I read a lot of rationalizations from the city council members this week for the support of a new assistant position to be created under mayor Kearns. Most of it had some fuzzy or incorrect thinking about how tax money came to be sitting in the budget of the city. They need a refresher course in taxes and spending.
Government money comes from taxes
There are some fees the government collects for the use of land, or more esoteric stuff like sale of radio frequencies. That stuff is minor – most government money comes from taxes (property and income and sales, individual and business). The voters give the government the right to tax, and increase taxes, via voting.
The Grandview Heights school board once tried to tell us all that they had negotiated the rent of space on the football field for cell towers, and that because they did all the work negotiating with the phone companies, they were the owners of that money and could use it however they wanted (which at the time was to pay for new field turf).
If the board had gone into business for themselves, and started buying up property, then selling it to cell phone tower companies, they could have honestly said they owned the money. But that would be silly – school boards are not in the business of cell towers. The land those towers were built on belonged to the public. The money they received was only a fee, same as the fee for use of the field by other school teams. Those fees went into the general funds of the school, which is owned by the residents of this city.
Our city collects some money from other parts of the government, the state (which has been decreasing mostly) and the federal government. They got that money from taxes too, so … taxes are where the money comes from.
Taxes increase because we voted for the increase
Ohio has House Bill 920, which decreases the tax valuation of property because of property value increases (and Grandview has some of the fastest increases in value). There are some other exemptions and rollbacks, but generally taxes ratchet higher every year.
Taxes go up because governments convince voters to approves increases. We all want better schools, more services, faster police response, new transportation options (monorails). Our governments are supposed to be the experts who can tell us what new expenditures will be worth higher taxes, and which will be wastes of money. Unfortunately, those office holders can fall for the same poor rationalizations that cause the normal person with a high credit card balance to get into trouble.
Spending money because we have it in our hand
This is the “burning a hole in your pocket” trap, and I think many of the city council members have fallen for it. They were quick to note that the council had not spent all the money it had budgeted for last year, and this was a rationalization for more spending this year.
If we are the kind of people who carefully budget our household spending, and we end the year with money to spare, we can feel free to go out for an expensive evening, and still not cause long term budget issues. The problem comes when people use a short term surplus to justify a big ticket item on the credit card. If that budget goes negative the next year, you are in trouble.
New employees for the city are even worse than credit card spending, because if you keep up the CC bills, eventually that new car is paid off. A new employee for the city is forever – it is nearly impossible to cut city employees, unless the economy has cratered (I can’t remember the city cutting people during the 2008 downturn, mostly there were people who didn’t get replaced when they chose to leave). The cost of new employees continues to rise with seniority.
And good luck being the council member who has to tell the mayor “we need to cut your assistant due to budget problems”. The job – and the cost – is forever.
No new taxes
Councilman Smith said he felt OK about the new assistant position because it would not require new taxes.
Every single dollar in the city coffers is there because of new taxes. The 2016 tax levy was not that long ago, if there was a large surplus in the last year’s budget, then maybe that 2016 tax was too large.
As I noted above, every dollar in the city budget is the result of new taxes – some of those increases may be longer in the past, but it all came from new taxes.
A present for the new mayor
Some of the council members said they felt the new mayor deserved the staff she wanted, as a sort of birthday present. Ms Houston said:
“… The mayor also reserves the right to reconfigure her leadership staff and their responsibilities as she sees fit …”
The mayor is charged with running the city administration as she sees fit, within the limitations of the city charter. The city council, however, holds the purse – and all authority for hiring new employees.
If we are at the point where new city positions are created just to make the new mayor happy, then the council has lost its way.
Reasons I could accept
New mayor Kearns needs to stand up before the residents of the city, and make the case for her new assistant. If she is honest, she will say “yes, this new position will cost you more of your tax dollars that you voted for in 2016. It is going to shorten the time before we ask for more money. But it is a good thing to spend your money on.” And then explain how this addition to the bureaucracy will not make the mayor’s office less responsive.