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As you read in the Free Lance Star, http://fredericksburg.com/News/FLS/2009/062009/06102009/472358, at the last Council meeting it was agreed to consider increasing the meals tax 1% instead of placing the entire tax burden on the real estate tax rate. The reasons for this recommendation have been covered in the previous posts. The vote on the rate was put off to give staff the opportunity to review the meals tax revenue projections and come back with recommendation to reduce the budget a further $100,000.00 to balance the budget.
In a staff memo later in the week a recommendation was submitted to, “Close the $100,000 gap with several relatively minor revenue and expenditure adjustments.” They included:
1. $30,000.00 savings from the Economic Director’s salary as it was not realistic to expect to fill that position until October.
2. $10,000.00 reduction in the Unemployment Reserve to $30,000.00 that the staff felt still left us with an adequate reserve.
3. $60,000.00 increase in revenue from the Business License Tax based on a “significant increase” in revenue from the spring projections.
None of these recommendations are contrary to the Council majority view that no further adjustments are made to the operating budget. Yet, Councilman Solley requested, and Councilwoman Greenlaw concurred, that a budget proposal also be considered setting the tax rate at 68.5 cents with no adjustments made to the budget. This scenario resulted in a surplus of $70,000.00. Added to the additional revenue projected from the Business License tax would bring the surplus to $130,000 which staff recommend be use to reduce the amount of reserve used to balance the budget.
I support staff’s effort to reduce the use of reserve, as all indications are that the economy is going to continue its downward trend. In addition to what has previously been posted on this point a recent story in the Free Lance Star, http://fredericksburg.com/News/FLS/2009/062009/06162009/473673 (Virginia Reports Drop in Revenue) shows state revenues still not meeting projections and more cuts in the state budget may be coming in August. Based on the state’s past track record localities can expect further reductions in state support.
However, I still have an issue with the majority view on Council that the current budget, which the 68.5cent rate supports, can be justified under the current economic downturn. My response to the last staff memo follows:
Good Morning All,
I have no problem with what staff has proposed to get to the 68 cent tax rate. Enclosed is a breakdown of additional savings totaling $68,860. I would suggest that these funds be either:
1. Redirected to human services.
2. Saved.
3. Used to start-up a fund to assist groups and organizations that have a specific proposal, some funding raised on their own, and consider some form of dollar match.
-Matt-
Bluemont—This is one of those groups that should be supported by the community; or we should consider setting up some sort of matching program putting them in the position of
raising some funding locally on there own.. Under the current financial constraints this is hard to justify as a core expense. ................................$5,000.00
DRMI—Based on numerous discussions there seems agreement that DRMI needs to put some resources on the table which the city should consider matching. This is not a core service.
........................................................................................$2,000.00
Heritage Festival—See Bluemont. .......................$ 4,000.00
Sister City—See Bluemont. .....................................$ 2,500.00
SPCA--$10,000.00 is for the Capital Campaign for the new facility. The SPCA does provide a service to the city in dealing with stray dogs and cats. However, deferring the payment this year
should not present a significant burden. The balance of $5,000 remains......$10,000.00
F’burg Arts Commission—As I understand it $5,000.00 of this budget is a state grant. This is another organization which needs to do some fund raising and the city consider matching that effort instead of just putting money on the table.................$ 4,500.00
FRA—If the EDA wishes to keep funding this organization, as was the
case last year, that is were there funding should come.......$11,110.00
Fburg Vol. Fire—The city currently pays the insurance for this organization to the amount of $7,500.00. At this point it the service to the Fire Department is not extensive. We all hope with the new program at JM this may change. Recommend 50% reduction..$ 5,000.00
Fburg Areas Museum—I have talk with reps of this organization and offered to consider matching their efforts to acquire operational funding. Recommend an additional $10,000.00 cut. ............................................................$10,000.00
Germanna CC—With the magnitude of state cuts why are we supporting a state institution?
............................................................$ 5,750.00
TOTAL SAVINGS...................$59,860.00
I agree with Councilman Ellis that there are probably other areas where savings can be found but the debate on the budget ended over a month ago when the Council majority advised staff that they would not consider further reductions. Since that decision was made the economic picture has continued to change, mostly for the worse, but there has still been no interest to consider further adjustments beyond shifting some of the tax burden to the meals tax. What has been proposed is another Council retreat later in the year to begin discussions on next years budget. With only a few days before the budget has to be passed the debate is over beyond the possibility of some peripheral changes as outlined above.
Under the current economic conditions leaving some flexibility in the budget is probably prudent. To cut it back further with the possibility of further state cuts, and the continued downturn in the economy, could lead to some painful mid budget/service cuts. Then there is the fact that we are already faced with some tough choices next year starting with the budget just over a million in the hole. If we take every opportunity to save over the coming year, and there is any improvement in the revenue picture, hopefully we will be able to reduce that deficit.
However, under the current economic conditions we can only justified asking residents and business to support core services.
How did you view this years budget process?
Sunday, June 21, 2009
Thursday, May 28, 2009
The Budget--The last 48 hours
I would refer you to my past posts for my views of the budget discussions up to this point. This post will focus on where we are now on the budget. Below is an e-mail sent to Council and staff as well as a breakdown on the alternate budget proposed:
Good Evening All,
Enclosed is a rough draft of a alternative budget for consideration. I have put this together in response to the following:
1. As noted a week ago, state revenues have again come in lower than projections. If additional cuts are contemplated localities can expect to be included.
2. In discussion with members of the banking community at the last REDCO meeting the next bump in the road will be a steep dive in the commercial real estate market within the next year.
3. Another area of the economy teetering on the edge is the credit market.
4. As noted in a previous e-mail the drop in the residential real estate market means that the commercial market is left to make up the difference as well as providing the additional revenue to meet budget needs. This at a time when businesses are already pinching pennies.
5. If the economy continues to worsen we need to maintain our reserves as much as possible for next year to avoid deeper cuts and possible layoffs. If, as some feel is the case, we have turned the corner, we need to maintain our reserves to protect our bond rating, and if things do improve, build up some funds for projects like the court facility.
The enclosed budget proposal does the following:
--Increases the meals tax by 1/2 percent. As noted this translates to only 50 cents on a $100.00 tab. This tax is on disposable income, takes a small part of the tax burden off residents and businesses.
--It does find savings in the original Outside Agency (OAs) budget and redirects these resources towards human services. It prioritizes the OAs. Additional funding is placed in these areas to bring services back to 09 levels as opposed to 15% cuts. It also means a lot of OAs are zeroed out.
--The funding for the dump truck is included but not funding for the Economic Development position. In discussions with most of you it was agreed that we need to take a serious look at this department before making any decisions. Under the current economic climate hiring someone now would probably not have much of an impact.
--The tax rate is set at 69 cents as opposed to the 70.5 cents currently projected. Even so, there is still a balance showing that should be used to lessen our draw down of reserves for the reasons noted above. At the least we should defer specific expenditures until we have a better handle on where this economy is going.
--This proposal also shows savings for the City Manager's position and for maintaining some for of hiring freeze. This is based on some very preliminary discussions with Mark and I am waiting for his and Bev's views on whether we go down this road and/or if the figures shown are realistic. Bev & Mark replace last proposal with the one enclosed. There is a math error in the first draft sent.
I had hoped to vet this with staff a bit more and do hope to have some more conversations tomorrow with them on the viability of this proposal. However, I did not want to blind side the Council tomorrow evening so I'm forwarding it on the understanding that changes are possible.
