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.

Accountability 101, Part 4: A Clean Process is the First Step Towards a 'Clean Site'

During our October 17th radio appearance, WGVA morning host Ted Baker presented us with a riddle: “How many Councils does it take to tear down an old gas station?” You can hear how we answered by clicking on this radio archive link; essentially, we said it only takes one Council acting in good faith, in the public eye, and with adequate funding to implement its decision, no matter which way it were to come down on the issue.

The City has itself to blame for the mess. As we’ve explained here, in a series of posts on the topic over several months the “quagmire” the current Council finds itself in is a function of three things:

1. Making a back room deal with a developer;
2. Acquiring property without adequate public disclosure; and
3. Trying to create a process that fits a predetermined outcome.

Council acquired the building willfully-- through an active petition, not merely through tax default action, as many still wrongly believe-- to make good on a back room deal. The old gas station had been sitting there for years, unused and with taxes unpaid, but a federal income tax lien in the property allowed the City to avoid taking possession of it and incurring responsibility for environmental clean up.

It was one of those buildings which brought passerbys to say, “I wish they’d do something with that before it’s too late,” but the federal government had more pressing matters and just let the building languish.

Then, sometime around 2002, a budding arts development group (the Geneva Arts Development Council) decided that the building would be a great ticket area and lobby for the imagined performing arts center they contemplated building on the land between 305 Main Street and the Smith Opera House.

A series of small group meetings with various local leaders-- including Chris Iversen, Carl Fribolin, Alaine Espenscheid, Rich Rising, Clark Cannon, and Bob Schick—took place to discuss acquisition of the vacant building. The arts group had limited resources and didn’t want to spend money paying off all of the liens on the property. They wanted to save their money for the renovation of the property. So, they asked the City to petition the federal government to discharge the liens and allow the City to retake the property based on its very delinquent property taxes.

At the time, the City Manager told Council about a report from Fire Chief Ralph DeBolt stating that the underground storage tanks on the site had been removed and/or filled in. City Manager Rich Rising also said that the Director of Public Works, Gordy Eddington, had gotten some ‘preliminary estimates’ on the site cleanup and, therefore, Council was told by Rising, any environmental liability on the site was “very small.” It was so small, he said, that the arts group would provide the City up to $50,000, which conceivably would more than cover the City’s clean up expense-- as long as the City conveyed the building and the clean land around it, to the arts group for $1.

However, consultants hired by the arts group to do a feasibilty study for the performing arts facility concluded that the facility wouldn’t be viable (you can read their report here) and would actually drain resources from the existing Smith Opera House, putting that landmark building in jeopardy. Unfortunately, Council did not heed this warning and directed City Attorney Clark Cannon to pursue taking ownership of the property.

There were several other development proposals from the arts group in that time period, but all involved the reuse of the existing building. When Capraro re-joined City Council in late 2006, Rising conducted the new Council ‘orientation’ session, stating that the Council policy on 305 Main Street was the see the existing building stabilized and reused, given its prominent placement on Geneva’s Main Street.

But then the development deal fell through, the Council realized the mess (literally) it had gotten City taxpayers into, and instead of admitting its error and trying to make it right,Rising led the Council majority down the path towards demolition, trying to ‘make the facts fit the theory.’

So why wasn’t the building immediately demolished? Because the City Council got sticker shock from the cost to demolish the building. The cost to demolish was, in fact, much higher than the initial estimates to clean up the site with the building in place. So Rising encouraged the City Council to apply for grants from the EPA and the DEC for site cleanup that included demolition. But, those agencies are giving out your taxpayer dollars, and they want some assurance that the projects are being done in the most responsible way possible.

The City was awarded both grants, pending completion of this review. The City has not yet accepted the DEC money, but it has started working with the EPA. As our previous post indicated, the EPA is not content with the information provided regarding demolition.  To say it another way, a federal agency has deemed that the information that Council based its demolition decision on is actually not a compelling case for demolition. The EPA wants the City to demonstrate that it has seriously developed and discussed alternatives to demolition.

