MORE Common Sense For Sun City, This Time From Wisconsin

A key point in the editorial below is mindless tax freezes that dodge our responsibility to sort out political priorities and practical spending needs. At every level, elected officials avoid their responsibility. The citizens—like the geezers in Sun City—are more prone to mindless responses to complex issues because those issues are difficult, complicated, and lack easy answers. Thus, the Sun City kneejerk response to taxes. All taxes are bad is akin to saying all snowflakes are alike. If this is (fair & balanced) anti-simple-mindedness, so be it.

[x Wisconsin State Journal]
Put real limits on state, local taxation

If lawmakers want to solve state and local budgeting problems for the long term, they must jettison so-called "freezes" in favor of more effective - but more complicated - long-term solutions.

The Joint Finance Committee, once the brain trust of the Legislature, seems to be suffering brain freeze these days. First, members announced plans to freeze local property tax levies. And this week, Republicans who control the committee are expected to lay out a new plan: a three-year freeze on general state spending. Oooh, that's cold.

Politicians propose arbitrary, mindless "freezes" to dodge their responsibility to sort out political priorities and practical spending needs. Spending freezes imply that all government programs are created equal, and as a result, freezes lock in bad budgeting practices and priorities, ensuring that you usually get less, not more, for your taxpayer dollar.

Worst of all, freezes tend to be temporary solutions enacted in a moment of fiscal crisis. After a while, the freezes thaw, and then it's back to old taxpayer-soaking habits.

What we need are permanent, reasonable limits that match government's tax collecting to taxpayers' ability to pay. Done right, these limits wouldn't really "freeze" anything: instead, the rules would allow for logical, restricted growth in spending based on measurable benchmarks.

For example, some other states match their growth in tax collections to personal income growth or the inflation rate. For local government, a reasonable limit would allow property tax levy increases based on population growth or new construction (the Legislature may include such a quick-thawing provision in its levy "freeze" ). Another possibility: pegging local budgets to the consumer price index. And leaders committed to easing tax burdens could shave a percentage point off the benchmark rates.

To enforce honesty, state budgeteers must be banned from shifting expenses forward into future budgets. Counting income and spending in the year they're due gives a truer budget picture.

Finally, in flush times, state tax surpluses ought to go into a rainy day fund or back to taxpayers. That would deter lawmakers from creating new, permanent spending obligations.

There's no doubt that we need some type of guidelines to enforce fiscal discipline. State spending during the 1990s grew too fast, and most of the money went back to local governments and schools that spent too much in part due to their overreliance on state handouts.

The Legislature is right to attack both problems, but so far the GOP majority seems to be budgeting based on political strategy and ideology rather than sound fiscal policy.

Logical limits based on new formulas won't be nearly as poll-friendly as a "tax freeze" - but coupled with an effective economic growth strategy for the state, they would more effectively and permanently limit government's reach into our bank accounts.

Copyright © 2004 Capital Newspapers, publishers of the Wisconsin State Journal, The Capital Times, Agri-View and Apartment Showcase.. All rights reserved.

Common Sense For Sun City

The Texas Municipal League was founded as the League of Texas Municipalities in the summer of 1913 by Herman G. James, Director of the Bureau of Municipal Research and Reference at the University of Texas, and Alexander P. Wooldridge,qv then mayor of Austin. The two men invited representatives from all Texas cities to come to Austin for an organizational meeting. Fourteen cities eventually sent representatives. At that first meeting a modest membership fee was approved along with a constitution to govern the association. Maximilian Starcke of Seguin was among the organizers of the league, and served several terms as president. The membership grew quickly, and by 1946 there were 425 member cities. The sole purpose of the organization is to provide services to Texas cities and city officials. League services to its member cities include legal advice and information on municipal legal matters and legislative representation on the state and federal levels. The central office also supplies information and research library facilities; publishes a monthly magazine, Texas Municipalities; sponsors an annual conference and training seminars on municipal issues; and provides professional development of member city officials. The league is financed primarily by annual service charges paid by affiliated cities, but some income is also derived from magazine and bulletin sales and from subsidiary organizations. I trust the Texas Municipal League far more than a group of wacko tax protesters in Sun City, Texas. All Sun City residents should read (and heed) Point 4 below. If this is (fair & balanced) information, so be it.

[x Texas Municipal League]
TAX FREEZES: CITIES SHOULD PROCEED CAUTIOUSLY

A constitutional amendment approved by Texas voters in 2003 (H.J.R. 16), permits cities to freeze property taxes on the homesteads of persons over the age of 65 and disabled persons. The freeze is optional for each city, except that a popular election on the issue is required if the city receives a petition signed by five percent of the registered voters in the city.

Many cities are beginning to feel the pressure brought by advocates of the freeze, including organizations representing the elderly and certain newspapers columnists around the state. According to some of these proponents, the freeze should be enacted immediately, without any further study or deliberation by cities. This is unfortunate. Enacting the freeze without careful consideration is very risky for several reasons:

1. Once enacted, the freeze is permanent. There is no opportunity for the council or the voters to undo it in the future. Hasty action could lead to fiscal regret for years to come.
2. The impact of public school finance reform is an enormous fiscal question mark on the horizon. Talk of reform now includes proposed restrictions on municipal property revenue (see previous articles). Though TML will be fighting any threat to city revenue during a school finance session, it may be wise to wait until the smoke clears before acting on other property tax issues. If a city grants the freeze and the legislature subsequently reduces the authority of cities to raise revenue, the city may find it very difficult or impossible to recover the revenue lost to the freeze.
3. There is no advantage to enacting the freeze now, as opposed to enacting it later in calendar year 2004. A freeze enacted anytime in 2004 does not impact actual taxes paid until 2005. Thus, waiting until after a spring special session on school finance to enact the freeze would confer the same benefit on affected taxpayers as acting right away would, but at much less risk.
4. Whether real tax “relief” is offered by the freeze is questionable. Cities must still levy taxes to pay for public safety, infrastructure, and much more. Any artificial limitation on taxes simply shifts the tax burden from the benefited landowners to other citizens—in this case younger taxpayers.
5. Persons over 65 already enjoy substantial front-end homestead exemptions in many cities, sometimes as much as $100,000. A city feeling pressured to enact the freeze may wish to reexamine the extent to which these optional homestead exemptions are currently offered. Freezing taxes on an already nearly tax-exempt homestead could be a case of gilding the lily.

There is no deadline by which city councils must make a decision on this issue. TML would advise careful consideration before any decision on tax freezes, especially considering the current fiscal situation in our state. City officials with questions about the freeze may call Bennett Sandlin in the TML Legal Department at (512) 231-7400.

© 2004 Texas Municipal League