We need to take some time to define the city's responsibilities and long term priorities to shape a strategic budget plan. We cannot keep going year to year especially under the current economic conditions. We need to explain expenditures to the public in terms of outcomes which may take a few years to achieve.
-Matt-
New Revenue:
1/2 Percent on Meals Tax $440,000.00
Limited Hiring Freeze $50,000.00
(Based on $150,000 past year)
Manager's Expenses $30,000.00
(Roughly (4) months thru Dec.)
Reductions Outside Agencies:
(Based on Manager's Original Budget)
Volunteer Fire $5,000.00
Regional Alliance $11,110.00
SPCA (Deferred) $10,000.00
Area Museum $10,000.00
Germanna CC $5,750.00
Total Available Revenue $866,860.00
Good Evening All,
Enclosed is a rough draft of a alternative budget for consideration. I have put this together in response to the following:
1. As noted a week ago, state revenues have again come in lower than projections. If additional cuts are contemplated localities can expect to be included.
2. In discussion with members of the banking community at the last REDCO meeting the next bump in the road will be a steep dive in the commercial real estate market within the next year.
3. Another area of the economy teetering on the edge is the credit market.
4. As noted in a previous e-mail the drop in the residential real estate market means that the commercial market is left to make up the difference as well as providing the additional revenue to meet budget needs. This at a time when businesses are already pinching pennies.
5. If the economy continues to worsen we need to maintain our reserves as much as possible for next year to avoid deeper cuts and possible layoffs. If, as some feel is the case, we have turned the corner, we need to maintain our reserves to protect our bond rating, and if things do improve, build up some funds for projects like the court facility.
The enclosed budget proposal does the following:
--Increases the meals tax by 1/2 percent. As noted this translates to only 50 cents on a $100.00 tab. This tax is on disposable income, takes a small part of the tax burden off residents and businesses.
--It does find savings in the original Outside Agency (OAs) budget and redirects these resources towards human services. It prioritizes the OAs. Additional funding is placed in these areas to bring services back to 09 levels as opposed to 15% cuts. It also means a lot of OAs are zeroed out.
--The funding for the dump truck is included but not funding for the Economic Development position. In discussions with most of you it was agreed that we need to take a serious look at this department before making any decisions. Under the current economic climate hiring someone now would probably not have much of an impact.
--The tax rate is set at 69 cents as opposed to the 70.5 cents currently projected. Even so, there is still a balance showing that should be used to lessen our draw down of reserves for the reasons noted above. At the least we should defer specific expenditures until we have a better handle on where this economy is going.
--This proposal also shows savings for the City Manager's position and for maintaining some for of hiring freeze. This is based on some very preliminary discussions with Mark and I am waiting for his and Bev's views on whether we go down this road and/or if the figures shown are realistic. Bev & Mark replace last proposal with the one enclosed. There is a math error in the first draft sent.
I had hoped to vet this with staff a bit more and do hope to have some more conversations tomorrow with them on the viability of this proposal. However, I did not want to blind side the Council tomorrow evening so I'm forwarding it on the understanding that changes are possible.
We need to take some time to define the city's responsibilities and long term priorities to shape a strategic budget plan. We cannot keep going year to year especially under the current economic conditions. We need to explain expenditures to the public in terms of outcomes which may take a few years to achieve.
-Matt-
2010 Budget Revisions
Funding Committed As Per Last Work Session:
Outside Agencies $150,000.00
Econ Dev. Director $90,000.00
Dump Truck $65,000.00
Funding Committed As Per Last Work Session:
Outside Agencies $150,000.00
Econ Dev. Director $90,000.00
Dump Truck $65,000.00
Sub-Total $305,000.00
New Revenue:
1/2 Percent on Meals Tax $440,000.00
Limited Hiring Freeze $50,000.00
(Based on $150,000 past year)
Manager's Expenses $30,000.00
(Roughly (4) months thru Dec.)
Reductions Outside Agencies:
(Based on Manager's Original Budget)
Volunteer Fire $5,000.00
Regional Alliance $11,110.00
SPCA (Deferred) $10,000.00
Area Museum $10,000.00
Germanna CC $5,750.00
Total Available Revenue $866,860.00
Additional Expenditures:
(To 09 Levels)
GWRC $2,612.00
Boys & Girls Club $30,000.00
Senior Visitor Program $14,400.00
Domestic Violence $11,060.00
Legal Services $34,298.00
(Request less than 09)
Disability Resource Center $26,100.00
Extension Service $1,500.00
Dump Truck $65,000.00
Total Costs ($184,970.00)
(To 09 Levels)
GWRC $2,612.00
Boys & Girls Club $30,000.00
Senior Visitor Program $14,400.00
Domestic Violence $11,060.00
Legal Services $34,298.00
(Request less than 09)
Disability Resource Center $26,100.00
Extension Service $1,500.00
Dump Truck $65,000.00
Total Costs ($184,970.00)
Balance Remaining $ 681,890.00
Tax Reduction:
1.5 cents on tax rate (down to 69 cents) ($510,000.00)
Balance Back to Reserve $171,890.00
Tax Reduction:
1.5 cents on tax rate (down to 69 cents) ($510,000.00)
Balance Back to Reserve $171,890.00
************
It was pointed out at the last Council meeting that this effort does not involve any significant savings. The point made was that it wasn’t worth the effort to save “$100,000.00.” Actually the potential savings are a little more than that; but I would ask—why is it a waste of time to save taxpayer’s dollars whatever the amount?
For me the most important issue is not what our tax rate is in relation to our neighbors; or how little the savings or the cost is to residents and businesses when setting the tax rate. The focus should be on what is the level of service residents expect and how do we provided it at a reasonable cost so that we do not become a burden on those we serve. Yes I’m beginning to sound like a broken record.
The attitude that it’s only a little cost this year usually means that in five years we are wondering how taxes got so high. When we justify tax increases because our tax rate is lower than our neighbors then we find ourselves looking for ways to spend money. Both attitudes ignore local demographics and the current state of the economy.
As per my e-mail to Council, over the next three or four years we starting off with a budget deficit, the need to increase the personal property tax, and significant increases in debt service if we maintain the current timeline on the new court facility and other projects that has majority support. Under these circumstances, and at a time when residents and businesses are cutting back and still facing economic uncertainty, saving even $100,000 is worth the effort.
For me the most important issue is not what our tax rate is in relation to our neighbors; or how little the savings or the cost is to residents and businesses when setting the tax rate. The focus should be on what is the level of service residents expect and how do we provided it at a reasonable cost so that we do not become a burden on those we serve. Yes I’m beginning to sound like a broken record.
The attitude that it’s only a little cost this year usually means that in five years we are wondering how taxes got so high. When we justify tax increases because our tax rate is lower than our neighbors then we find ourselves looking for ways to spend money. Both attitudes ignore local demographics and the current state of the economy.
As per my e-mail to Council, over the next three or four years we starting off with a budget deficit, the need to increase the personal property tax, and significant increases in debt service if we maintain the current timeline on the new court facility and other projects that has majority support. Under these circumstances, and at a time when residents and businesses are cutting back and still facing economic uncertainty, saving even $100,000 is worth the effort.
************
What are your thoughts on where we are on the budget?
Wednesday, May 6, 2009
What is Local Government's Role?
Below is the OpEd that I wrote on the current financial situation the city faces. The underling question I am trying to answer is—What is local government’s role?
