The Halfway Point - Commentary on the World Today
   


About
When I was 46 I started writing essays on life, or the state of the human condition as I once called it. Because I was halfway between old enough to vote (21) and planned retirement (72) it was known as the "Halfway Point" series of essays.

Later when I mentioned the essays in one context or another on USENET, I got requests for copies and eventually for future essays. Thus the mailing list was born, and it moved to the Internet when that became widely available. At that time I moved to writing on a schedule, the 1st, 11th, and 21st of the month.

Now the trend is to "blogs," and read on demand. I am therefore making this available as a blog, and we shall see if people read it here, or by mail, or not at all.

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  •        
    Wed, 20 Jul 2011

    UpstateNY - why a property tax cap can't work long term (09:53)

    I was against the new NY State tax cap in property taxes, because in the long run it can't work, nor can any approach which limits income but not cost.

    The state has capped the increase in property taxes for smaller municipalities to 2%, as a tax cutting measure. While this sounds good to the innumerate, limiting county and city income creates a problem rather than solves one. The reason local taxes are so high (mine are supposedly the highest in the nation) is that expenses are going up.

    Let's look at causes before talking solving cost through efficiencies:

    • Unfunded Mandates - the state can, and has, and will mandate that counties and large cities do certain things on behalf of the state. The state doesn't pay for these services, so there is no penalty to the state legislators, and state taxes don't go up. Medicaid is one, but New York is very concerned about the poor, as long as someone else has to raise taxes to pay for it.
    • Cost of living increases - things cost more, and the current method of limiting inflation, recession and high employment, is unpopular. Therefore any approach which limits revenue increases to 2% is bound to be less, perhaps far less then enough at times. And employees cost more, because they need to be paid more so they can afford to live. Holding down pay only helps if the pay is generous, after that low wages result in low quality people, every position being an entry position, employees leaving as soon as they get some experience on their resumes, etc. Turnover drives training costs, and providing service with inexperienced people and those no one else would here, is a ticket to bad service. Politicians hate poor service, it leads to unhappy voters and turnovers in office, too.
    • Infrastructure costs - roads and bridges are aging and crumbling in many localities, for the most part these are old cities and towns. My street is being repaved as I type, after being designated the worst street in the city, due to using the lowest bidder the last time. The first thing the city did was give us a truckload of cold patch and a Rough Road sign, but ridicule of that "solution" forced the repaving.

      If the roads are old, what's underneath is old, too. The water lines and sewers are both aging and to some extent obsolete, and it's hard to keep the streets paved when you have to dig them up regularly.
    • Environmental issues - there is increasing cost to limiting damage to the environment, but there is also increasing cost associated with damage from the environment. Special interests have limited the regulation of coal plant emissions, so cheap sulphur rich coal can be burned, and few filters limit sulphur in the exhaust. So on the east coast the lakes are dying, and buildings and roof materials are being dissolved with acid. Anything in a part of the country where water freezes and thaws has additional damage as any slight roughness of surface turns to scaling, and large cracks turn to total failures.
    • Pension costs - the Governor wants to limit salaries for administrators, which takes away the option of hiring a few really good people at the right level to make things work better. See below for another approach.
    If you expected to find a clever solution here, at least in terms of a cheap or quick solution, look to politicians, they will always promise a clever solution until the day after election.

    Just for grins, here are my thoughts on these things:
    • Mandates - have the government which passes the mandate fund the mandate. Leave the choice of paying the local government to do the work, hiring a service to do the job, or doing it at the mandating level.
    • Cost of living - the state wants the local governments to merge. That doesn't scale well, government should serve local interests. However, encouraging merged purchasing to improve discounts, reduce personnel count, and hopefully allow the best people to negotiate prices, and full or partial merging of highway departments, up to some level where administrative costs match economies of scale, do seem useful.
    • Infrastructure - the way to limit cost seems to be buy good goods. Contracts should go to the lowest qualified bidder, and if a road is to be repaved, consideration given to replacing what's under it. Obviously on a case by case basis.

      Stop building new roads. No, really. And raise the gas tax for highway maintenance by a dime a year for a decade. This will cover inflation (the tax hasn't changed in years), faster rebuilding, and encourage voluntary purchase of economical vehicles. Mandating "better gas mileage" reduces choices, forcing buyers to consider the choices increases choices and makes the buyer happier with the choice.

      Pre-fund roads and bridges, don't just fund the construction, require payment up front for maintenance. Put the future costs in a lock box allocated to just that project. This would discourage building roads and bridges which aren't really needed, and make the real cost clear. It would also encourage using better materials, such as corrosion resistant steel in girders instead of or in addition to painting, better road beds under the pavement, perhaps concrete rather than asphalt in the north.
    • Environment - time to pay for pollution, this is one of those "you can pay me now or you can pay me later" issues.
    • Pension costs - cap the salary which can be counted toward pension. Social Security taxes and benefits are capped, government pension contributions can and should be, as well. Allow Medicaid and Medicare to negotiate prices for drugs and services just like private insurance. No, it's not a perfect solution, it just makes the cost of imperfection lower.

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    Procrastination is the art of putting off until the last possible moment.
    But no longer!