Cut The Slush Out Of Government And Out Of Our Tax Bills
Written by Michael Lewis on September 4, 2008
By Michael Lewis
Commissioners this week take their first cut at Miami-Dade’s budget. It should be a hefty cut.
This is the tax revolt budget when legislators vowed huge savings and settled for tiny at best, coupled with a doubling of the homestead exemption.
Unfortunately, as budgets of the county and its cities show, all these intended savings are headed toward higher, not lower, tax bills for many and just small trims for the rest.
You could fill a book with what went wrong in the Legislature that melted away promised piles of savings gold, but that’s over now.
Where taxpayers could still win are in local votes that set actual tax rates. The tax notice you just received shows your maximum rate, which governments can cut as much as they want but can’t raise further.
But in Miami-Dade and most cities, rates on those notices already surpass the Legislature’s ceiling. Your promised tax cut — which wasn’t going to be big anyhow — can turn into an increase if two-thirds of local officials vote to exceed the ceiling.
County Manager George Burgess’s budget memo this week lists 24 of the county’s 35 municipalities seeking a tax rate above the proposed ceiling. In that same message, he says 26 of them advertised rates above the ceiling. Strategic Business Management Director Jennifer Glazer-Moon told a county committee last week the number is 29.
Whatever the actual number is, most cities and villages want to exceed the Legislature’s ceiling.
The same is true for the county — or parts of it. Mayor Carlos Alvarez wants to keep county taxes right at the ceiling overall, but to do so he plans to go below the ceiling in some areas but tax residents of cities and villages 6.63% above the ceiling.
The logic eludes most people, including Carlos Gimenez, who plans to ask fellow commissioners not to exceed the ceiling anywhere, in or outside of cities.
That would require, he figures, trimming the proposed budget $68.5 million. He offers an immediate $50.5 million savings and says more is possible.
It’s more than possible. It should be a cakewalk.
Government spending is cost-plus. Whatever you’d spend to get something done, it costs more in government.
We’ve all read of $143 government hammers. And as Commissioner Joe A. Martinez told me last month, county-hired consultants can get triple the going rate. Chalk some of that up to a bureaucracy that decides who can bid to sell the county goods and services. After how many pages of documents does the $20 hammer become worth $143?
Out of far more than $7 billion, there’s no doubt the county budget could be slimmer.
The county has indeed cut positions — though Mr. Burgess now seeks 28,972 workers, 9 more than he was asking for in June. There’s a rationale for every job, but the result takes the county toward more spending, not saving.
Meanwhile, as taxes are sought above the ceiling, the county and City of Miami forge ahead on a $3 billion construction mega-plan. That’s a Trojan horse of another color but indicative of government’s desire to spend as much as, or more than, is available.
The blame for added spending rests, however, not with Mr. Burgess or Mr. Alvarez or city or county commissions but with all of us. How much do we want government to do for us (or to us)?
Mr. Gimenez notes, for example, that a budget proposal to add jobs and $779,000 for a new Office of Economic Development Coordination in the mayor’s office duplicates what private enterprise already does.
Do we want government to continue to do more and more, at the usual cost-plus level? If so, we need to seek property tax hikes instead of cuts to do those tasks at higher cost than we could do them ourselves.
Meanwhile, many residents already pay a hidden tax on the added value levied on homes even as market values fall.
If you’ve had a homestead exemption, a 3% cap on annual assessment hikes has protected you from huge tax increases based on added market value during the run-up over the past decade.
As property values now fall, however, assessments can still rise 3% a year to catch up. Many people whose homes have just lost value are being assessed more this year nonetheless, with added tax liabilities.
So when Mr. Burgess states in his budget message how much tax an average homeowner will save, he’s talking about two different people — the person whose home was at the county average last year now is probably at 3% more than county average, so he’s no longer the "average" homeowner Mr. Burgess talks of.
And when he tells us in his June message that having the county tax city residents above the state’s ceiling is "worth far more than the minimal savings that could be achieved" at the state’s cap, we have to ask: Worth far more to whom, you or me?
How much more in taxes is it worth to buy $143 hammers or hire consultants at triple the going rate? It might be worth it to the county, but how about to me?
Nobody questions the need for basic services, but some define "basic" differently. We all want police protection, but few want to pay police at overtime rates to sit inside a proposed government-built baseball stadium run by private enterprise.
There is no free lunch. We pay for what we get — and, with government, more than pay for it.
When commissioners dig into the budget this week and then decide Sept. 18 how much tax we’ll pay starting Oct. 1, they’ll share complicity for the spending.
Each gets a $300,000 annual slush fund to spend, no questions asked — $3.9 million in all. And anything they didn’t spend this year carries over, increasing the slush level. Their first saving should be to cut leftovers from next year’s budget rather than adding to the level of slush. How many of them would take that symbolic step?
Even more vital, they should join Mr. Gimenez and say enough is enough: the legislature set a tax cap so live with it even if intended targets live in cities and villages. Adjust spending to the ceiling, don’t raise the ceiling so you can spend more.
It will take just five commissioners to hold the line. Mr. Gimenez is number one. Will four more fiscally responsible commissioners step forward?