I cannot understand those who justify raising taxes because our tax rate is lower than other localities or those who opposes tax increases on the basis that taxes are too high. The issue for me is not the level of taxes but rather the level of service residents expects, and as a community, we can afford. When that question is answered then we take on the issue of how we raise the revenue to provide that level of service.
Obviously there are those services—public safety, public works, and education that are a governmental responsibility. I also believe, and I know some would question, that as a community we do have an obligation to help those who are not in a position to help themselves. I have also justified support for the use of tax dollars when there is going to be a financial return on the investment or will save tax dollars in the future. And again there are those who would question government’s role in these types of endeavors.
So what is the legitimate role of local government? Are we to focus strictly on core services? What about human services or the investment of tax dollars for positive outcomes? Then there is the question of whether there is a governmental role in providing quality of life investments-- in the arts, museums and recreational opportunities?
I have to admit that I am a bit perplexed by today’s societies reliance, or maybe a better term being expectation, that government should take care of all these things. The question I would ask is where has the role of community support gone? Wouldn’t it be easier to write a check to those groups and organizations that you strongly support instead of giving the money to local government who is dealing with competing needs and wants? I don’t have answers to these questions but look forward to hearing from those who think they do.
How will Fredericksburg pay its bills?
May 6, 2009 12:35 am
CITY COUNCIL'S responsibility is to ensure a safe environment and provide public services while not becoming a financial burden on those we serve. Living this responsibility in the current economic climate is a challenge. To meet it we must understand the financial realities we face and be prepared to make some tough choices.
For the second year in a row the city budget has gone down. Even with additional cuts and reductions in work force, a 3-cent increase in the real estate tax rate and the use of $1 million in fund balance is recommended to balance the budget. The use of fund balance for operating expenses means we must increase revenue or reduce spending next year. And there are other challenges on the horizon.
The outlook on Fredericksburg's 'AA' bond rating was changed from stable to negative in part because of the "city's reduced financial flexibility due to substantial declines in general fund reserve levels." This could impact the cost of future capital projects like the new court facility. If we maintain the current timeline for the court project, it too becomes an issue because we will have to begin paying debt service on it within three years.
Like our neighbors, we are faced with declining personal-property revenue and must set a rate to maintain the revenue stream as well as recover lost revenue from the end of this year--the new rate would not go into effect until January. We cannot disregard the impact on this and future city budgets.
Nor can we forget that residents and businesses are also under financial strain during this economic downturn. Property values have dropped, with one result being foreclosures. Our retail base continues to shrink, affecting both employment and revenue. Residents have seen their financial investments drop, and many businesses are just trying to keep the doors open. For these reasons, Council must focus on core services, prioritize needs, and avoid expanding the budget and putting additional financial strain on those we serve.
Council members have expressed three concerns regarding core services in the current budget: 1) the cut to the school budget; 2) reduction in employee salaries; and 3) outside agency funding cuts. To address these concerns while minimizing the impact on the budget and the tax burden on residents, I proposed adding $300,000 to the school budget from two designated reserves, for schools and the regional jail, and a half-percent increase in the meals tax in an effort to restore employee salaries.
I proposed the meals tax increase because it hits disposable income and it doesn't put the entire burden on residents. I also suggested that we be conservative with the revenue projections. Should revenue come in higher than what is needed to restore salaries it could be used to cover potential shortfalls or reduce the need to use reserves.
NEEDS VS. WANTS
In regard to outside agencies I proposed that we focus on community needs rather than wants. The staff identified organizations that provide important human services, such as the Senior Visitor Program, Boys and Girls Club, the Disability Resource Center, Legal Services, and the Council on Domestic Violence. Such organizations should be considered for full funding.
Savings within the budget have been identified and more funds from within the outside agency budget could be moved to fully fund human services programs. Sister-city programs, festivals, and museums add to the community but don't rise to the level of need. For those who feel taxes should be raised, here is an opportunity to provide more community support for these worthy causes.
A majority on Council are considering a different approach. Instead of increasing the meals tax they would prefer to increase the real estate tax rate an additional 1 cent, for a total increase of 4 cents. The rationale for this position is the possible negative impact of an increase in the meals tax on restaurants and a guaranteed revenue stream with the real estate tax rate.
Residents should be aware that the real estate tax rate will change with the new assessments to ensure projected revenues. The approach Council is considering puts an additional tax burden on home and property owners.
In regard to outside agencies the consensus is not to prioritize based on community needs but rather to add funding to all organizations. Because the added funds do not restore level funding, all organizations--including human services--will still be cut.
In addition, instead of just restoring 1 percent of the employee salary cut and meeting the needs of human services, discussions have begun on how to spend the remaining surplus revenues gleaned from the budget and the additional increase in the real estate tax rate.
I do not question the justification of some of the expenditures proposed by my colleagues. But in looking at the budget constraints that we face now and in the near future, current economic uncertainties, and the financial challenges faces by residents, the reality is we can't afford them right now.
What should your tax dollars be funding?
I cannot understand those who justify raising taxes because our tax rate is lower than other localities or those who opposes tax increases on the basis that taxes are too high. The issue for me is not the level of taxes but rather the level of service residents expects, and as a community, we can afford. When that question is answered then we take on the issue of how we raise the revenue to provide that level of service.
Obviously there are those services—public safety, public works, and education that are a governmental responsibility. I also believe, and I know some would question, that as a community we do have an obligation to help those who are not in a position to help themselves. I have also justified support for the use of tax dollars when there is going to be a financial return on the investment or will save tax dollars in the future. And again there are those who would question government’s role in these types of endeavors.
So what is the legitimate role of local government? Are we to focus strictly on core services? What about human services or the investment of tax dollars for positive outcomes? Then there is the question of whether there is a governmental role in providing quality of life investments-- in the arts, museums and recreational opportunities?
I have to admit that I am a bit perplexed by today’s societies reliance, or maybe a better term being expectation, that government should take care of all these things. The question I would ask is where has the role of community support gone? Wouldn’t it be easier to write a check to those groups and organizations that you strongly support instead of giving the money to local government who is dealing with competing needs and wants? I don’t have answers to these questions but look forward to hearing from those who think they do.
How will Fredericksburg pay its bills?
May 6, 2009 12:35 am
CITY COUNCIL'S responsibility is to ensure a safe environment and provide public services while not becoming a financial burden on those we serve. Living this responsibility in the current economic climate is a challenge. To meet it we must understand the financial realities we face and be prepared to make some tough choices.
For the second year in a row the city budget has gone down. Even with additional cuts and reductions in work force, a 3-cent increase in the real estate tax rate and the use of $1 million in fund balance is recommended to balance the budget. The use of fund balance for operating expenses means we must increase revenue or reduce spending next year. And there are other challenges on the horizon.
The outlook on Fredericksburg's 'AA' bond rating was changed from stable to negative in part because of the "city's reduced financial flexibility due to substantial declines in general fund reserve levels." This could impact the cost of future capital projects like the new court facility. If we maintain the current timeline for the court project, it too becomes an issue because we will have to begin paying debt service on it within three years.
Like our neighbors, we are faced with declining personal-property revenue and must set a rate to maintain the revenue stream as well as recover lost revenue from the end of this year--the new rate would not go into effect until January. We cannot disregard the impact on this and future city budgets.
