Just because there’s money, you don’t have to spend it all
Written by Michael Lewis on July 21, 2015
Miami-Dade aims to spend every cent of a tax windfall while patting itself on the back for not raising taxes.
Instead, the county is hailing all the good things that everything it’s adding to spending next year will do – including erasing some past budget cuts.
That’s all possible because property values have skyrocketed, allowing the same tax rate we paid this year to boost next year’s operating spending by $116 million, almost 2.6%, and capital spending by $394 million, 23.5%, the figures in Mayor Carlos Gimenez’s budget.
And since the county has more than a half billion dollars added potential tax income, it’s found places to spend it all – not exactly waste it, but spend it in ways that some voters will hail. And if we had hundreds of millions more, officials could spend those funds in ways that some voters would hail.
Only one commissioner, Juan Zapata, suggested a vital use for some of the windfall – cut tax rates so that taxpayers feel less pain, though despite a rate cut they’d still pay far more next year.
He’s right. The county could trim tax rates next year and still collect and spend hundreds of millions more while almost everyone’s tax bill rose.
That would be the ideal shape of a final budget to be set after Sept. 3 and 17 hearings – if commissioners realize that they can look great spending on their pet causes and still lower tax rates in a community that needs the break.
With unemployment at 6.3%, higher than the rest of Florida, and an economy that sizzles in real estate but is choppy where the middle-class lives, many taxpayers would get tax sticker shock even if rates were trimmed.
You won’t hear outcries now, because the plan is touted as holding the tax line. But that’s really just holding the rate line – bills are going to rise along with property values.
Tax pain won’t hit all equally. Most voters won’t feel it directly, because in a county where 63% rent, they don’t pay property taxes. Nonetheless, they’ll feel the pain as landlords raise rents to fund higher taxes.
Homesteaded residents won’t hurt as much. By law, appraised values of their homes can only rise by the cost of living, capped at 3% a year and most recently a slim 1.2%.
But for owners of second homes, or foreigners owning but renting out condos, or any owner of commercial property, the jump in tax bills could be staggering even with flat tax rates as countywide value of existing properties rose 8.1%.
Of course, neither foreign investors nor second-home owners vote, and commercial owners’ votes are few. That makes a difference as officials set tax rates with next year’s election in mind.
As for the county’s perceived cash needs, note this: new construction just added $2.8 billion in taxable value. If tax bills rather than tax rates were held flat for all properties now on the tax rolls, the county would still have $2.8 billion in new properties adding 1.3% to total taxable value to tap for revenue.
As it is, the county plans to keep the entire tax increase – it’s not a rate increase, but few taxpayers care whether they’re paying more because rates rose or because their values rose. Either way, they pay.
For elected officials, however, the aim seems to be to fund spending, not to protect taxpayers, so they are joyful about a budget that will raise tax bills.
Rather than cut rates, Commissioner Dennis Moss said last week, “Let’s give ourselves maximum flexibility at this time to address other concerns that come up.”
Remember Parkinson’s Law, “Work expands so as to fill the time available for its completion”? Well, Mr. Moss is applying its Miami corollary: “Work expands so as to use all of the money available for its funding.”
Commissioner Daniella Levine Cava also sees growth: “This is a rebuilding year for vital services and programming and we need to keep investing. Things are looking up, and looking forward, I think we can accelerate the growing process.”
This illustrates another corollary: “Work expands so as to support the ambitions of those in charge.”
None of that work, none of those ambitions, none of that spending is necessarily bad – or necessarily good. But is it necessary at all? The more money available, the more necessary spending seems to become.
Miami-Dade will probably see need to spend even more as vast new construction flows onto future tax rolls, multiplying money available without raising tax rates. And if property values also keep rising, government will get a double shot of fiscal fuel to burn in even more “necessary” ways.
If tax income doubled, in fact, governments would find it necessary to spend every cent – at least, it’s necessary for elected officials, who can tell voters all the good things they have achieved.
And just think – they didn’t have to raise tax rates to do it. What a windfall!