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David Rodeback's Blog

Monday, July 14, 2008

If You Want Those American Fork Property Taxes to Double, Don't Write.

The Mayor and City Council are discussing a possible 50 percent property tax increase and four bond issues that will increase taxes that much again if they all pass. It's time for us help them see reason. First, we deluge them with helpful constituent letters.

I don't recall ever trying before, here at the blog, to incite a grass-roots campaign for or against any American Fork issue. My intent is typically to inform and, by doing so, to sway opinion. But offering an opinion is not the same as pleading with you to write your city councilors this week, then pack the room later, when a certain issue or combination of issues appears on the City Council's regular meeting agenda. That meeting could be next Tuesday, July 22, by the way, because at least some of this is on this Thursday's work session agenda.

Here's what prompts my unusual plea: A combination of several likely proposals could double the American Fork City portion of your property taxes and mine.

But before we get too incensed about this -- if you aren't already steaming from a recent newspaper account, which you really must read all the way to the jaw-dropping ending, by the way -- let's back off and consider a few points. Then we'll get incensed in a more informed and reasoned way.

Perversity in "Truth in Taxation"

For a conservative, I'm relatively easy to convince that a small, annual city property tax increase is a good thing in Utah. Our "truth in taxation" law perversely requires Utah municipalities to raise taxes slightly just to break even from year to year. Official calculations of this year's non-raised rate (done by the County) are based on last year's revenues on the same taxable properties, but they don't use real, inflation-adjusted dollars. That's the problem. The effect is that, unless they "raise" taxes just to break even, cities absorb an automatic tax cut every year of roughly the same percentage as the inflation rate. Over ten or twenty years, that automatic cut compounds quite nastily.

No doubt some state legislators thought they were being righteous and maybe even a bit clever, back in the day, by making municipal budgets shrink automatically in real terms unless local leaders who both have spines and can do math are willing to propose a small "increase" every year just to stay even. (If you want to know how all this works in detail -- "certified tax rate" is a key phrase -- I have tried to explain it elsewhere.)

Local politicians being as they are, most of the time they're not about to vote for a tax "increase" annually, even if it's just to stay even. The current American Fork City Council seems to be made of sterner, smarter stuff -- may it always be thus -- so they've realized the importance of getting the public accustomed to a small annual tax increase that really only offsets automatic cuts through inflation.

Knowing all this, I have no problem at all with a three-to-five percent increase in American Fork City's portion of the property tax in any year -- because it's not really an increase. I see the ongoing necessity of it. In a year when there are unusual needs -- including, still, a backlog from less fiscally sensible days -- I could even swallow a 10-to-12 percent increase occasionally, because I understand that one-third to one-half of such an increase is a state legislature-induced illusion.

Two years ago, we found ourselves with leaders who have spines and do math, and we had a whopper of a tax increase, which partially made up for years of accumulated "truth in taxation" damage. It helped a lot of things around the city, and I think the voters and potential electoral challengers understood the need. Later that year, the voters overwhelmingly approved a large bond issue for a secondary irrigation system, another long-procrastinated need. Then, last year, all City Council incumbents were re-elected against minimal opposition.

If the voters -- at least a majority of them -- were smart enough to understand fiscal necessity in 2006, then they are also smart enough to understand the annual truth-in-taxation problem, if the City will explain it clearly. (I've tried repeatedly to explain it, but let's face it: Town meetings about tax increases still draw more attention than your humble blogger.) And once the voters understand the annual problem, they're smart enough to accept a three-to-five percent "break even" tax increase every year, and maybe even another five percent of real increase sometimes, if they understand that we're still trying to dig out of a fiscal hole that took years to create.

The Proposals

Long-term fiscal holes and my earlier praise of current leaders notwithstanding, not even the reasonable voters will be pleased by what the City Council discussed recently in a work session: another massive tax increase (only two years after the last one!), perhaps as much as 50 percent, and, after that, four bond issues on the ballot in November, which would combine to add another comparable increase. Put the tax increase and the bonds together, and your City property taxes could double.

First, I'll explain why it probably won't be this bad. Then I'll explain why not this bad is bad enough.