Nor can we forget that residents and businesses are also under financial strain during this economic downturn. Property values have dropped, with one result being foreclosures. Our retail base continues to shrink, affecting both employment and revenue. Residents have seen their financial investments drop, and many businesses are just trying to keep the doors open. For these reasons, Council must focus on core services, prioritize needs, and avoid expanding the budget and putting additional financial strain on those we serve.
Council members have expressed three concerns regarding core services in the current budget: 1) the cut to the school budget; 2) reduction in employee salaries; and 3) outside agency funding cuts. To address these concerns while minimizing the impact on the budget and the tax burden on residents, I proposed adding $300,000 to the school budget from two designated reserves, for schools and the regional jail, and a half-percent increase in the meals tax in an effort to restore employee salaries.
I proposed the meals tax increase because it hits disposable income and it doesn't put the entire burden on residents. I also suggested that we be conservative with the revenue projections. Should revenue come in higher than what is needed to restore salaries it could be used to cover potential shortfalls or reduce the need to use reserves.
NEEDS VS. WANTS
In regard to outside agencies I proposed that we focus on community needs rather than wants. The staff identified organizations that provide important human services, such as the Senior Visitor Program, Boys and Girls Club, the Disability Resource Center, Legal Services, and the Council on Domestic Violence. Such organizations should be considered for full funding.
Savings within the budget have been identified and more funds from within the outside agency budget could be moved to fully fund human services programs. Sister-city programs, festivals, and museums add to the community but don't rise to the level of need. For those who feel taxes should be raised, here is an opportunity to provide more community support for these worthy causes.
A majority on Council are considering a different approach. Instead of increasing the meals tax they would prefer to increase the real estate tax rate an additional 1 cent, for a total increase of 4 cents. The rationale for this position is the possible negative impact of an increase in the meals tax on restaurants and a guaranteed revenue stream with the real estate tax rate.
Residents should be aware that the real estate tax rate will change with the new assessments to ensure projected revenues. The approach Council is considering puts an additional tax burden on home and property owners.
In regard to outside agencies the consensus is not to prioritize based on community needs but rather to add funding to all organizations. Because the added funds do not restore level funding, all organizations--including human services--will still be cut.
In addition, instead of just restoring 1 percent of the employee salary cut and meeting the needs of human services, discussions have begun on how to spend the remaining surplus revenues gleaned from the budget and the additional increase in the real estate tax rate.
I do not question the justification of some of the expenditures proposed by my colleagues. But in looking at the budget constraints that we face now and in the near future, current economic uncertainties, and the financial challenges faces by residents, the reality is we can't afford them right now.
What should your tax dollars be funding?
Sunday, April 19, 2009
The Budget & Taxes
City Council’s primary responsibility is to fund a level of services that provide residents with a good quality of life. But in pursuing the goal we cannot become a financial burden on those we serve. “The point to remember is that what the government gives it must first take away.” This year Council faces the prospect of increasing taxes just to maintain services. The question is how far will City Council go to maintain services? Like those we serve, the city must make some sacrifices during this economic downturn.
Fredericksburg’s 2010 budget brings spending back to 2006 levels—a reduction of 6.63% from the current budget. To cover this year’s $7.3 million deficit staff has proposed $4.85 million in budget cuts, the use of $1 million in fund balance, an increase in the real estate tax rate of 3 cents to generate $1.2 million, with the balance covered by an increase in the Consumer Utility tax and other fees/taxes.
To get to this point we have reduced operating expenses, maintained a hiring freeze with a number of positions remaining unfilled resulting in fewer people having to do more for less money as the proposed budget comes with across-the-board salary cuts. Benefit costs for employees are also going up resulting in a further erosion of salaries. We continue to defer maintenance and replacement of infrastructure, equipment and vehicles and city support for outside service agencies have been drastically reduced. Unlike city residents and businesses city government can cover shortfalls by raising revenue through increases in taxes and fees.
In the past Council has raised taxes/fees, with community support, to build schools, recreational facilities, public safety improvements at a time when we had large reserves, increasing property values, and increased revenue from the business community. The community was willing to give more because they saw the benefits of the investments and felt they could afford to do so.
Today, city reserves are down, property values have dropped dramatically and foreclosures are still on the rise. Unemployment is up and our retail base continues to shrink affecting both employment and revenue. Residents have seen their financial investments drop and most businesses are dealing with revenue losses. The community is now faced with layoffs, pay-cuts, devalued investments and an uncertainty as to what the future may bring. Now the question is whether residents and businesses can afford additional taxes?
Another factor that must be considered regarding the budget is the looming debt service for a new court facility. Court construction will have a significant impact on the city’s debt service and resident’s taxes. Projects like Wegmans, and the downtown hotel will hopefully help offset some of this cost but it would not be prudent to start counting on funds that we don’t have. At a minimum, other projects that have greater community support and deferred infrastructure, equipment and vehicle purchases will be affected. Under the current economic realities this project needs to be pushed back as far as possible.
After two years of reduced budgets there is not much more to cut unless we start into services and/or positions. While the current budget is balanced with a 3-cent real estate tax rate a majority on Council has asked for some flexibility and the tax rate has been advertised at 5-cents. Cuts in the budget in three areas have members of Council concerned: 1) Schools 2) Employee salaries 3) Outside Agencies.
Before we consider additional funding for the schools and Outside Agencies we need to address the cuts in salaries for city employees. While many are now facing financial hardships city employees have been facing salary stagnation and benefit reductions for the past three years culminating in salary cuts in the proposed budgets. While salaries and benefits have been reduced their responsibilities have increased.
To fund employee salaries I have proposed a ½ cent increase in the meals tax. This tax impacts disposable income and is paid by visitors as well as residents. In discussions with staff it was agreed that we should be very conservative on projecting the amount of revenue raised; but it should cover salaries. If additional funds are raised we are in a better position next year.
A ½-cent increase would put us 1-cent higher than the neighboring jurisdictions and that should not result in a significant drop in business beyond what is being caused by the current economic downturn. The alternative at this point is to raise the real estate tax, which would have a bigger affect on residents and business.
In regard to the schools I have proposed an increase in their budget of $300,000 coming from two designated reserve balances—schools and regional jail. This proposal will only cover the current year but it does take pressure off the tax rate for now. It also gives both the city and the schools time to begin discussions on funding for the following year.
At the conclusion of last year’s budget deliberations Council made a “loan” to Outside Agencies of $450,000. It was explained that this year the Outside Agency Budget would be reduced by $450,000 and additional cuts would have to be made if the economy continued to decline. It was recommended that they begin looking for other sources of funding. The decline has continued and more cuts have been made with many agencies being zeroed out.
There is no question that some of these agencies provide a service not provided by the city and will have potentially greater financial impacts if they are cut too severely. Our Social Service Director has been tasked with submitting recommendations on funding such services and I will seriously consider these recommendations. Thus far we have identified $67,000 of savings in the budget that can be used for this purpose. I also believe that some funding within the Outside Agency budget can be reallocated to help fund the agencies identified by Social Services.
These proposals address the budget concerns expressed on the Council and can be achieved without any further increases in the real estate tax rate.
There is no question even with the increased taxes proposed the budget core services are being strained. However, I do not believe that under the current financial climate, and the uncertainties we still face, we can justify further increases in the tax rate. Residents and businesses are cutting back to make ends meet—not spending, investing or expanding. To raise taxes further will mean more of a hardship on our residents and businesses resulting in even less spending, investment and expansion that translates to less revenue in the future.
We are already facing the cost of a new court facility in the next few years and the need to equalize the personal property tax rate. We need to give city residents and businesses a break and not add to their financial burdens during the current financial downturn.
