Vox Populi

A Public Sphere for Poetry, Politics, and Nature

Djelloul Marbrook: The biggest tax swindle of them all

New York governor Andrew M. Cuomo has opened Pandora’s Box, and we would all be better off to finger the evils pouring out—if the press and the politicians had the courage and integrity to lay them out before us.

His state has the highest property taxes in the nation. While these taxes, now reaching confiscatory levels, hurt everyone, they especially devastate the young and the old. The young are unable to buy homes and the elderly are unable to hold on to them. And in the middle of this spectrum many middle-aged homeowners are struggling with underwater mortgages.

But doing something about these property taxes is not merely a fiscal issue, it’s a cultural issue. Governor Cuomo looks to consolidation to reduce property taxes by creating efficiencies and reducing redundancies of services, infrastructure and equipment. That may or may not work. Consolidation of schools has a checkered history. Even if consolidation does work, it will mean cultural dislocations, the erasures of histories. It will sacrifice micro-cultures for a greater good. It will attack deep roots.

Before we look into these underlying problems, let’s uncover a big lie that has been widely swallowed by an unsuspecting public in New York State and throughout the land. The politicians, with the help of a complicit and self-serving press, have laid the blame for taxes on the federal doorstep, claiming the federal government is bloated, corrupt and overpaid. It’s simply not true. The real tax burden is on property owners, and the real culprit is closer to home.

Conservative politicians want to reduce the size of the federal government not because it’s economically wise but because they oppose the social safety net it administers. They want to dismantle Social Security, Medicare, Medicaid, food stamps and other programs for the poor and elderly. They know that federal taxes are a pittance compared to the property tax burden—and compared to central government taxes in other developed countries. These politicians are not willing to dismantle hometown programs because the patronage inherent in them buttresses their political bases. It’s easy for them demonize a faceless Washington bureaucracy, as the last elections proved. It’s not so easy to attack excess when your cousin and neighbor wear its face.

The right wing of American politics has successfully scapegoated the federal government to distract Americans from two irrefutable facts:

  • We can’t improve our quality of life while waging endless war, maintaining 130 bases overseas.
  • Most onerous property taxes are levied by communities dominated by conservatives.

Pointing the finger at Washington enables conservative politicians to lay down a smokescreen to conceal outdated, clumsy and duplicative government at home. For example, many small communities have police forces they don’t need.

Governor Cuomo rounds out the total of local governments in New York State at 10,000. Some people put the figure at 11,000, and others at 10,500. They’re towns, villages, lighting districts, water districts, sewer districts, and even a special district to count the other districts—to say nothing of the 698 tax-levying school districts —a double whammy often even higher than the property tax. It all adds up not only to excessive government—the very issue conservatives fulminate about in Washington—but also to pernicious redundancy. Even worse is the widespread failure of regional planning. Instead of collaborating, communities tend to compete with each other. If an adjacent community has a school nurse then the hometown must have one, even though the nurse could very well serve both communities. If the town across the line has a winning football team, our town must have one.

The New York State comptroller says there are 4,135 local governments in the state. The U.S. Census Bureau counts 3,453.North Dakota and South Dakota, by comparison, have a combined population of about 1.5 million people, yet they have 4,668 local governments. On a per-person basis these two states have 17 times more governmental units than New York, with a population of 19.65 million.

We’re talking about New York State here because it is trying to address its prohibitive property taxes by capping them, but if you rank each state by the number of local governments compared against the state’s population, New York would rank 35th nationally, a full 60 percent fewer government units per person than the national average, a sobering thought to say the least.

In 2012 according to the Census Bureau there were 89,004 local government entities (down from 89,476 in 2007) in the nation:  3,031 counties 19,522 municipalities, 16,364 townships, 37,203 special districts, and 12,884 independent school districts.

Every five years since 1952, the Census Bureau has completed a comprehensive count of all local governments in the country. The most dramatic changes have been the decline in independent school districts and the notable increase in special districts. An interactive history of the counts of special districts and school districts from 1952 to 2012 can be found at https://www.census.gov/govs/go/.

The total number of New York local governments includes 7,000 special districts with varying degrees of autonomy. Some experts argue that these districts are little more than a line on your tax bill, but that argument is disingenuous. They didn’t get there by administrative happenstance. They were invented, argued, defended, opposed, and they involve contracts in which profit is made. They involve jobs. They often involve patronage, political favoritism, and sometimes a plain swindle. Somebody administers them. To reduce them to a line on a tax bill is to play loose with reality.

