Q: "Why the 'Incessant' Focus on Taxes?"A: Because Taxes are the Best Indicator of how Government Is, or Is Not, Working

In response to a recent post, we received a fair question from one of our readers: "Why the incessant focus on taxes, as if the only issue is that "they are too high," and, thus, by inference, "if they were lower, all would be better in the City of Geneva?"

In most cases we respond to comments in kind, meaning that we post a response comment that gets tucked below the initial question underneath the initial post. Sometimes, if people aren't looking specifically for the comments, they get a bit lost in the shuffle. But this question brought us right to the heart of the blog and our mission. As we discussed our response, we realized that the answer to his/her question merited a free-standing, full post.

Let us launch into this post with an acknowledgement that our commentator is right. We do obsess about taxes. Here’s why. For us, our blog is essentially about accountability, whether it pertains literally to government spending and taxing, or, more generally, to government’s fidelity to the democratic process, fairness, objectivity, professionalism, etc.: whatever the appropriate criteria and context for a particular action. We believe the essence of accountability is responsibility for one’s actions, which means being able to justify them to the satisfaction of various constituencies.

That means we end often end up following the money. After all, the law allows government to tax us, and we are obligated to pay, or risk loss of property or incarceration. So, we expect that taxation and corresponding spending will be appropriate, serving the best interest of the community, and not slanted toward personal profit of any individual or group, for example.

Our outrageously high city property tax rate, among the highest in the United States makes the issue more pressing. Under these conditions, who can afford a tax increase? Even if new tax revenue were to be well spent, if folks cannot afford it, it's no bargain.  The only people we know who seem not to complain about taxes are tax-and-spenders who think government spending is inherently good and who can usually, themselves, comfortably afford it.

Now, let's take a look at the two parts of the question, in reverse order. First, we're not saying that lower taxes would make everything better. As you know, taxes are a function of both the tax rate and property assessments. So, even if the rate stayed the same, a severe drop in assessed value would mean that taxes would be lower. That would not be a good situation; hopefully, there's unanimous agreement on that.

So when we say we want taxes to be lower, we are speaking of the rate. And there are a couple of ways that could happen, either through reduced spending (so the tax levy, the amount to be raised, is lower) or through increased property assessments, or through increased revenue from non-property tax sources, or some combination of those.

That situation, a reduced tax rate, gets to the heart of the first point of your comment. We focus on the tax issue because it's the best indicator, in our view, of how local government is, or is not, working. It is a part of a larger whole.

We maintain that the City of Geneva's taxes have been too high because they do not represent the best possible value for the tax dollars paid. We've observed so much waste, inefficiency, and free spending in government that we feel the only way to reign it all in is to slow down the intake.

In addition to wasteful spending, there has been an over-reliance on increased assessments that are based on blips in market value, not actual neighborhood improvements. There has been a lack of creativity in pursuing alternate sources of revenue, shared services, and efficiency. Remember when the City told the Attorney General's Office that purchasing a used bucket truck from a Councilor was a 'good deal' for taxpayers, because it saved at least $200 each to change light bulbs in some City locations? $200 to change a light bulb? By the way, we also question whether the truck was really acquired for that purpose and how frequently it’s used in that way.

We are also concerned about property values and marketability of property in the City. High taxes are a significant factor in depressed property values in the City, which have increased only about 1% a year for the past ten years. That means if you bought a house ten years ago, it is likely only worth about 10% more now; that's well below inflation, and doesn't take into account the national home mortgage crisis.

Another impact of high taxes is in the area of economic development. Private citizens and businesses seem to prefer to buy in the town, where quality of life approximates that of the City—because we are essentially one community—but taxes are much lower. Consequently, increases in population and economic growth have hit the town, to the detriment of the City, all because taxes are lower in the town.

That is why we offered guarded praise to the City Manager and Council for this year's budget. Not simply because the tax rate stayed the same, but for the first time in our collective memory, the Council and Manager developed a set of priorities that take the financial challenges seriously and get the city poised for new and improved operations--putting money into programs that work and avoiding, whenever possible, taking on more crippling debt, focusing on programs that help taxpayers and their neighborhoods instead of handing out tax breaks to benefit a small group of investors, making open and well-considered decisions instead of back room deals for the good ol’ boys.

So, it's not that we think that lowering taxes will make everything better. Instead, we believe that we will see lower taxes when everything in Geneva is done in a better way.

Just so we end on a consistent note—namely, more worries about taxes—we’ll close with concern over the economic picture, and its possible long term impact on City taxpayers. The downturn of the national, state and local economy is sure to have consequences.  Sales tax revenue will go down. While state officials have pledged not to touch state aid to cities, that is not guaranteed. If the market downturn persists, in a year or two, City tax payers could get hit with an increase in what the City must pay into the state pension fund to make up for investment losses or decreases in earnings. So we recognize that the City must operate within constraints, but a public understanding of those constraints and some consensus-building around priorities is, in our view, a sound approach.