Your thoughts on the budget and the funding proposals as outlined?
Fredericksburg’s 2010 budget brings spending back to 2006 levels—a reduction of 6.63% from the current budget. To cover this year’s $7.3 million deficit staff has proposed $4.85 million in budget cuts, the use of $1 million in fund balance, an increase in the real estate tax rate of 3 cents to generate $1.2 million, with the balance covered by an increase in the Consumer Utility tax and other fees/taxes.
To get to this point we have reduced operating expenses, maintained a hiring freeze with a number of positions remaining unfilled resulting in fewer people having to do more for less money as the proposed budget comes with across-the-board salary cuts. Benefit costs for employees are also going up resulting in a further erosion of salaries. We continue to defer maintenance and replacement of infrastructure, equipment and vehicles and city support for outside service agencies have been drastically reduced. Unlike city residents and businesses city government can cover shortfalls by raising revenue through increases in taxes and fees.
In the past Council has raised taxes/fees, with community support, to build schools, recreational facilities, public safety improvements at a time when we had large reserves, increasing property values, and increased revenue from the business community. The community was willing to give more because they saw the benefits of the investments and felt they could afford to do so.
Today, city reserves are down, property values have dropped dramatically and foreclosures are still on the rise. Unemployment is up and our retail base continues to shrink affecting both employment and revenue. Residents have seen their financial investments drop and most businesses are dealing with revenue losses. The community is now faced with layoffs, pay-cuts, devalued investments and an uncertainty as to what the future may bring. Now the question is whether residents and businesses can afford additional taxes?
Another factor that must be considered regarding the budget is the looming debt service for a new court facility. Court construction will have a significant impact on the city’s debt service and resident’s taxes. Projects like Wegmans, and the downtown hotel will hopefully help offset some of this cost but it would not be prudent to start counting on funds that we don’t have. At a minimum, other projects that have greater community support and deferred infrastructure, equipment and vehicle purchases will be affected. Under the current economic realities this project needs to be pushed back as far as possible.
After two years of reduced budgets there is not much more to cut unless we start into services and/or positions. While the current budget is balanced with a 3-cent real estate tax rate a majority on Council has asked for some flexibility and the tax rate has been advertised at 5-cents. Cuts in the budget in three areas have members of Council concerned: 1) Schools 2) Employee salaries 3) Outside Agencies.
Before we consider additional funding for the schools and Outside Agencies we need to address the cuts in salaries for city employees. While many are now facing financial hardships city employees have been facing salary stagnation and benefit reductions for the past three years culminating in salary cuts in the proposed budgets. While salaries and benefits have been reduced their responsibilities have increased.
To fund employee salaries I have proposed a ½ cent increase in the meals tax. This tax impacts disposable income and is paid by visitors as well as residents. In discussions with staff it was agreed that we should be very conservative on projecting the amount of revenue raised; but it should cover salaries. If additional funds are raised we are in a better position next year.
A ½-cent increase would put us 1-cent higher than the neighboring jurisdictions and that should not result in a significant drop in business beyond what is being caused by the current economic downturn. The alternative at this point is to raise the real estate tax, which would have a bigger affect on residents and business.
In regard to the schools I have proposed an increase in their budget of $300,000 coming from two designated reserve balances—schools and regional jail. This proposal will only cover the current year but it does take pressure off the tax rate for now. It also gives both the city and the schools time to begin discussions on funding for the following year.
At the conclusion of last year’s budget deliberations Council made a “loan” to Outside Agencies of $450,000. It was explained that this year the Outside Agency Budget would be reduced by $450,000 and additional cuts would have to be made if the economy continued to decline. It was recommended that they begin looking for other sources of funding. The decline has continued and more cuts have been made with many agencies being zeroed out.
There is no question that some of these agencies provide a service not provided by the city and will have potentially greater financial impacts if they are cut too severely. Our Social Service Director has been tasked with submitting recommendations on funding such services and I will seriously consider these recommendations. Thus far we have identified $67,000 of savings in the budget that can be used for this purpose. I also believe that some funding within the Outside Agency budget can be reallocated to help fund the agencies identified by Social Services.
These proposals address the budget concerns expressed on the Council and can be achieved without any further increases in the real estate tax rate.
There is no question even with the increased taxes proposed the budget core services are being strained. However, I do not believe that under the current financial climate, and the uncertainties we still face, we can justify further increases in the tax rate. Residents and businesses are cutting back to make ends meet—not spending, investing or expanding. To raise taxes further will mean more of a hardship on our residents and businesses resulting in even less spending, investment and expansion that translates to less revenue in the future.
We are already facing the cost of a new court facility in the next few years and the need to equalize the personal property tax rate. We need to give city residents and businesses a break and not add to their financial burdens during the current financial downturn.
Your thoughts on the budget and the funding proposals as outlined?
Wednesday, April 8, 2009
THE BUDGET--What Else
Here is the e-mail I sent out yesterday to staff and Council members which provides a little more detail on today's FLS story on the budget http://fredericksburg.com/News/FLS/2009/042009/04082009/457892--
Good Afternoon All,
At our last work session on the budget council members expressed support for more money for the schools. There were also comments on City employee salaries and Outside Agencies. To do all this would add significantly to the operating budget. We are already dipping heavily into our Undesignated Reserves just to meet the current budget and are still looking at a tax increase of at least three cents.
As I have said many times (an no doubt you are tired of hearing about it) we have the lowest median income in the region and the highest number of residents on fixed incomes. While they may not own their homes any real estate tax increase is passed on in rents and the cost of goods and services. Today, we all know of people facing pay cuts and possible job loss. In addition, due to the crash of the markets people who once thought they had a secured source of income have seen the value of their investments, and income, decline. Under these circumstances, and the fact that we are still facing the cost of a new court facility within the next two years, raising the real estate tax beyond staff’s recommendation is difficult to justify.
However, understanding the current dynamic on Council I would like to propose the following:
1. A half-cent increase in the meals tax added with some of the saving identified in the budget should cover the $300,000 to restore employee’s salaries.The meals tax is on disposable income and spreads the pain to both residents (homeowners and renters) and visitors to the area. The small increase should not have a negative impact on visitation to our restaurants. I’ve also chatted with staff and made sure that the amount to be included in the budget takes into consideration the current economy.
2. In regard to the schools we have designated reserves for schools and the regional jail totaling $400,000.00. I would propose using a portion of these funds, not to exceed what we put towards employee’s salaries, for the schools.As staff will point out this is using one-time funds for operating expenses. In this case we are trying to maintain funding and not expanding operating expenses. What this does is put off the day of reckoning for a year. But it also gives City taxpayers a small breathing space also. I would be remiss to remind some that next year they will be facing re-election.
In looking at the lodging tax the return would not be significant at one-half or one percent and staff does have a concern that an increase now would affect business.
In regard to Outside Agencies I would point out that all were advised a year ago that this was going to be a tough year. In looking over this budget I do see opportunities to better prioritize the expenditures with existing funds.
Below is the link to the budget on the City's new website:http://www.fredericksburgva.gov/Departments/CityManager/index.aspx?id=769
A lot of people have commented on waste and overspending in the budget. Here is your opportunity to identify that waste and or recommend cuts, or just make an observation that you think is important.
Good Afternoon All,
At our last work session on the budget council members expressed support for more money for the schools. There were also comments on City employee salaries and Outside Agencies. To do all this would add significantly to the operating budget. We are already dipping heavily into our Undesignated Reserves just to meet the current budget and are still looking at a tax increase of at least three cents.