The City is required to report to the County that it is considering a tax increase, and it reports a percentage to the County in the process. Then, if there is a tax increase, it cannot exceed that percentage. In this case, the number the City reported was 50 percent. In other words, for every dollar you paid last year, you could pay $1.50 this year. That's much larger than the increase in gasoline prices over the past year.

Admittedly, this "tax adjustment" would be intended to fund some good things, including a small, well-deserved stipend for Planning Commission members, the dumping of City waste at the dump instead of at Art Dye Park (and the needed cleanup at the park after years of dumping), a needed new employee in the Parks Department, a federally required elevator at the Public Works building, and a trail at Art Dye Park, among other things.

Bear in mind that no public vote is necessary for a tax increase; the City Council can do that by itself, after holding the public hearings (not "listenings") which state law requires. Bond issues -- at least the most economical, general obligation (GO) bonds -- do require a public vote. The Council is contemplating putting four GO bonds on the November ballot for voter approval. One would primarily address needed road construction and modification; this one would increase taxes significantly, about $107 per year for the median household. One would fund additional parking at the Fitness Center; I don't have an estimated number for this one. Another would help the City acquire additional cemetery property; I don't currently have a number for it, either. The fourth would basically finish Art Dye Park -- something we really ought to do -- for about an additional $12 per year, for a typical household.

It's not yet certain that all four of these will be on the ballot, or that they will be exactly as discussed in the work session. If they are all on the ballot, it is unlikely that all would pass, even with no tax increase this year. There is a presidential election on the November ballot, so turnout will be high, and high turnout is usually bad news for bond issues.

So the tax increase will likely be less than 50 percent, and at least some of the possible bond issues will probably fail.

Suppose the increase is only 30 percent, and all the bond issues fail. Remember, I'm the guy who thinks three-to-five percent increases every year are necessary and wise, and ten percent would be okay every few years. I'm trying to be reasonable. Thirty percent is a lot less than a 100 percent increase (doubling), but it still does not seem reasonable to me this year.

For what it's worth, MFCC was the lone dissenter in the discussion of all this. Read the article, as I said above, all the way to the end. If my 2730 words here are not enough for you when you're finished, you can read the work session minutes at the City web site. There are more numbers there.

The Fiscal Climate

Here are the political facts as I see them:

• Energy costs are high and are driving up the cost of everything else, putting pressure on many household budgets.
• Water bills in American Fork are increasing significantly, because of the pressurized irrigation system -- itself a necessary thing, which voters understood.
• The economy is a little soft. We're not in a recession; that requires two consecutive quarters of negative growth, and we haven't had one yet. But it's a little soft.
• There was a large City property tax increase two years ago. (As I said, most voters seem to have understood the need for that one.)

In such a climate, don't you have to be politically tone-deaf and economically naive (a) to talk about increasing taxes as much as 50 percent this year, and (b) to put four bond issues up for vote in November, which will increase taxes roughly the same amount again, if they pass? And don't you have to be somewhat detached from political reality to think that four bond issues will pass in the high turnout of a presidential election, or that any bond issues will pass after the sort of tax increase the Council is discussing?

Most of the time, this American Fork City Council is smarter than this and more in touch with American Forkers generally. This time they need our help.

What to Do First -- and You Need to Do It This Week

I propose that we each write a brief, respectful letter to each member of the City Council and to Mayor Thompson -- six copies of the same letter will be fine -- saying something like this. (Use your own words, and pick your own numbers and priorities; my numbers are five and ten percent, as I have explained.)

Dear Mayor and Members of the City Council:

I am a resident of American Fork, and I vote. [Note: both of these are important to politicians.]

I understand that state law effectively requires a small annual tax increase in order for the City just to break even, because state law doesn't allow for inflation when rates are calculated. Therefore, I don't object to an annual "increase" of three to five percent. In fact, I think it is wise.

I also understand that circumstances may sometimes require a larger increase; I don't object to another five percent every few years, if it's really necessary.

I have read that you are considering a tax increase of up to 50 percent, to be followed by as many as four bond issues on the ballot in November, which could combine to double that increase.

My votes on bond issues in November depend on the size of the tax increase you approve this summer.