Governor Cuomo says the antidote to this governmentalization is consolidation. That may be true in some instances, but it’s no panacea. School consolidation should have taught the state by now that shutting down the neighborhood school wasn’t always a good idea. It led to monstrous transportation systems and costs, and those systems to this day fail to redress persistent segregation. The banks and developers horn-swoggled American communities in the 1950s and 1960s into school consolidations that turned out to be good for nobody but them. They promised cost efficiencies and quality of education improvements that never materialized. And then the gas prices went up.

No state should set about redressing the property tax burden without confronting head-on the certainty that the venerable cultures of its towns, villages, hamlets and little cities will be impacted. Livelihoods are supported by those property taxes, whether the jobs are justified or not. It’s all very well to say that New York has too much government. It’s another matter to throw people out of work without somehow anticipating their resulting plight.

Insularity is a major component of the cultural challenge. Communities are in love with their identity, their history. Families long established in communities feel proprietary about their community’s identity. They tend to regard newcomers as interlopers not entitled to have a say. But this insularity flies in the face of intelligent regional planning. It flies in the face of common sense, even though it wears the face of homespun common sense.

It never made sense to allow antiseptic suburbs to suck the blood out of Main Street, while neglecting an established if deteriorated infrastructure. It made sense only to developers and bankers. It never made sense to allow malls to swamp small businesses. But it did make sense for communities to pull together. They didn’t. They pulled apart. They abandoned their waterfronts to the poor. They abandoned perfectly sensible trolley and municipal bus systems (often with pressure from oil and steel lobbies) in favor of the ubiquitous car, which is no longer affordable. They competed for development, making foolish tax concessions, when they should have worked in concert. They supported small athletic programs, often at the expense of the classroom, instead of combining them. They resorted to redundant and costly school transportation systems instead of pooling resources. They yammered about competition while throttling it, allowing chains and their absentee owners to crush Main Street.

None of this will be easy to undo. Some of it should not be undone. School consolidation, for example, is largely a failure. It has depersonalized and dehumanized education, imposing high transport and administrative burdens on taxpayers. It was adopted largely in response to politicians corrupted by developers and predatory bankers. And to this day the political class refuses to take responsibility for this bankrupting mistake.

There are ways to preserve communities’ identities and heritages, but they remain unexplored. There are consolidations that make sense, others that would be disastrous, and yet others that have been  disastrous. But for their own reasons, to preserve patronage and nepotism, politicians in New York State and almost everywhere else have imposed too much government and too much taxation while blaming Washington for their own local sins. Property taxes burgeon because of a failure of vision, and the press, always ready to alarm and polarize, is part of the problem.

Once we lost a vigilant and vibrant hometown press and an ambitious regional press, the people themselves lost a court of last resort. Their votes were betrayed by under-the-table deals between politicians and amoral business, and long-standing small businesses were stabbed in the back. The remnant press mostly does the bidding of its advertisers, and that means developers, bankers, chains and malls. They all like things the way they are because regional planning would confront them with environmental and other issues that have been circumvented.

One reason Republicans are entrenched in so many small communities—communities that are arguably supporting services they can’t afford—is that they have succeeded in convincing local electorates that outsider Democrats want to come into town and change things, firing good old boys and introducing scary big-city ways. They have succeeded in painting the Democrats as outsiders who would eat your cousin’s lunch and swipe your cousin’s job. And there is often just enough truth in this shibboleth to sell it.

On the other hand, these very conservatives betray their communities by peddling nativism and the mantra that all growth is good, encouraging overdevelopment that endangers aquifers and the surrounding environment and requires services compelling higher taxes. The next corrupting step is that tax assessors try to soak the newcomers, setting off hearings and litigation. It doesn’t invariably happen, but it happens often. The new services and the new jobs go to political buddies, friends of friends. Favors are passed back and forth and sometimes under the table. A them-and-us mentality is used to preserve a corrupt but nativist system.