As I have said many times (an no doubt you are tired of hearing about it) we have the lowest median income in the region and the highest number of residents on fixed incomes. While they may not own their homes any real estate tax increase is passed on in rents and the cost of goods and services. Today, we all know of people facing pay cuts and possible job loss. In addition, due to the crash of the markets people who once thought they had a secured source of income have seen the value of their investments, and income, decline. Under these circumstances, and the fact that we are still facing the cost of a new court facility within the next two years, raising the real estate tax beyond staff’s recommendation is difficult to justify.
However, understanding the current dynamic on Council I would like to propose the following:
1. A half-cent increase in the meals tax added with some of the saving identified in the budget should cover the $300,000 to restore employee’s salaries.The meals tax is on disposable income and spreads the pain to both residents (homeowners and renters) and visitors to the area. The small increase should not have a negative impact on visitation to our restaurants. I’ve also chatted with staff and made sure that the amount to be included in the budget takes into consideration the current economy.
2. In regard to the schools we have designated reserves for schools and the regional jail totaling $400,000.00. I would propose using a portion of these funds, not to exceed what we put towards employee’s salaries, for the schools.As staff will point out this is using one-time funds for operating expenses. In this case we are trying to maintain funding and not expanding operating expenses. What this does is put off the day of reckoning for a year. But it also gives City taxpayers a small breathing space also. I would be remiss to remind some that next year they will be facing re-election.
In looking at the lodging tax the return would not be significant at one-half or one percent and staff does have a concern that an increase now would affect business.
In regard to Outside Agencies I would point out that all were advised a year ago that this was going to be a tough year. In looking over this budget I do see opportunities to better prioritize the expenditures with existing funds.
Below is the link to the budget on the City's new website:http://www.fredericksburgva.gov/Departments/CityManager/index.aspx?id=769
A lot of people have commented on waste and overspending in the budget. Here is your opportunity to identify that waste and or recommend cuts, or just make an observation that you think is important.
Sunday, March 8, 2009
Why VRE--In Context
Here is the entire e-mail I sent to Spotsylvania Supervisor Jerry Logan referenced in Mr. Telvock's story, County's Inaction Costs its Neighbors, http://fredericksburg.com/News/FLS/2009/032009/03082009/450654 in the FLS. As you can see it covers a bit more than just the issue of the cost of Spotsylvania's inaction to the City and Stafford. When read in its entirety it puts my comments in proper context--
Jerry,
I would ask that you broaden your view of VRE beyond just the gas tax and the operating costs and look at the overall impact of the service and its importance to the future development of the region. To focus on just the cost ignores the realities we now face and does a disservice to those we serve. While costs must be consider so must the impact of doing nothing, and the potential benefits that may offset those costs.
You need to take some time and review the recently adopted regional transportation plan to place VRE in its proper context in the region’s transportation plan today and in the future. The population in this region will double by 2035 and as reported, we cannot lay enough pavement to meet the growing demands on our road system. If we do not look at making transit viable the quality of life for residents will suffer.
While we all are looking for new economic development opportunities the growing congestion on our roads is making it more difficult to attract, and keep, businesses. Our region’s economic development is tied to the Washington Metro area so our ability to maintain adequate traffic flow in the I-95 corridor is critical. I am aware that there are project you would like to see in Spotsylvania and that you are being told by those bringing those projects forward VRE is important to the success of those projects.
Right now the funding for VRE is an issue that I will not deny. But I would ask that you look beyond today and the possibilities in the future. DRPT is planning to begin train service from Richmond/Lynchburg to New York. They are now taking a more active role in funding rail transportation. The new administration in Washington has now shifted the emphasis on transportation away for roads and putting more funding into transit. It is easy to look to “doomsday” scenarios to justify inaction. It takes some effort to come up with workable solutions.
VRE, like most anything else, is not perfect. It is easy to stand on the sidelines and criticize it but that gets us no closer to meeting our goal of maintaining adequate transportation north and south. As a member of VRE you would have the opportunity to bring forward changes to improve the system and become part of the solution. If you feel VRE is not the answer please tell me what you think is a better way.
I would also be remiss if I did not point out a few of the negative impact of Spotsylvania’s inaction regarding VRE on both the City and Stafford County. One of the reasons we are facing some financial challenges is because of the number of non-VRE riders we serve. Our downtown streets and parking lots are full of Spotsylvania residents (No they don’t eat and shop here-- they run off the trains and go home) and FAMPO just allocated $150,000.00 to lease private commercial spaces because existing parking lots are full—with a lot of Spotsylvania residents. Expansion of lots costing hundreds of thousands of dollars are planned in part because of growing ridership--again including Spotsylvania residents. I’ve yet to hear a member of the Spotsylvania Board of Supervisors acknowledge these, and other impacts, Spotsylvania residents are having on our communities.
This afternoon I am attending a meeting with staff to get the City to support the Towne Centre improvements on Route 3. I realize the importance of this project to the region and especially for Spotsylvania County. What I’m hearing is why should the City help Spotsylvania County when they do not seem interested in working as a regional partner. This “provincial” attitude must come to an end if we are to meet the challenges we face in the future. Working as a region brings shared costs, improved opportunities for outside funding, and less of a financial impact on our residents.
As a fellow Republican I also take issue with the rising cost of government and I have, and am prepared, to cut spending where I do not see a benefit to residents. In doing so though, I am obligated to look beyond the project or expenditure itself to judge its impact in meeting the needs and goals of our community today and in the future. It means that I may have to accept some cost today to meet future needs or goals. To that end I must be able to provide residents with the vision to justify the support.
I take issue with those in the party who begin every position they take with the word “No.” This is a statement not a solution. It provides no vision or direction for the future development of our region. I would hope you would agree that inaction could also have serious consequences. What the local Republican Party currently lacks in vision and leadership. Without it we are doomed to be in the minority and justifiably so. My question to you is this: While opposition to VRE may in your view make political sense; does it make sense in regard to the future of Spotsylvania?
If you have any question please do not hesitate to give me a call.
Please feel free to comment--
Jerry,
I would ask that you broaden your view of VRE beyond just the gas tax and the operating costs and look at the overall impact of the service and its importance to the future development of the region. To focus on just the cost ignores the realities we now face and does a disservice to those we serve. While costs must be consider so must the impact of doing nothing, and the potential benefits that may offset those costs.
You need to take some time and review the recently adopted regional transportation plan to place VRE in its proper context in the region’s transportation plan today and in the future. The population in this region will double by 2035 and as reported, we cannot lay enough pavement to meet the growing demands on our road system. If we do not look at making transit viable the quality of life for residents will suffer.
While we all are looking for new economic development opportunities the growing congestion on our roads is making it more difficult to attract, and keep, businesses. Our region’s economic development is tied to the Washington Metro area so our ability to maintain adequate traffic flow in the I-95 corridor is critical. I am aware that there are project you would like to see in Spotsylvania and that you are being told by those bringing those projects forward VRE is important to the success of those projects.
Right now the funding for VRE is an issue that I will not deny. But I would ask that you look beyond today and the possibilities in the future. DRPT is planning to begin train service from Richmond/Lynchburg to New York. They are now taking a more active role in funding rail transportation. The new administration in Washington has now shifted the emphasis on transportation away for roads and putting more funding into transit. It is easy to look to “doomsday” scenarios to justify inaction. It takes some effort to come up with workable solutions.
