When I was young, I was a big fan of science fiction. One SF movie classic is 1957's "The Incredible Shrinking Man," in which an accidental exposure to chemicals causes the main character to start shrinking and he keeps on shrinking until he is small enough to be threatened by a spider. Personally, I'd just like to shrink to 200 pounds, but that's another story.
Good science fiction embodies all the elements of any good story, but it has one advantage. In addition to reality, it can add mystery by the invention of things that are improbable or impossible in the real world. Do you need someone small? Just shrink them. That added element is a wildcard and it keeps science fiction popular. I suppose it's also the mystery element that keeps me interested in politics, you just never know what's going to happen next; take the case of, "The Incredible Shrinking Tax Base."
When Hollister's city council and local unions were busy promoting Measure T, the one-percent city sales tax approved in November of 2007, they estimated that it would bring in an added $4 million for a full year. Now that $4 million estimate has shrunk to $2.8 million for the first year and that's only on the collection side. The cost of pay raises on the expense side will shrink the city's ability to provide additional services even further.
The missing 30 percent, $1.2 million, translates into sales decreases or lack of collections on $120 million and that is a real chunk for an economy the size of Hollister. We are told that business is bad, but that's not bad; that's tragic. It's "close my business and let's go home" tragic for far too many. For the city and county, it means all the sales tax revenues will be down, way down.
How much of this is actually fallout form Measure T? We will probably never know, but higher taxes are always somewhat self-defeating; they encourage government to spend more, as the city council just did, and they encourage the taxpayers to spend less, as they are doing every day. Sooner of later the lower spending by taxpayers just can't support the higher spending by government and we have another crisis at hand.
For the other major component of local tax revenues, we rely on property taxes. The state takes the property tax money first, and then they give it a good washing, and return what's left after shrinkage. There can be a lot of shrinkage, sometime as much as ninety-percent.
When the amount going into the state's property tax washer is reduced, as it is now, you can expect that even less will come out. Considering the stagnation of the housing market and the drop in assessed property values, we can expect monumental shrinkage in property tax returns. This shortfall will be another crisis or maybe just the same crisis dressed up in a different outfit.
At last week's COG meeting the staff asked for authority to apply for $250,000 in public transportation funds to purchase two new buses. They added that we were not going to pay for these; the money was coming from state funds, and if we did not spend it someone else will get it, and they will. Imagine COG meetings all over the state and every one saying the same thing, "if we don't spend the money, someone else will get it, and they will." It's too bad we can't figure out how to get that money and keep it, but there are too many strings attached.
My question is this, when all the tax generating private enterprise is out of business, where are the government run buses going to take the riders so they can work.
Almost everyone in government can see these crises coming, but they are not preparing for the storm. Instead, there seems to be this resignation, an acknowledgement that "this is really going to hurt" followed by business as usual. Why we are acting so passively and often irrationally in the face of these facts is a total mystery to me.
Marty Richman Got a question or a comment? Send us an email.
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Students warm up for school
