Comments on: The State and Local Hole

By: may

may — Thu, 11 Jun 2009 18:11:07 +0000

There’s the issue of special district proliferation as well.
Talking of NYC did you read the newsday article:
http://www.newsday.com/news/local/investigations/ny-lispecialdistricts1207,0,4049924.story
Prior to vote, special districts again in crosshairs

Justify that!

Meanwhile in Colorado:

http://facethestate.com/articles/14426-new-bill-seeks-sunshine-states-special-districts
New bill seeks sunshine for state’s special districts

And according to US Census number was over 35,000 by 2002;which according to observers of what wasn’t included means that was an undercounting!

By: Mark

Mark — Wed, 10 Jun 2009 20:41:48 +0000

“good debate” is partly right about duplication of services. The “partly” is because non-school expenses are still a smaller part of the budget than school expenses which can’t be consolidated as easily.
The biggest problem with most local governments is that they were funded heavily from taxes and fees extracted from real estate and construction activity, which went on so long that the governments grew far beyond what can be financed from other sources.
The other big problem is unbelievably excessive retirement commitments. In NY, until recently, pension vesting began at 5 years of service. Now a new employee has to wait 10 to vest. That is considered progress. Similarly, lifetime health benefits are vested after 10 years of service. Those commitments far exceed anything GM etc obligated themselves for. That is the big disaster coming down the road and the road is getting a lot shorter. For those progressives who are always going on about “equity” and “justice” in regard to taxes and spending, justify those entitlements.

By: may

may — Wed, 10 Jun 2009 15:24:32 +0000

“Another irony is that when states encourage (or mandate) the consolidation of service – such as regionalizing education, towns go up in arms, claiming it as a ‘loss of local control’(at least here in MA). So people complain about the costs of government and then proceed to protest against measures that might at least, manage costs.”

Check out BC regional districts.

BC regional district is more sophisticated, complex and has greater variants than anything in U.S. Has been evolving with provincial support since the 1960s.

By: Paul

Paul — Wed, 10 Jun 2009 14:21:57 +0000

For those still complaining about how Prop 13 has stymied California, Mish Shedlock has a great post @ http://globaleconomicanalysis.blogspot.com/

It seems that even after adjusting for population increase and inflation since 1997-8, California State spending has increased 46%. This is the kind of unsustainable spending and ensuing taxation, that causes the most productive portion of the population in the high tax states to flee on a consistent basis.

By: q

Wed, 10 Jun 2009 13:31:35 +0000

we should all move to north dakota!

By: may

may — Wed, 10 Jun 2009 02:19:48 +0000

You might want to check out the BC regional district system

By: may

may — Wed, 10 Jun 2009 02:08:58 +0000

You might want to stick with what you have….
You should read this article about Indian urban government:
http://www.citymayors.com/government/india_government.html

Local government in India still carries
characteristics of its colonial heritage

By: Bill

Bill — Tue, 09 Jun 2009 17:40:32 +0000

Only high-income taxpayers more in federal taxes than in local taxes. My gut feeling based on my own experience in different tax brackets in recent years is that for many if not most home-owning families with modest incomes, the local tax bill is highest.

By: Markel

Markel — Tue, 09 Jun 2009 12:54:21 +0000

Not the school Susan is talking about.

Newton North–also known as “Versailles High”–is the most expensive high school ever built in Massachusetts, a budget-busting $200 million Graham Gund-designed folly featuring a zig-zag footprint, glass-walled cafeteria, state-of-the-art student theater, and so on. The town of Newton has another $200 million in projects coming up at other schools.

Meanwhile, a so-called Blue Ribbon commission has repeatedly warned that Newton’s budget is unsustainable, with (even before the economic collapse) 6% annual revenue increases overwhelmed by 9% annual spending increases.

Newton is not unusual among affluent communities, wanting everything without paying for it. Think California.

By: D. Christopher Leonard

D. Christopher Leonard — Tue, 09 Jun 2009 10:29:25 +0000

Missing from Paul’s argument (infra) is the recognition that pitting localities, regions, and states against each other for the lowest tax burden is a race to the bottom. I take it he is about to move to Mississippi-worst health outcomes, lowest educational attainment, etc in the U.S? The logical outcome of the argument is to relocate to a low-tax nation state. Perhaps rural Burma (pardon Mynmar) beckons?
I think there is a problem with the seemingly endless replication of levels of government. But aggregating the provision of services (police, fire, education, healthcare) argues for a regional approach and counties would seem to be the logical unit. In the east, counties have become less meaningful as administrative entities. In the west, they;re quite important and, I think may provide a national model.
Another irony is that when states encourage (or mandate) the consolidation of service – such as regionalizing education, towns go up in arms, claiming it as a ‘loss of local control’(at least here in MA). So people complain about the costs of government and then proceed to protest against measures that might at least, manage costs.