VRE, like most anything else, is not perfect. It is easy to stand on the sidelines and criticize it but that gets us no closer to meeting our goal of maintaining adequate transportation north and south. As a member of VRE you would have the opportunity to bring forward changes to improve the system and become part of the solution. If you feel VRE is not the answer please tell me what you think is a better way.
I would also be remiss if I did not point out a few of the negative impact of Spotsylvania’s inaction regarding VRE on both the City and Stafford County. One of the reasons we are facing some financial challenges is because of the number of non-VRE riders we serve. Our downtown streets and parking lots are full of Spotsylvania residents (No they don’t eat and shop here-- they run off the trains and go home) and FAMPO just allocated $150,000.00 to lease private commercial spaces because existing parking lots are full—with a lot of Spotsylvania residents. Expansion of lots costing hundreds of thousands of dollars are planned in part because of growing ridership--again including Spotsylvania residents. I’ve yet to hear a member of the Spotsylvania Board of Supervisors acknowledge these, and other impacts, Spotsylvania residents are having on our communities.
This afternoon I am attending a meeting with staff to get the City to support the Towne Centre improvements on Route 3. I realize the importance of this project to the region and especially for Spotsylvania County. What I’m hearing is why should the City help Spotsylvania County when they do not seem interested in working as a regional partner. This “provincial” attitude must come to an end if we are to meet the challenges we face in the future. Working as a region brings shared costs, improved opportunities for outside funding, and less of a financial impact on our residents.
As a fellow Republican I also take issue with the rising cost of government and I have, and am prepared, to cut spending where I do not see a benefit to residents. In doing so though, I am obligated to look beyond the project or expenditure itself to judge its impact in meeting the needs and goals of our community today and in the future. It means that I may have to accept some cost today to meet future needs or goals. To that end I must be able to provide residents with the vision to justify the support.
I take issue with those in the party who begin every position they take with the word “No.” This is a statement not a solution. It provides no vision or direction for the future development of our region. I would hope you would agree that inaction could also have serious consequences. What the local Republican Party currently lacks in vision and leadership. Without it we are doomed to be in the minority and justifiably so. My question to you is this: While opposition to VRE may in your view make political sense; does it make sense in regard to the future of Spotsylvania?
If you have any question please do not hesitate to give me a call.
Please feel free to comment--
Saturday, February 14, 2009
Let's Talk Taxes
“The people are hungry: It is because those in authority eat up too much in taxes.”
Lao Tzu
“Taxes grow without rain.”
Jewish Proverb
“He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation... For imposing Taxes on us without our Consent.... We, therefore... solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States.”
The Declaration of Independence of the Thirteen Colonies, 1776
“Why, sir, there is every possibility that you will soon be able to tax it!”
(PM William Gladstone, on the usefulness of electricity)
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Winston Churchill
“The point to remember is that what the government gives it must first take away.”
John S. Coleman, address, Detroit Chamber of Commerce, 1956
“You don't pay taxes - they take taxes.”
Chris Rock, Bigger and Blacker
Bitching about taxes has been around for a while and I’d be willing to bet what remains of my income after April 15th that taxation will continue to be the target of “thoughtful” comments well into the future. The purpose of this post is not to out-do the witty insights of those who came before me nor continue the centuries old tirades, clichés, or sound bites against taxes. The goal is to arrive at a consensus as to what level of taxation is legitimate. To tackle this question we must also make some determination regarding the legitimate role of government. Our focus will be on taxes at the local level.
I am going to step out on a limb and say that we all agree that taxes are at least a necessary evil. The question then becomes what constitutes, “necessary.” Another aspect of this question that should be considered is the direct benefit of tax dollars to the community being served—overhead vs. outcomes.
Tax dollars collected at the local level stay local. They are primarily spent on services, not programs, and a higher percentage of those dollars goes towards services than to overhead. As you get farther up the food chain to the state and federal level those dynamics change—more program spending, less percentage of tax dollars actually meeting a need due to higher overhead. And then there is the issue of using tax policy for redistribution of wealth and social policy--A discussion for another day.
As with taxes in general there are those in the community who believe their local taxes are too high while others point to the fact that Fredericksburg has one of the lowest tax rates in the state as a justification for increasing taxes. For those supporting higher taxes you need to consider the fact that the City also has the lowest median income and the largest percentage of households on fixed incomes in the region. Our level of taxation in relation to other localities is irrelevant. The level of service expected and the efficiency of providing those services are relevant. For those at the other end of the spectrum consider this--
During one of our budget discussions I received a call from a constituent who was on a fixed income and was told that to raise taxes would cause her great financial distress. Then she told me not to cut the library budget. At the same time Council announced that the city would no longer be supplying trash bags, which would mean a savings of over $60,000.00 a year. I received more calls and comments (and still do) complaining about the loss of trash bags than I did about the tax rate. We are told not to increase taxes but at the same time we are told not to reduce services. The reality is that something has got to give--higher taxes or less service. The most common response to this reality is to deny it. We are told not to reduce services, but instead cut out “wasteful” spending.
I’ve lost count of the times I’ve been told that the City could end “wasteful” spending if it were run more like a business. To date I’ve yet to receive an explanation as to what that means. Am I to believe that the private sector is free of wasteful spending and runs at 100% peak efficiency? The current situation faced by the auto industry and financial firms, for example, would seem to indicate that this is not the case. So let’s put the clichés aside and focus on whether we can really save money without affecting services.
The city has actually been reducing expenditures in areas like travel, continuing education, and supplies for the last two years. In addition, the city has deferred maintenance and put off replacement of equipment and vehicles. We have reduced our workforce through attrition and are having to do more with less. As a result of these actions last year’s city budget was actually less than the one the year before. So as any good business would do we have been trying to control costs while trying to minimize the impact on our responsibility to provide services. It is not my intent to imply the city is now running at 100% peak efficiency but rather to make clear that further reductions will start affecting services.
Another factor which has a big impact on expenditures and services comes from mandates, regulations, and funding, or lack there of, from the state and federal governments. Before you recommend that the city should reduce work crews from three to five to do a job, read the OSHA regulations. Before you point to savings in the school budget in the area of administration or in the classroom, check to see how state or federal law mandates many of those positions or programs.
In regard to funding, at the state level the current view is to hold the line on tax increases and as a result funding to localities to meet state obligations in such areas as education, transportation, public safety, and Constitutional Officers, have been reduced, or are not keeping up with increasing costs, thereby leaving the localities to face the shortfall. This statement is not meant as either an endorsement or criticism of state tax policy it is simply a statement of fact.
On the Federal side of this issue it is not so much money as an added level of bureaucracy, which just adds to the amount of paperwork and procedures, which take time and resources away from actually providing efficient and cost effective services. In applying for or using HUD funds for example, the amount of paperwork and regulations, which change almost daily, is mind-boggling. The rationale for this process is to ensure that funds are properly spent. The reality is that these regulations waste time and resources dealing with the process, thus leaving less time and resources for the desired outcome.
Here is the link to the city’s current 2009 budget:
http://www.fredericksburgva.gov/citypubs/citypubs.asp
I invite you to go through it and point out where you believe the city is wasting money. Or if you believe that there are obvious savings that don’t require a look at the budget please pass them on. I will be happy to respond by either pointing out issues with the proposed cuts or acknowledge the validity of the suggestion and pass it on to staff. Let’s put assumptions and clichés aside and instead provide specifics with a rationale to back them up.
