Friday, 17 August 2012 00:00
1. A stunning report issued last week by the Office of the State Comptroller analyzed data from over 4,000 New York local government units, and found over 300 of them had run budget deficits in 2010 or 2011 and over 100 had serious cash flow problems that threatened their ability to pay current bills and obligations. Declining sales tax revenues, property values, state aid and mortgage recording tax revenues have left many local governments “extremely vulnerable to any unanticipated expenditures resulting from emergencies, mandates, or unexpected increases in the costs of goods and services.”
2. Many governments have scaled back, particularly in the areas of public safety, health and recreational programs, garbage collection and road projects.
3. But what really turned my head was that eight local governments are now in critical danger of reaching their “Constitutional tax limit,” which is based on a percentage of taxable real property within a jurisdiction. Once that limit is reached, it’s like a tax cap on steroids. Even routine increases in costs or expenditures can mean service reductions and program eliminations. New York City, four small upstate cities (Binghamton, Gloversville, Jamestown and Lackawanna) two upstate villages and Cortland County are at or near 90 percent of their tax limits.
4. And before anyone sneers about “tax and spend liberals,” keep in mind that Cortland County in particular hasn’t been run by anything like a liberal since Hiawatha and Dekanawida declared the Iroquois Great Law of Peace five centuries ago.
5. The property tax is designed to make up the difference to cover the difference between local government appropriations and non-property tax revenues. When one stalls out, reliance increases on the other. The property tax was never meant, ever, to finance a modern government with modern responsibilities in a modern economy.
6. Do you think I like writing about this? Do you think I can’t write columns about pleasant things, like kittens and ponies and new car smells?
7. Unfortunately, many of our elected officials are happy smiling for the newsletters, telling us that they’ve fixed everything with the property tax cap. In fact, they have sheared off local control and flexibility, and at the worst possible time.
8. They still think this is just another periodic recession, and that they can wait it out until the state aid flows again. I hope they are right. I hope we have time.
9. Article VIII of the State Constitution lays down basic rules and restrictions on taxing and borrowing by local governments. Is as long as the entire U.S. Constitution, and longer than the Constitutions of some other states. Some of the sentences have more than 100 words. This is heavy stuff, and a mess. A long series of amendments to allow governments more flexibility in fixing serious problems added to its length and complexity.
10. Some of us feel that local governments must return to pay-as-you-go, the way it was meant to be in the 18th century, presumably paying for immediate needs in gold. Like pirates.
11. Which services and conveniences do we give back? Which do we cut loose, sell off or lease? Asphalt roads, like in some Michigan, South Dakota, Pennsylvania and Alabama counties? Street lighting, like in Colorado Springs and Highland Park, Michigan? Sewage systems? Parks? Buses? Which ones aren’t important to you, and does everyone on your street feel that way?
12. This tax stuff isn’t easy, isn’t black and white, and every “simple” solution to eliminate or restructure a tax stream reverberates down the line.
13. This is the first taxation and finance crisis in a century in which the adequacy, equity, fairness, restructuring and reform of the taxes we pay are completely off the table. Silence. We’re going with the flow, as if the last three decades of ridiculous fiscal policies never happened.
14. We are facing the slow motion bankruptcy of programs that made this island a place where people wanted to raise their families. Worse, one big jolt will send many of our governments over the edge, with no backup or contingency plan.
15. It makes me tired, and sad. Kittens and ponies. Kittens and ponies.
Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: email@example.com