Here is an example of what happens without regional cooperation. A state hydrologist warns a town that the aquifers in a three-county region are endangered by overdevelopment. But the town welcomes developers, ignores the hydrologist, and fails to consult its neighbors. A nearby county seat loses its water supply originating in neighboring towns, causing a fiscal crisis. The overdeveloped areas now contemplate abandoning their artesian wells in order to float a bond for a municipal storm drain and sewer and water system. But the outlying taxpayers cry bloody murder. So the town limits the cost to its village. Rents soar. Small businesses fail. Then it gets worse. The capped artesian wells flood basements every spring, causing expensive repairs and pump-outs. Foundations weaken. But where can the overflowing water be pumped? The town doesn’t want that water in its storm system, so expensive litigation arises. All because nobody cooperated with anybody else and the town council lied to its citizens about the risks—all of them: higher taxes, flooding basements, litigation. And one further problem, the contractors who raked in the money to install sewer and water systems were somebody’s buddies, and money probably passed under quite a few tables. Competitive bidding? Sure. But the specifications were written so that only certain contractors could qualify, just the way fire departments used to write specs so that only American Lafrance, their favorite engine maker, could qualify.

The state had no authority to intervene. The county, having a bit more authority, might have intervened, but the county’s dominant political party was the same as the town’s. No one was served except developers, banks and the tradesmen who installed the expensive systems. Overall property taxes rose, and marginal business in the village became an endangered species. It made no long-term sense, but the politicians called it progress.

Would it be different if progressives were in charge? Maybe not. But the reality of these micro-cultures must be considered, nativism notwithstanding. Otherwise you have Democrat Cuomo claiming he is trying to topple the property tax hobgoblin and Republicans saying he is trying to destroy their political bases. That all becomes a formula for gridlock.

Governor Cuomo engineered a two percent property tax cap through his state’s legislature. The New York Times described the cap as a Draconian effort to strong-arm communities into holding the tax line, but it’s doubtful that lesser devices would have worked, and even now communities can override the cap if 60 percent of their legislative members consent.

Would the efficiencies of consolidation outweigh the drawbacks? Dr. Mildred Warner, professor of city and regional planning at Cornell University, is not so sure. She thinks a service-by-service approach is wiser to prevent ham-handed consolidation. She thinks each service would need to be negotiated on its merits. Highway departments might share equipment, but snow removal services might remain localized, for example. .

“An economy of scale is when your per-unit cost of service delivery drops as the population that you serve rises, that’s when you get an economy of scale,” Dr. Warner says. ”Consolidation can only achieve cost savings when you have an economy of scale that you have not yet realized, which means that when you have two units consolidating into one, your per-unit costs of service delivery are going to drop. That’s the only place cost savings can come from if you’re going to keep your quality and quantity of service the same. Now if you’re going to reduce the quantity and quality of service, that’s not a real cost saving, that’s a cost transfer.”

Unmentioned in either approach, the governor’s or the professor’s, is patronage, nepotism, self-dealing and under-the-table dealing. Politicians contract out work and hand out jobs according to the impact on their voter base. Getting communities to navigate through those entrenched practices is an imponderable.

Kevin Gaughan, a government reform advocate from Erie County, sees it differently. He says the argument that this kind of government restructuring doesn’t result in savings is similar to claiming fewer calories won’t result in weight loss.

“I disagree with the rather creative assertions . . . that reducing government size is not going to result in reduced taxes. It is the only reform that will result in reduced taxes in my experience.”

But neither consolidation nor economies of scale is the whole answer. New York communities, like most in the nation, are invested in the shady notion that all growth is good. That is the notion that drove the pre-2008 housing boom, and the subsequent crash caused by predatory lending has not dissuaded communities from this mantra.

Millions of homes were built in ecologically fragile areas, endangering water supplies and creating environmental hazards, such as mudslides. Deforestation threatens the water supply with mud and other pollution and destroys fish and wildlife habitats. Many communities have been forced to truck water in at high costs.

But the greater costs come from services that must be provided the new homes—lighting, streets, trash removal, snow removal, policing, fire protection. The expanded tax bases rarely rise to the level of meeting these costs, and in consequence property taxes rise and keep rising.

Professor Warner is almost certainly right that only states can compel remedial action. But state legislatures are responsive to local politics, and only the strongest and most compelling leadership can prompt them to act in ways that might rattle their political çages.

The solution lies with the alternative press—media like Mother Jones, Rolling Stone, Alternet, Vox Populi, First Look—which can show the public how it is being swindled by this most gigantic tax fraud of them all. But first their reporters and editors must understand the issues. Then their business managers must resist the pressure from advertisers that caused the press before 2008 to countenance a fraudulent housing bubble and then feign surprise when it burst.

—by Djelloul Marbrook writing for Vox Populi

Copyright © 2014 by Djelloul Marbroik

Andrew Cuomo

Andrew M. Cuomo

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This entry was posted on November 10, 2014 by in Opinion Leaders and tagged , , , , , .

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