Employee benefit liabilities and costly missteps recently made by city officials are cause for community concern, but the parcel tax is not the culprit.
The parcel tax contributes to the revenue that enables the city to provide above-average municipal services. A decade ago it did allow generous (competitive) compensation packages for city employees.
The parcel tax, however, is not a slush fund. Nor is it onerous, amounting to about five percent of annual property taxes for most households. The school tax is five times that amount.
The parcel tax also provides a cushion to absorb unexpected expenditures or revenue reductions. This, in itself, is reason to support the parcel tax. No rational business or homeowner would intentionally reduce income in the face of rising expenses.
The nearly $40 million in unfunded liabilities for employee benefits is a rising debt that must be curtailed. It is not unmanageable, however. If, for example, the entire $40 million were to be amortized over the next 25 years, the annual impact would be only $400 per household and hardly a cause for alarm. Current obligations are fully accounted for in the FY 2012/13 budget and its five-year projections. These budget projections show an ending surplus of $4.6 million with the parcel tax but a deficit of $2.3 million without it, a $7 million difference!
The MTRC and the Budget Advisory Committee did what they were asked to do: advise the City Council of impending fiscal problems, highlight fiscal and managerial deficiencies, and suggest steps to improve decisions and accountability. Both committees unequivocally supported continuing the parcel tax. Without it, the City would be forced to make “unprecedented” cuts, so said the report of the Budget Advisory Committee.
Several citizens who served on these committees agree that defeating the parcel tax will force the city to cut expenses, but they now believe that by this action the City will also be pressured to make certain fiscal reforms that may prevent costly missteps in the future. Ironically, defeat of the parcel tax deprives the city of the very revenue needed to meet these expectations, including the setting aside of meaningful reserves. Defeat of the parcel tax also precludes funding for any improvements such as a new swimming pool and expansion of KCOM coverage.
The parcel tax does not make decisions. The City Council makes decisions — good and bad — based on citizen input and staff recommendations. Adding an independent budget analyst and an experienced project manager would help avoid future missteps. Electing a City Council that represents a cross-section of the city’s neighborhoods would offset the undue influence of special interests groups. Defeating the parcel tax, however, does not resolve any issue.