Local Government – Page 72

Sanity And Taxes

A couple of weeks ago, fifty-five assorted residents of Indianapolis boarded a chartered bus and headed to Washington, D.C. for the Jon Stewart/Stephen Colbert “Rally for Sanity.” It was a pretty diverse group—college students and retirees, black and white, varying religions and political parties—but we all wanted to demonstrate that the cable shouters, insult-throwers and nasty political ads dominating the airwaves don’t represent most Americans.

There were plenty of clever signs on display, but two more serious ones summed up what I think was the “message” of the Rally. One said “Turn Your Caps-Lock Off!” And the other read, “I pay taxes because I’m an adult and that’s the way it works.”

Ah, taxes. We have just emerged from an election season that was high on heat and low on light. Candidates of both parties were on my television—with their “caps-locks” on—promising to deliver services and balance budgets while cutting—or at least not raising—taxes. (On those rare occasions when a reporter challenged a candidate to identify what cuts he would make to accomplish this miracle, the lack of response was revealing.)

Here in Indiana, voters overwhelmingly agreed to place property tax caps in the state constitution, despite the fact that the negative consequences of the statutory caps are already being felt. The political golden rule—“He who has the gold, rules”—has shifted spending authority to the state, and made it much more difficult for local governments to deliver even basic services.

Mayors are desperate. They have fewer resources with which to meet the demands of citizens who want their public services improved, but who don’t want to pay for them.

Some—like Mayor Ballard—resort to gimmicks like the proposed contract with ACS to take over the city’s parking meters for fifty years. In return for giving away significant future revenues, the city will get some up-front money; more important, it will contract away its responsibility for deciding whether and when to raise parking fees.

Stripped of all the fancy rhetoric, this is best understood as a deal to outsource the taxing power. That is what the state did with the Toll Road. Recognizing that the legislature lacked the political will to raise tolls, the Daniels Administration “sold” the right to do so. That is also what motivated the sale of the Water Company to Citizens Gas; ratepayers essentially will be “taxed” in order to recover the up-front payment that is being used to pave streets and repair sidewalks.

Citizens, as a public trust, may prove to be a more prudent operator than the city. The parking proposal has no obvious merits and many obvious drawbacks. But good deals or bad, this is not the way adults make decisions. Eventually, services must be paid for. That doesn’t mean we cannot deliberate over the proper type of tax, or who should pay it, or how high it needs to be. But games cost more than taxes in the long run.

Adults know that.

Park It

Mayor Ballard’s proposal to privatize the city’s parking continues to spark bipartisan concern. Last week, the Sunday Star ran a “point-counterpoint” between Deputy Mayor Michael Huber, the proposal’s architect, and Aaron Renn, a respected urban affairs expert who has criticized it. Star editor Dennis Ryerson noted that many open questions should be answered before the City-County Council makes a final decision.

What are those questions?

Why would any city turn over an important part of its infrastructure to any private company for fifty years? Even if the deal were less one-sided fiscally, decisions about where to place meters, how to price them, what lengths of time to allow and so on have an enormous impact on local businesses and residential neighborhoods. They are decisions requiring flexibility in the face of changing circumstances; they are most definitely not decisions that should be held hostage to contracting provisions aimed at protecting a vendor’s profits.

Why would we enter into a contract that will add significantly to the costs of downtown development? Indianapolis has worked hard to encourage construction of hotels, retail establishments and residential units in our urban core. Often, that construction interrupts adjacent parking. Now, the city can choose to ignore that loss of parking revenue, or to charge the developer, based upon the City’s best interests. This contract requires that ACS be paid whenever such interruptions occur. It has been estimated that such a provision would have added over two million dollars to the cost of the current legs of the Cultural Trail.

Why ACS? Much has been written about the problems with Chicago’s parking privatization, but far less about ACS’ track record in places like Washington, D.C., where an audit documented mismanagement, overcharging, over-counting of meters, and the issuance of bogus tickets (ACS gets all the revenue for tickets). Washington lost $8,823,447 in revenue and experienced a twenty-fold increase in complaints from the public. And it wasn’t just D.C. Police officers in Edmonton, Canada, were tried for accepting bribes from ACS, and a few years ago, the company’s CEO and CFO stepped down after admitting to $51 million in stock fraud. Why enter into such a disadvantageous deal for so long a term with a company having so troubling a track record?

One of the problems with privatization in general, as we learned during the Goldsmith administration, is that it leads to speculation about cronyism and political back-scratching. In this case, the Mayor’s personal advisor is a registered lobbyist for ACS through Barnes and Thornburg, the same law firm that employs the President of the City-County Council. Whatever the facts of the situation, those relationships raise an appearance of impropriety.

Finally, why not simply retain control of our infrastructure, and issue revenue bonds for the necessary improvements? Interest rates are at a historic low, making it an excellent time to do so. If this administration simply can’t manage parking, create a Municipal Parking Authority, as Councilor Jackie Nytes has suggested.

However we proceed, we should park this proposal. Permanently.

Comments

Woe is Mayor

These are rough days to be a mayor. If you don’t believe me, look at just two of the issues bedeviling Mayor Ballard right now: police and parking.

In both cases, the Mayor has correctly identified a problem. But in both cases, there are substantial questions about his chosen solutions.

Managing the police is a perennial problem for mayors. Controlling crime and keeping citizens safe is an essential foundation for all the other things a mayor must do. It is no exaggeration to suggest that economic development, service delivery and a city’s quality of life all depend upon the safety of its citizens.