Now that we are in the process of eliminating all wasteful spending in the budget we need to address the issue of what services local government is to provide. As I noted the sole determinate in setting the tax rate should be to ensure that we have the revenue to provide the services that City residents expect and at a reasonable cost. We are dealing with the cost issue as outlined above, so let’s now talk about services.
In previous posts I have discussed my thoughts on the level of service we should be providing. Now I want to hear from you regarding what level of service you believe should be funded at the local level. As a taxpayer what do you expect for your investment?
I would breakdown services as follows: Core services would be public works—water, sewer, roads, trash pick-up, public safety, and education. Next would come quality of life services such as recreational and library facilities. Then there are services that we fund through outside organizations primarily related to social services— SPCA, legal aid, homeless shelter, counseling services etc. You may, or may not, agree with this breakdown of services. If not, let me know how you would rank services.
If you have the view that taxes are too high then you need to point out cost savings and/or what services should be reduced (and how) or eliminated. If you believe that local government needs to be providing more services let me know what they are and then offer a viable suggestion for how we are going to pay for them. Everyone has a position on taxes. I am giving you the opportunity to prove your point. No one-liners allowed!
Lao Tzu
“Taxes grow without rain.”
Jewish Proverb
“He has combined with others to subject us to a jurisdiction foreign to our constitution and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation... For imposing Taxes on us without our Consent.... We, therefore... solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States.”
The Declaration of Independence of the Thirteen Colonies, 1776
“Why, sir, there is every possibility that you will soon be able to tax it!”
(PM William Gladstone, on the usefulness of electricity)
“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”
Winston Churchill
“The point to remember is that what the government gives it must first take away.”
John S. Coleman, address, Detroit Chamber of Commerce, 1956
“You don't pay taxes - they take taxes.”
Chris Rock, Bigger and Blacker
Bitching about taxes has been around for a while and I’d be willing to bet what remains of my income after April 15th that taxation will continue to be the target of “thoughtful” comments well into the future. The purpose of this post is not to out-do the witty insights of those who came before me nor continue the centuries old tirades, clichés, or sound bites against taxes. The goal is to arrive at a consensus as to what level of taxation is legitimate. To tackle this question we must also make some determination regarding the legitimate role of government. Our focus will be on taxes at the local level.
I am going to step out on a limb and say that we all agree that taxes are at least a necessary evil. The question then becomes what constitutes, “necessary.” Another aspect of this question that should be considered is the direct benefit of tax dollars to the community being served—overhead vs. outcomes.
Tax dollars collected at the local level stay local. They are primarily spent on services, not programs, and a higher percentage of those dollars goes towards services than to overhead. As you get farther up the food chain to the state and federal level those dynamics change—more program spending, less percentage of tax dollars actually meeting a need due to higher overhead. And then there is the issue of using tax policy for redistribution of wealth and social policy--A discussion for another day.
As with taxes in general there are those in the community who believe their local taxes are too high while others point to the fact that Fredericksburg has one of the lowest tax rates in the state as a justification for increasing taxes. For those supporting higher taxes you need to consider the fact that the City also has the lowest median income and the largest percentage of households on fixed incomes in the region. Our level of taxation in relation to other localities is irrelevant. The level of service expected and the efficiency of providing those services are relevant. For those at the other end of the spectrum consider this--
During one of our budget discussions I received a call from a constituent who was on a fixed income and was told that to raise taxes would cause her great financial distress. Then she told me not to cut the library budget. At the same time Council announced that the city would no longer be supplying trash bags, which would mean a savings of over $60,000.00 a year. I received more calls and comments (and still do) complaining about the loss of trash bags than I did about the tax rate. We are told not to increase taxes but at the same time we are told not to reduce services. The reality is that something has got to give--higher taxes or less service. The most common response to this reality is to deny it. We are told not to reduce services, but instead cut out “wasteful” spending.
I’ve lost count of the times I’ve been told that the City could end “wasteful” spending if it were run more like a business. To date I’ve yet to receive an explanation as to what that means. Am I to believe that the private sector is free of wasteful spending and runs at 100% peak efficiency? The current situation faced by the auto industry and financial firms, for example, would seem to indicate that this is not the case. So let’s put the clichés aside and focus on whether we can really save money without affecting services.
The city has actually been reducing expenditures in areas like travel, continuing education, and supplies for the last two years. In addition, the city has deferred maintenance and put off replacement of equipment and vehicles. We have reduced our workforce through attrition and are having to do more with less. As a result of these actions last year’s city budget was actually less than the one the year before. So as any good business would do we have been trying to control costs while trying to minimize the impact on our responsibility to provide services. It is not my intent to imply the city is now running at 100% peak efficiency but rather to make clear that further reductions will start affecting services.
Another factor which has a big impact on expenditures and services comes from mandates, regulations, and funding, or lack there of, from the state and federal governments. Before you recommend that the city should reduce work crews from three to five to do a job, read the OSHA regulations. Before you point to savings in the school budget in the area of administration or in the classroom, check to see how state or federal law mandates many of those positions or programs.
In regard to funding, at the state level the current view is to hold the line on tax increases and as a result funding to localities to meet state obligations in such areas as education, transportation, public safety, and Constitutional Officers, have been reduced, or are not keeping up with increasing costs, thereby leaving the localities to face the shortfall. This statement is not meant as either an endorsement or criticism of state tax policy it is simply a statement of fact.
On the Federal side of this issue it is not so much money as an added level of bureaucracy, which just adds to the amount of paperwork and procedures, which take time and resources away from actually providing efficient and cost effective services. In applying for or using HUD funds for example, the amount of paperwork and regulations, which change almost daily, is mind-boggling. The rationale for this process is to ensure that funds are properly spent. The reality is that these regulations waste time and resources dealing with the process, thus leaving less time and resources for the desired outcome.
Here is the link to the city’s current 2009 budget:
http://www.fredericksburgva.gov/citypubs/citypubs.asp
I invite you to go through it and point out where you believe the city is wasting money. Or if you believe that there are obvious savings that don’t require a look at the budget please pass them on. I will be happy to respond by either pointing out issues with the proposed cuts or acknowledge the validity of the suggestion and pass it on to staff. Let’s put assumptions and clichés aside and instead provide specifics with a rationale to back them up.
Now that we are in the process of eliminating all wasteful spending in the budget we need to address the issue of what services local government is to provide. As I noted the sole determinate in setting the tax rate should be to ensure that we have the revenue to provide the services that City residents expect and at a reasonable cost. We are dealing with the cost issue as outlined above, so let’s now talk about services.
In previous posts I have discussed my thoughts on the level of service we should be providing. Now I want to hear from you regarding what level of service you believe should be funded at the local level. As a taxpayer what do you expect for your investment?
I would breakdown services as follows: Core services would be public works—water, sewer, roads, trash pick-up, public safety, and education. Next would come quality of life services such as recreational and library facilities. Then there are services that we fund through outside organizations primarily related to social services— SPCA, legal aid, homeless shelter, counseling services etc. You may, or may not, agree with this breakdown of services. If not, let me know how you would rank services.
If you have the view that taxes are too high then you need to point out cost savings and/or what services should be reduced (and how) or eliminated. If you believe that local government needs to be providing more services let me know what they are and then offer a viable suggestion for how we are going to pay for them. Everyone has a position on taxes. I am giving you the opportunity to prove your point. No one-liners allowed!
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