So, unless the City wants to reject a federal EPA grant and leave City taxpayers on the hook for the environmental cleanup, it has to follow the EPA’s requirement that it explore all options related to cleaning up the soil without demolishing the building.

After voting for a $16+ million spending plan for the 2009 budget, they proceeded to argue for about an hour about spending $2,400 on the ‘alternatives assessment’ that’s needed for the EPA. But what was there to argue about? A private (as in non-tax-payer) agency provided all but $4,400 of the study’s cost through a grant that the City Council agreed they should apply for. The Landmark Society of Rochester (again, a non-taxpayer-funded agency) kicked in another $2,000, leaving a gap of $2,400. As we wrote about earlier, this study is part of the process to draw down the $250,000 EPA cleanup grant. But instead of just saying “okay, $2,400 investment for $250,000 in grant funds seems to make sense,” the Council majority refused to pony up the money. Never fear, the Geneva Historical Society came to the rescue, agreeing to pay the $2,400 balance if the City refused.

So, you might ask yourself, “If there was a gap, and the gap was covered by the Historical Society, what else was there to argue about for an hour?” Well, it seems that some Councilors are still uncomfortable with the idea that there might actually be an option to remediate the soil that doesn’t involve demolition. But why? Why are some people so stuck on demolishing that building when there’s no plan for reusing the site and everyone agrees that it will not be an attractive site for developers given the size and grade of the land?

Imagine, in an ideal world, a Council that said “here we are, we’re a new group, and we find ourselves with this piece of land with a troubled history. Let’s put aside the baggage of the past and just look at the situation with a fresh set of eyes.” What do you think a responsible group of public-policy-makers should do in that situation? Would you think it was reasonable for them to say “let’s look at the options, look at the funding sources for each option, look at the return on investment for each option (with regard to property tax, impact on Main Street, etc.) and then have an open, public discussion to select the best course of action?” Or, would you prefer that the group say, “you know, that building’s not our problem. The previous group wanted it down and we’re just going to charge ahead in fulfilling their wish.”

Why must Geneva’s residents, under a new Council, be forced to suffer the tax implications of the mistaken decisions of the prior Council?

Praise and Blame: The Bloggers' Perspective

Our Friday morning radio appearance with WGVA’s Ted Baker covered a lot of ground. We led off with discussion of the 2009 City Budget which was carried by Council with no tax increase. This year’s budget is a legitimate “0%” tax increase budget. People’s taxes are not going up. Contrast this with the 2008, which saw no increase in the tax rate, but an over 7% increase in property assessments, resulting in most Genevans paying at least 7% more property tax. That budget (which Capraro and Augustine voted against) brought unwarranted praise for Council.

Capraro went on to extend guarded praise for the new City Manager, Matt Horn, who, in contrast to his predecessor, created a transparent budget process that insisted Council articulate its priorities and responded with a responsible spending plan that tracked with those priorities--without raising taxes!

Of course, in the context of a declining economy, Capraro said he is "not optimistic" that revenue projections--particularly sales tax and state aid--will be as high as anticipated and again stressed the need to look at budgeting solutions other than future property tax increases, such as shared services and alternative sources of revenue.

We were then given a riddle, "How many councils does it take to tear down an old gas station?" We'll answer this more fully in a future post, but the short answer is: It only takes one Council acting in good faith, in the public eye, and with adequate funding to implement its decision, either way.

Ted then asked us about the lakefront plan, as proposed. While it is absolutely clear that the community has reject Building 12, the most important point is that Council needs get the process gets back on track with regard to weighing community values against special interests. We indicated a way that Council could discuss and act on the plan in a responsible, praise-worthy fashion instead of bringing upon themselves the blame of the community for letting outside forces unduly alter the outcome.

Listen to this, and our former radio appearances by visiting the NoStringsGeneva Radio Archive.