By: David

David — Tue, 09 Jun 2009 07:41:22 +0000

Of course, reduce taxes, why didn’t I think of that.

Reducing taxes will also lower crime rates. Reducing taxes will reduce teenage pregnancies. Reducing taxes will help us win the war on terror. Reducing taxes will help everyone lose weight…

By: Bayard

Bayard — Tue, 09 Jun 2009 04:54:11 +0000

In many areas, the county budget is about 60% funded by real property taxes. With foreclosures galore, and assessments (tax basis) dwindling because of massive value declines, these governments will be hard pressed, and will be prime candidates for more bailout funds. Much of their budgets are tied up in schools, police and fire departments. A very large problem looming as new budget years approach in July.

By: good debate

good debate — Tue, 09 Jun 2009 03:18:07 +0000

I think a major problem revolves around the duplication of services and poor coordination between federal, state, county and local entities with respect to services.

In Westchester, Suffolk, Nassau Counties in New York, I suspect you could eliminate the county level of government ($1b) and no one would notice. Any shortfall, could be made up with the consolidation of services at the state level.

By political leadership playing shell and blame games with the federal, state, county, and local jurisdictions, it is difficult for the voter to undersatnd what tax dollar pays for what service. And therefore, the taxpayer has trouble understanding what politicians are accountable for what spending.

By: Paul

Paul — Tue, 09 Jun 2009 02:55:54 +0000

Many of you just don’t get it.

The raising of progressive State taxes often results in less State revenue, not more! Every Fed tax cut since the 60′s raised total revenue, not less. Most states are definitely on the downhill side of the Laffer Tax Curve, and cannot afford to raise taxes in this ugly recession. Plus, raising taxes destroys many of the business you need to keep people employed.

The reason for this tax situation are many; here are some:

A. People have choices. That terrible thing Freedom, has done it to us again! Drat! People can and often do move to lower tax states when taxes are raised. The Tax Foundation has a study out that reports that 1100 people a day on average for last 11 years left the high tax states for the low tax states. http://www.taxfoundation.org/research/show/24488.html And these are your productive people, those who make a state go.

B. Again Choices. Many high tax states have very progressive State Income taxes. When taxes get too high, high income people can opt for things like tax free bonds or less risky and financially rewarding investments. These choices take their toll of State Revenue.

C. Higher Taxes depress business activity. Less business, less profits and in the case of this recession, perhaps no profits. Less or no profits mean less tax revenue, often a lot less because people can be pushed into lower brackets.

As for the Feds, the total Income Tax take has consistently hovered around 19% since WWII, whether or not taxes were high or low. It’s post war high was during the height of the unsustainable dot com stock bubble ( 23%), and the post war low (prior to this recession ) was just two years later (16%) during the dot com bust under the same tax structure. Generally speaking, booms generate lots of taxes, while recessions cause tax revenue to fall, sometimes as now, precipitously.

Therefore, the smartest way to maximize tax revenue is to generate sustainable booms. The tried and true method of creating booms is through reasonable regulation, free trade and low taxes. ( the 20′s. 60′s, 80′s, 90′s 2003-2007.) High taxes, trade restrictions and unreasonable regulation, on the other hand, historically cause recessions ( 30′s and 70′s) and considerably less total revenue.

By: Min

Min — Tue, 09 Jun 2009 00:16:15 +0000

Wayne Martin: “So .. if there is a 6% shortfall in revenue, state/local governments reduce their spending by that much and their budgets balance. What’s the problem?”

The problem, if there is one, would be a recession. In that case the gov’t should normally reduce its revenues further or increase its spending, or both. That means that it should be setting aside provisions for a rainy day. The larger problem is that it does not do that. The conservatives lower taxes, even in flush times, and the liberals spend all the time. (And the current Republicans do both, it turns out. :() For reference, see the Biblical story of the seven fat years and the seven lean years.