledo politicians have bigger problems than funding a study of a solar field on a dump. But they don't seem to want to address those. They'd rather keep spending - and getting nice headlines from a local paper who loves the idea.

For last year's deficit, they took money out of the Capital Improvements Program (CIP) fund and moved it into the General Fund in order to balance 2008. This year, the number of CIP projects are reduced as a result.

They've voted to put a temporary change to the distribution of the 3/4% payroll income tax on the ballot so they can, again, move money from the CIP to cover their general fund expenditures, including a police class.

Carty is still pushing for an increase in the trash tax. Though that was supposed to be for garbage service, it's being used as a general tax to supplement general fund activities, an action likely to cause them to lose their lawsuit over the issue. And there has been no public discussion among council members on the impact of losing that lawsuit and the potential cost to the city to reimburse residents for the money collected.

Additionally, Carty is still pushing for the end of 100% reciprocity for Toledo residents who work in other jurisdictions - basically, a tax increase on citizens who live in Toledo but work in areas like Sylvania, Maumee or Oregon. Council has rejected this in the past, but we still have a deficit, so who knows?

The problem is that they have no idea how to live within their means - our means, actually. They're too busy promoting their own pet projects and programs and expecting that they'll just get the money from somewhere, though that 'somewhere' ends up being from us - and we're completely tapped out.

I don't care how good of an idea you think it is, we just don't have the money.

STOP THE SPENDING!!!!!!!!!!

JUST STOP!

Will police concessions be enough?

The City of Toledo and the Toledo Police Patrolman's Association have reached a tentative contract and the TPPA has voted to approve it. Toledo City Council will vote today.

There were concessions by the union - many were not insignificant. They include no pay increases in 2009 and 2010, but a 3.5% raise in 2011; members paying 7% of their pension from July-December; paying a portion of their health insurance costs; and overtime payments being postponed until March 2010.

While these are probably good compromises, there are still problems for the citizens in terms of the long-term issues of unsustainable government costs.

I'm glad the TPPA will be paying 7% of their 10% pension contribution, since right now they pay nothing with the city (taxpayers) picking up the city's share as well as the employee's share (total of 29.5%). But having the union members make a portion of their own payment for six months does not address the problem that these pension pick-ups are unsustainable, and grossly out of whack with what the private market in Toledo is doing. Additionally, they 'traded' that concession for 6.5 more vacation days to be used over the same time frame.

The best part of the arrangement is that new officers will be required to pay their 10% pension share. Perhaps this is the start of addressing the problem, which exists in all of city government. If so, this is a good thing. However, if this is just a temporary step for the existing employees, we will find ourselves right back in the same mess for each upcoming yearly budget.

The same goes for the overtime. The city is not saving any money, just postponing when it will be paid. In effect, we're incurring costs we cannot now afford with the hope that the money will be available next year. Nothing in the economy or in the decisions about spending being made by the administration and council indicate that our situation in 2010 will be any different than now. In fact, because they've put off maintenance-type actions and removed money from the Capital Improvements Budget to balance the General Fund, we'll eventually find ourselves without the money for our capital needs as well.

Then there is the issue of the trash tax. Included in the tentative agreement is a little clause that says it is in the interest of both the union and the administration that the council address the deficit through revenue enhancements. In an interview with WSPD this morning (podcast will be here when posted), TPPA President Dan Wagner said the union agrees the budget must be balanced with either cuts in spending or additional revenue.

This contract does not solve the city's budget deficit. Neither will similar concessions by other unions who still haven't agreed on new contracts. So the administration is still insisting upon an increase in the trash tax (the equivalent of a 3.91 mill levy) and eliminating the payroll income tax reciprocity for Toledoans who work outside the city, both of which have been rejected by city council.

Stay tuned...