Perhaps it’s time for “The Taxpayer Giveth, and the Taxpayer Taketh Away.”
Chapter 1
Well dear, loyal, anxious readers, Here I go again. I’ve been thinking about the general subject of this post for a week or two, and began to make serious notes this afternoon, with the intent of sending it to the presses today. It would include hard data illuminating a serious fiscal challenge facing our beloved town; information which I have already compiled from authoritative sources.
And then, “love stepped in and opened up the door.” Love in the form of Sweety Bitch and Boo-boo, otherwise known as Maggie and Boomer, our two English Springer Spaniels. They’re “twins,” and will be 8 in dog years next month.
In recent weeks, your reporter and the “kids", as we call them around the editorial offices, have gotten in the habit of a late afternoon walk in the cool crisp air around dusk, right after I start a fire in the wood stove.
As you know by now, your humble correspondent suffers from running mouth, hyper-typer syndrome, and excessive obstrepory on a variety of subjects. Taking the kids for a walk only exacerbates the problem, what with the accelerated heart-beat (yes, I DO have a heart), invigorating temperatures, and a runny nose. It’s particularly severe when we “walk” out of the house and I’m already cogitating on a specific subject.
That was the case tonight, and the scope of the task at hand has expanded. So your reporter bows in your general direction and asks for your indulgence. I feel the need to set the context for the topic in a more robust fashion, and will do this in a moment.
The upshot is a conflict with my original intent of summarily completing this excursion here and now. It also conflicts with my wish not to write after dinner.
So here’s the current plan. This “post” will evolve into at least two “chapters.” The first few will be delivered tonight, and the next few will, I hope, arrive on your doorstep sometime tomorrow. We cannot say if they will be the last chapters; the answer will reveal itself along the way.
Chapter 2
Setting aside the notion of “one world government,” we here in Maine are subjects to three primary forms of government. Tacit in that assertion is the assertion that county government is of little relevance to our local circumstances.
First, we have the Federal Government, at the “national” level. Don’t even get me started on how completely distorted and corrupted the original notion of federalism has become.
For our purposes here, only the generalities of budget management are germane. The feds have no obligation, at least any that can be enforced, to “balance” the budget. Oh, they may take a look at revenue projections, including personal income tax, corporate income tax, capital gains taxes, and numerous other revenue lines to see what things look like.
But it doesn’t really matter. Given the ability to increase the money supply by printing currency, and the authority to borrow nearly unlimited amounts, both without the direct consent of the governed, and you have a free for all where political agendas completely trump any considerations of fiscal prudence.
Mix in a healthy dose of revenue sharing, or “intergovernmental transfers” to the several states, and you have a colossal and corrupt economic framework that has a horizon no further than the next election, and dysfunctionality a thousand times more severe than Enron or anything else the private sector could dream up.
But remember this: the feds are the source of addictive “free money.
Next is State Government, in our case, Maine State Government. This august body cannot print currency, and at least in principle, has a requirement to “balance the budget.” Accordingly, revenue projections are made at least twice a year so that our benevolent and responsible public servants can adjust spending to match revenue.
Yeah, right. It is the rare bird who will propose raising “broad based taxes” to increase revenue, since raising the income tax or sales tax is an extremely visible act. There, are, however, a myriad of ways in which the state can increase revenues without raising such taxes, some of which include the claim of “reducing taxes.'”
For example, if they lower the sales tax rate by a quarter percent, but double the amount of exchange to which it is applied, were taxes raised? Or, if they lower the income tax rate by a quarter percent, but eliminate half of the itemized deductions, were taxes raised?
Then there’s a hundred or more fees and other charges that can be raised while not being reported as tax increases. How about fishing licenses, or tolls on 95? You wouldn’t believe how many more such variables there are for prying more revenue from us.
Here are several other escape routes state government has for creating the illusion of balancing the budget, while doing nothing of the sort, and kicking the can so far forward no one can find it, let alone see it. 1) Declare whatever you want to be “off budget.” 2) Issue debt in the form of bonds, usually without, but sometimes with approval of voters, who have come to believe that bonds are “free money,” just like credit cards. 3) Simply don’t pay bills; the state owes more than $400 million to medical providers; will they ever pay it?
And then there’s this: the state, in all its benevolence, sends money to the towns or municipalities, again as “revenue sharing,” or intergovernmental transfers. To the locals, its more “free money,” and is addictive and more tempting than you can believe.
When it comes, is it from the state, or is the state simply forwarding federal funds?
HELLO! It’s from neither! It’s from us…you, and me, and your kids, family, and friends.
The worst part is that this is item 4) in how the state can “balance” their budget. They simply renege or revise or adjust or reprogram or otherwise reduce the amounts sent down to the little people in the towns.
In other words, “deal with it, Brunswick.”
And now we come to Town Government, that which is closest to our hearts, and which we hold near and dear because it is the collective expression of “community.”
Town government is also unique. It must balance its budget on an annual basis. But it has its own unique freedoms to deal with this obligation.
While the state and federal government derive the majority of their revenues from taxes on economic activities that fluctuate as a function of general economic conditions, the towns are largely immune to these factors, other than as they affect “free money” flowing from the state and the feds.
The “organic” revenues for the town are property taxes first, excise taxes second, and after that, a grab-bag of lesser lines. (Exclusive of “sharing,” to be clear.)
If you lose your job, your property tax obligation does not decline. If the real estate market goes in the tank, the town doesn’t lower the assessed value of your house. And neither effects the amount you owe when you renew the registration for your car.
In reality, the town, revenue sharing aside, is more immune from economic conditions than both state and federal government.
As to balancing the budget, which means matching expenditures to revenues, the towns are in a unique and enviable situation.
Imagine that you could look at your family expenditures for 2009, and estimate how much they would increase in 2010. And then imagine that you could go to your employer, assuming you have one, and demand that he increase your compensation to match your expenditures for the coming year. And that if he declines to do so, that you could seize his assets and liquidate them to meet your demands.
If you really “immersed yourself” in this role, you know what it feels like to be town government. Oh, your employer might be unhappy with you, but he doesn’t really have much choice but to honor your demands.
That’s why the property tax is the most insidious form of taxation. There is no “established rate” in statute or law. There is only last year’s rate, which has no legal relevance to the rate the year before, and has no relevance to the rate for the coming year.
The rate for the coming year will be set by looking at how much the town wants to spend, and setting the tax rate to yield the necessary revenue. And the vast majority of residents will have no idea of what happened or why, especially if their property taxes are impounded to escrow via mortgage payments. “Oh well, the payment goes up every year…what do you expect?”
I can trace my “activism” and letter-writing habit back to 10 years or so ago when the town council of that year proposed to increase property taxes by 12% because they wanted to, and because they could. After considerable citizen resistance, the increase was reduced to 9%.
Think about that as I close this chapter for tonight. First, the tactic of proposing an increase far beyond what they really want, so they can back off by “popular demand” and “listen to the voice of the people.” Second, the ability to make a 9% annual increase seem like a “win” from the taxpayer’s perspective.
This reporter predicts that the coming budget season will be a test of wills and leadership beyond anything this town has seen in modern history. Will you be watching?
I will be, if only from afar. And I pledge to you that I will do my best to illuminate what is happening right before our very eyes.
Good night for now, Mrs. Calabash, wherever you are.
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