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Best practices on city taxation in a recession: a proposed project for YPP readers
Submitted by Marc Stier on Thu, 12/18/2008 - 1:07am.
Most of us here, and to judge from the poll Ray and Dan sponsored, most of the city, believes that we should not be cutting taxes when our services are being reduced so much. We should be, at least temporarily, delay the wage tax cuts.
But what do you do when the strong mayor of our city totally disagrees and when the members of City Council who, in addition to having the usual disinclination of politicians to raise taxes, are also disinclined to pick a fight with the Mayor in his first (of most likely eight) years in office.
Where do we get the leverage to move the debate in the city. The poll helped, but what do we do now?
For one thing, we can keep pointing out that the rationale for cutting taxes--to influence the location decisions of businesses and residents--is substantially less important when businesses and residents are by and large not relocating because no one can borrow the money they need to move.
For another, we can point out that cities around the country--oure competitors--are raising taxes.
The problem with the second point is that, while I'm pretty sure it is true, it's hard to know how true. The major sources that collect this information--such as the league of cities--haven't done so yet.
But the information is available on the websites of newspapers from cities around the country.
So here is a project for the twenty or forty or sixty of us who hang out at YPP.
Let's each volunteer to track tax and budget decisions in one city and report back here. Let's see whether, as I suspect, local taxes are going up all over the country.
Too make the comparision useful, it would be best if we could also find information about the total size of the city budget and express the total revenue increase as a percentage of the budget.
Also we should look for evidence that cities are delaying tax increases and spending cuts in the expectation of a bailout from the feds something else Dan, Ray, and I (and others) have recommended.
If we collect information on a bunch of cities raising taxes, we might be able to turn the public debate here.
After all, our Mayor says he wants to follow the best practices from around the country. So let's find out what they are.
So report back here. If you have too much information, email the details to me. I'll try to create a spreadsheet that summarize what you all report.
And to begin with, I volunteer to track San Francisco.
News from Detroit
The City of Detroit is conducting an audit to determine how bad they think their deficit will be. They think it is gonna be about $200 million. You'd have to imagine that $200 million in Detroit is the equivalent of about $300 million or more here (based on population sizes). Layoffs are being talked about, but from what I read, there seemed to be no timeline for them, and certainly not layoffs or cuts before Christmas. Read more here.
Other Cities
Marc, this is a great idea. We do a lot of work with out of state cities, so I can collate what we have thus far this year.
Most cities have greater emphasis on the property tax, so they are less liable than Philadelphia on "boom and bust" dependent taxes like wage, business and sales taxes. we don't want an apples to oranges comparison.
I know that Altoona, Erie, Pittsburgh, Allentown or Harrisburg City are not raising taxes. A few have shortfalls. Smaller cities like Dubois are lowering taxes; Washington and Lock Haven are raising just the land values part of the property tax.
Josh Vincent
So, ground rules? Size of city? Size of budget?
Phree Philly
Just off the top of my head
As a researcher, I've often found that it's best not going into a project with a fully formed idea, so that you are less likely to have preconceived notions that blind you to what is before your eyes.
So I haven't really thought this project through.
But, off the top of my head I think the cities it would be most helpful to look at are those of roughly the same size and importance in their region/ state as Philly. You know...all those cities that have MLB teams.
I'm particularly curious about those southern and southwestern cities that are the anchors for regions that are growing--phoenix, atlanta, charlotte, etc.
As for the information that would be helpful
1. size of deficit in absolute terms and in proportion to the size of the budget.
2. what kinds of service cuts they are contemplating
3. what kinds of tax increases they are contemplating both in absolute terms and as a percentage of their budget.
4. Also what specific taxes do they plan to raise.
It would also be helpful to look at the oveall tax structure, although this won't necessarily be as easy to find. If we found, for example, that as Josh suggests, other cities are less prone to boom and bust because they rely more on property taxes instead of real estate transfer taxes, that would be good to know.
(Lots of us here at YPP have been saying that its time to rethink our tax structure. I don't know why a major financial crisis is a good time to make major changes in our library system--and the wrong ones--while talking about our tax structure does not seem to be on the the administration's table. What happened to the "crises are good times for dramatic change" theory?)
Excellent point
Great point, Marc. This would seem to be the perfect time to dust off the report of the tax reform commission and see what recomendations work and don't work. Until then we seem doomed to depending on sports championships and real estate booms to boost our amusement taxes and real estate transfer taxes. (And don't get me started on taxing my "amusement." Never has the axiom about taxing something out of existence seemed more apt.)
Why raise taxes when we already have some of the highest taxes?
http://money.cnn.com/pf/features/lists/taxesbycity2005/index.html#table
http://www.kiplinger.com/businessresource/forecast/archive/how_u_s__citi...
http://www.philadelphiaforward.org/node/45
Our high taxes also contribute to the shrinking size of the city. Ultimately some programs need to make cuts. Maybe the libraries don't need to be cut as deeply as proposed, but something somewhere must be cut.
Great Resource on Local Taxes
The Office of the Chief Financial Officer produces an annual report that compares the rates and burdens of major taxes in the District of Columbia with states and other large cities in the United States. The office also analyzes the relative tax position of the District compared to surrounding jurisdictions.
http://cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/07study-final.pdf
Phree Philly
www.ourcommonwealth.org
www.urbantools.org