Raising taxes may or may not be the solution

I’m may catch a lot of negative heat for what I’m about to write, but I’m a big girl and I can take it.

 

The City of Lebanon is in a financial pinch, and I’m not sure what the solution is. I do believe that city department heads and employees have cut as steep as they can and still provide the services citizens have grown accustom to over the years.

Does the city need a property tax increase to accomplish this? Maybe. Do they need one as large as what is being proposed? Maybe. I’m honestly not sure.

What I do know is this. There is $9 million sitting in reserves or in the rainy day fund. For the past three years money from the reserves has been budgeted to balance the city’s budget. However, very little was ever used.

At Wednesday night’s budget meeting, the question came up about decreasing property taxes after they are raised. They can’t be done in the middle of the budget year, but they could be increased for the upcoming fiscal year 2013-2014 and then decreased for FY 2014-2015.

However, Mayor Philip Craighead said the problem with that is there are roads to be paved, 20-year-old vehicles needing replaced, buildings that need maintenance, additional drainage issues, etc. In other words, any increase could be utilized.

Here’s where I may ruffle some feathers. Those types of comments are what a lot of us find problematic with government today. Government seeks and gets more money, and then they never seem to find a way to give any back, claiming they need every dollar.

While I will agree with the obvious fact that Lebanon has grown since the last hike in property taxes some 21 years ago (1992), I’m not so sure there is not a way to minimize any proposed property tax increase even more than they’ve already done.

(I must digress here a moment and say I think the job they have done so far in finding ways to whittle the amount of any increase is admirable on the part of Finance Commissioner Russell Lee, the mayor and the entire council.)

Now, back to the point of this column. Most of what Mayor Craighead mentioned regarding needs that could be paid for by keeping the property tax at the level of the proposed increase were capital expenditure items, meaning one-time expenses.

Why not pull the majority of capital expenditure items out of the city’s operating budget and pay for them out of the reserves up to a certain limit? Say $4 million? That would leave the city with a still healthy reserve of $5 million. While reducing the reserves may impact the city’s bond rating in the short run, I have to ask, is the city in any position to borrow money anyway?

In addition, the city would implement a plan to pay X percentage of the money back into the reserves each year that city’s revenues exceed its projections by Y percentage.

In other words, operate the city like many folks do their household budgets (when they can.) They establish a savings account to pay for those big, one-time expenses such as household repairs, replacing an appliance, an unexpected health crisis, etc. Then, when things get back on an even keel, they replenish their savings account.

For far too many years, the city prospered because of a growing sales tax base, without anyone giving much thought to the idea that hard economic times could hit. They forgot the Six P’s – Proper Planning Prevents Piss Poor Performance.

Today, our city’s leaders are paying for that lack of foresight, and I’ll be the first to say, I don’t envy them one little bit. However, long-term solutions require thinking out of the box. Raising taxes or fees aren’t the only answers. There are other solutions out there, provided our city’s leaders are willing to find them.

So, to those who disagree, let me have it. Leave a comment. Give me a call. I’m a big girl. I can take it.

 

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