If it is five percent or less, I will carefully consider the bond issues proposed and vote for as many as two of them, whichever ones I think most important -- probably the cemetery and finishing Art Dye Park, if those are on the ballot. I will vote against the others.

If the tax increase is no more than ten percent, I will vote for the one bond issue I think most important -- one of the two I mentioned -- and against the others, of course.

If the tax increase exceeds ten percent, I will vote for none of the bond issues, and, later, I will vote against all City incumbents who seek re-election, except the ones who vote against the large tax increase this year.

Please understand: My water bill is increasing significantly. Gas prices and other energy costs are beginning to pinch, and they are making everything else more expensive, too. You imposed a large increase in City property taxes two years ago.

At home I have to make hard choices, deciding what good things I will have at the expense of some good things I will not have, or will at least delay. We need our leaders to understand the current financial pressures on the average American Fork household and make some hard choices in our behalf.

Thank you for your consideration.

Sincerely, [etc.]

Perhaps you think my letter -- or yours -- should be angrier or more threatening. Perhaps you think I am too willing to accept small tax increases, and too helpful in suggesting which bond issues I might be willing to approve. Your letter is your letter; say what you please. But if you want your letter to be taken seriously, you must bear in mind the following:

• Short letters (about one page) are more effective and more likely to be read than longer letters. (If the same applies to the length of blog posts . . . well, do as I say, not as I do.)
• A calm, rational tone will get you farther than anger or sarcasm, and trying to be helpful is even better. I'm not saying you should value the same bond issues I might, but I do suggest you tell our leaders --  helpfully -- which one or two you consider most important or necessary.
• If you insist on no tax increases ever, for any reason, you will be dismissed as unreasonable, in part because of the unreasonable state laws which require an annual increase, so called, in order for the City just to break even.

These officials get very few if any letters on most issues. On big issues they get a few dozen. On this one, I don't see why they shouldn't get 200 or so in the next week. For that to happen, you must not only write and send your own letter. You must do more than merely tell your friends and neighbors. You must inform them, urge them, and perhaps even help them to write their own letters (unless they prefer to sign yours). You might send them this link to this page: http://www.localcommentary.com/davidblog/2008/20080714.htm

It would be best if our six elected American Fork officials have at least some letters before Thursday afternoon's work session, but it's not too late if they have them before next Tuesday evening.

Oh, one more thing: Don't write anonymous letters. Sign your real name. Give your real phone number, address, and e-mail address. Some of the people you're writing may want to reply or even discuss the matter with you.

I'm Happy to Help

I'll post addresses, e-mail addresses, etc., for City Councilors as soon as I have time to gather them here. You'll need some time to draft your letter, anyway. If I don't get back to you with contact information soon enough, just drop all six letters by the front desk at the City Administration Building and ask for them to be put in the Mayor's and City Councilors' boxes.

If you want some help polishing a draft, use one of the contact or comment links to send me an e-mail, and I'll help as much as time permits.

In fact, I'll make you a better offer. If you send me (preferably by e-mail) a copy of the letter you send to the Mayor and City Council about this issue, I'll post it here at LocalCommentary.com in the Guest Blog, if it's civil and reasonably well written.

After That

We'll see how things go in the work session Thursday, and what's on the agenda next Tuesday. Then I'll have another suggestion or two for you.

Two Concluding Confessions

Finally . . .

My first confession is, I already know that a letter this week will not be enough by itself, even if it is an important beginning. There may need to be more letters later, as things develop. And lots of people will need to attend City Council meetings and hearings, and some of those will need to speak there -- calmly, rationally, clearly, and concisely.

My second confession is more of a confession. Because most of the American Fork City Council reads this blog, I've put you in a difficult position. If they read this post and you don't write to them, they may assume that you either don't care much or actually favor enormous increases. In other words, if you don't write, after I have written, my writing will do more harm than good.

Stay tuned.

Copyright 2008 by David Rodeback.
All rights reserved.
Permission is given to publish this article elsewhere on the Web or via e-mail only under these conditions: The article is published intact and unchanged, and is properly credited to the author; and a visible link is included to the article's page at LocalCommentary.com.