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June 18, 2007
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Déjà vu

Please raise your hand America if you like property taxes. I see four or five hands out of scores of millions. Thank you. This explains a lot about the lust that periodically erupts in different states to massively cut back on the amount of property taxes you and I pay. The HR Doctor is one who did not raise his hand earlier since I, too, am not a fan of paying property taxes.

Currently, there is a legislative zeal in Florida which so far is relatively unbridled to take massive whacks at the amount of property tax people pay. Polling suggests that this tax cut idea is very strongly supported. 

Of course, the same polling suggests that the most trusted levels of government are local governments, and the most important services to people are those provided by local government. There is a strong feeling among citizens that they don’t want to see services cut. 

Half of the HR Doctor’s professional public service career was in California — before, during and in the aftermath of Proposition 13, the property tax-cutting citizen’s initiative. I’m feeling a sense of déjà vu because the same lust and the same statements are being made in Florida now as were made then in California. Why the property tax cutting campaign is so popular and what the results might be is certainly much more than a short article can effectively explain. Having said that, let’s try it anyway.

Key concerns
The property tax system needs fundamental reform. It is patently unfair that my property taxes are at one level but across the street in a similar or even identical house, the taxes may be twice as much or more than I pay. The reason is that I may have been in the house for quite a while and my new neighbor across the street is still unpacking boxes from moving in last month.

Property taxes represent the fundamental source of income, not for state governments but for local governments, such as cities, counties, school districts and many special districts. To use a machete instead of a scalpel to slash and burn an extremely important source of local government income without providing a stable alternative is bad decision-making. In places like Florida, the decision-making is being done by people in the state capital who themselves do not depend on property taxes as their number one source of state government revenue.

There is no doubt also that local governments can do more with less (sorry, I heard the whining, but in our hearts we know that it’s possible). A significant challenge to our normal traditional revenue source can produce positive changes as long as the loss is not at a destructive, catastrophic level.

Any major cuts without thoughtful consideration of long-term effects will produce unintended consequences. Many of these consequences will be exactly the opposite of what tax payers are being told to expect from the savings. 

Some of the consequences include erosion of the local government’s ability over time to respond to population growth, traffic increases, infrastructure deterioration, security demands and the overall quality of life.

It is hard to measure these long-term impacts because they are at least as much qualitative as quantitative. What is the price — over time — of a library closing at 5 p.m. instead of 9 p.m. or children’s programs or other park activities being curtailed? What is the price of a police department’s officer-to-population ratio declining? What is the price of the extra two minutes that it may take paramedics to respond to a heart attack call because the department’s growth has been stymied, but not the demands for service based on population-driven criteria? What is the price of a county government’s increased paralysis in meeting unfunded mandates such as jail population management and indigent care? The point is, with apologies to accountants and auditors, that the unintended consequences are not measurable only by using an Excel spreadsheet. These are quality of life issues which the children and grandchildren of taxpayers will wrestle with because the current generation of state lawmakers thinks in sound bites and with a short-term, “next election” mindset.

Public employees in many parts of the country, and especially fire and police employees, enjoy entitlements, which we average human beings can only drool over. These include wonderful early-out pension programs and workers’ compensation “presumption clauses” under which cancer and coronary problems are presumed to be the result of working in these jobs. The entitlements are another factor being touted as to why property tax cuts are a good thing. This occurs amid clarion cries to “trim the fat” and “curb government waste.”

Discussion fraught with irony
Where did many of the entitlements first come from? The answer is the State Legislature. Workers’ compensation presumption laws are not the product of the County Commission or a City Council. How did the property tax structure get so screwed up in the first place? Look no further than the legislature or citizen initiatives at the state level.

As happened in California, the same state government that can wreak havoc will come to the “rescue” and say “Don’t worry local governments, and stop whining! The state will provide some form of revenue-sharing.”  What this really means, however, is a power grab by state government to usurp local government authority. It could also result in a new annual journey by local government representatives to the state capitols each year — a  local government “trail of tears,” to be overly dramatic, asking for state legislative help each year in order for government programs to survive and grow as they need to in a changing world. 

So, fellow taxpayers, let’s enjoy our $600 or $800 property tax savings now because we’re going to need much more than that to make up for the deficit ahead in the long-term ability of our best and most trusted government entities to provide the services we demand. The hurricane “truck” in the State Capitol appears to be on a downhill road with no brakes. We will spend years figuring out how to fix the erosive effects of what is likely to happen if it makes taxpayer landfall!

Phil Rosenberg

The HR Doctor •


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