Given the importance of public safety, it’s understandable that Ballard wanted to control IMPD. When he assumed office and wrested control from Sheriff Frank Anderson, he made clear his belief that the Mayor should be the one held accountable for the department’s performance.

Those of us who disagreed pointed out that, in Indiana, the Sheriff is a constitutional office. Unlike the Director of Public Safety, he is elected by and answerable to the voters. Unlike mayors, who have multiple responsibilities, a Sheriffs’ duties and focus all involve law enforcement. If the Sheriff has responsibility for police behavior and public safety, and scandals erupt, voters can express their disapproval quite clearly at the ballot box. If the Mayor controls IMPD, voters must balance approval or disapproval of his public safety performance against their approval or disapproval of other initiatives, sending an inevitably mixed signal.

The Mayor’s current policing woes stem from that decision to seize control early in his term. Both that decision and his current proposal to privatize parking enforcement will hamstring future mayors as well.

Once again, the Mayor has identified a legitimate issue. Our parking meters are old and outdated; our parking fees have not been raised in many years. It is time to take a holistic look at all aspects of downtown parking—revenue to the city, the effect on downtown businesses, the placement of meters and so on. None of the solutions identified for existing problems, however, requires the City to give a private company control of our parking decisions—and a significant portion of our parking revenues—for fifty years.

As several people have pointed out, had a contract of this sort been in effect a few years ago, the City would not have been able to give permission to build the Cultural Trail.

The Mayor’s office defends the proposed privatization by pointing to the large capital outlay needed for new equipment, but the City could easily issue a twenty-year revenue bond for that purpose, and keep both control and all revenues in excess of those needed for bond repayment.

One of the most significant leadership challenges mayors face is deciding when to keep control of a public service and when to vest that control elsewhere. These are structural decisions, and they are especially consequential because they tie the hands of future administrations.

They are ultimately the decisions that determine a Mayor’s legacy.

Defining Our Terms

Anti-tax fervor has become a defining aspect of American politics—so much so, that here in Indiana we are getting ready to enshrine a so-called “property tax cap” in the state’s Constitution. (The existing law imposing such a cap is evidently considered inadequate.) Those of us who question the wisdom of such a measure are often accused of being “for” taxes—a clearly incomprehensible position.

Let me pose a question. What is a tax? Do we know one when we see one?

The answer begins with the simple premise that there is no such thing as a free lunch. Goods and services cost money, and that money has to come from somewhere. If the city picks up your garbage, payment comes from your taxes; if you employ a private scavenger service, you pay for pickup directly. There may be economies of scale that make the city service cheaper or there may not, but however the service is provided, it has to be paid for.

Policymakers face a series of questions. The first, and most important, is whether a service needs to be provided at all. What is the benefit to a community of garbage collection, or bus service, or libraries? Do we require police and fire services? A sports arena?

In some cases, the public benefit is obvious. If we don’t collect the garbage, we risk the public health; if we don’t provide fire protection, public safety suffers. Of course, we could simply require that property owners buy these services on the open market; in fact, many communities used to do just that. These and other public services were “socialized”—that is, they were provided communally—because it was cheaper and more efficient to have government provide them. They didn’t suddenly become “free”—we just paid for them differently.

If we want services, we have to pay for them. Calling that payment a “user fee” or a “utility bill” doesn’t change that. We can certainly debate whether we really need a particular service—some people would be perfectly happy to dispense with massive sports stadiums, others would cheerfully do without libraries. But if we do want them—and our streets paved, our neighborhoods policed and our parks mowed—we have to pay for them.

Transparency in government is considered a good thing because it allows voters to see what their elected officials are doing, and where their money is actually going. The problem with the current anti-tax fervor is that it penalizes transparency and rewards official game-playing. Voters’ hostility to paying taxes—coupled with their insistence on continuing to receive services—sends elected officials a clear message: lie to us.

“Cap” our taxes and find “nontax revenue sources.” Shift expenses from operating to capital budgets, so you can borrow money to cover operating expenses. Blame the federal government for service cuts. Hide the street repair money in our utility bills.

It’s more costly when we do things that way—but the payments aren’t called taxes, and evidently that’s all that counts.

Comments

The Ethics of Private Police

In my historic neighborhood, we are having a vigorous debate about the wisdom/propriety of paying monthly “dues” to hire off-duty police officers to conduct extra patrols. The concern is that the Indianapolis police force is stretched thin, and despite Mayor Ballard’s emphasis on public safety, not much has changed, and certainly not for the better.

I understand the problem; it’s real, and not improving. Like my neighbors, I want to feel that my person and property are being adequately protected. But I have a real problem with “rent-a-cop” proposals of this sort.

Public safety is one of the very few things that virtually all Americans believe should be provided by government. Practically speaking, private policing creates the classic “free rider” problem–if I pay a private security guy to patrol my street, my neighbor who refuses to pay his fair share for this service will benefit anyway. Ethically, the question goes to the heart of why we have collective mechanisms like government in the first place: why should citizens who can afford to pay extra get adequate basic services while our poorer neighbors don’t?

If I thought that hiring private security for the Old Northside would prompt the city to deploy added police in underserved poor neighborhoods–where social dysfunction and economic distress increases the incidence of violent crime–I might reconsider my opposition, but anyone who understands the way these things work knows how unlikely that is. It’s more likely that the Mayor would breathe a sigh of relief and REDUCE the public police force proportionately. My neighborhood would benefit at the expense of poorer areas.

What’s worse, we’d be echoing the message that seems to resonate with all those “tea bagger” folks: that we don’t need no stinkin’ government. If for some reason you can’t fend for yourself, it’s probably because you are undeserving. In any case, that’s your problem.