Tuesday, February 27, 2007

Taxing Credibility

We have had a lot of discussion about our tax rates recently. Most of us have either seen or heard about this sign. We know we have a high tax rate, but how much impact does that really have?

When the San Angelo city government wants to get a feel for where it fits in, it normally uses a set of benchmark cities. They do this when comparing wages, recreation facilities, housing, unemployment, etc. so it is only fair we use these benchmark cities to compare city taxes. These cities are usually Abilene, Midland, Odessa, and Wichita Falls. You can find their tax rates (and utility rates) on the Texas Municipal League site. If you look at the numbers you will see we are significantly higher than any of our benchmark cities. (A comparison from high to low for cities over 50k is here.)

The closest benchmark city to us tax wise is Odessa at $.679 per $100.00 which is $.176 (20%) lower than our rate of $.855. Midland is $.213 lower. Abilene is $.2195 lower. Wichita Falls is $.2654 lower, a difference of just over 30%. There are differences such as the amount of taxable valuation of each city, but that doesn't explain all of the differences. It doesn't explain how Odessa, with a slightly larger population and slightly less taxable property can have a tax rate that is 20% less than San Angelo.

Tax rates do affect the decisions of businesses that want to locate here. If a company wants to build a $10 million facility, you can be sure that taxes will be factored in as an operational cost. Everything else being equal (which it never is) a company can save $17,600.00 per year by building in Odessa instead of here. They could save $26,254.00 by building in Wichita falls. They save even more ($56,788.00) by locating in Amarillo or at the extreme, they could save $61,662.50 by locating in Tyler, the lowest property taxed city in Texas. Those savings are the equivalent of 1 to 2 jobs.

The point is that we really must figure out why our taxes are so high, and how to lower them. When a major company locates here, our taxes cost them the equivalent of at least 1 job. Incentives can help for the short term, but if the company is here for the long haul our taxes will hurt their ability to add jobs.

Sunday, February 25, 2007

Eye on the Snakepit

Now that the Legislature has removed the budgetary logjam, things in the Austin Snakepit are getting lively. I spent much of Saturday strolling through the Texas Legislature Online site, thought I would report on items of local interest I found. The site, www.capitol.state.tx.us , is well worth one's time, very user friendly and it even lets one put any given bill on e-mail alert every time that bill moves. For background, HB is a House Bill, SB a Senate bill, HJR or SJR, the JR is Joint Resolution, required for Constitutional Amendments. ED is Eminent Domain and Viagra has no effect on it.

The local city charter review is in progress, and I am confident limiting eminent domain will make it on the charter ballot. After the Kelo decision, eminent domain limits are popping up in Austin like flowers after an early spring rain. My favorite is HJR 11, by Frank Corte, a Constitutional Amendment which would limit ED to public use, no transfer to another private owner, AND require the entity exercising ED to present “clear and convincing evidence” of the necessity of a particular seizure. As it should be. Our Senator Robert Duncan has SJR 3, a good Constitutional Amendment. It would require any future grant of ED from the Legislature to a local entity be passed by a 4/5ths, recorded vote majority, and invalidate any such grant previously given, meaning existing ED power is NOT grandfathered, but must be re-applied for under the 4/5ths rule. HJR 30 is another Constitutional Amendment requiring the state to grant the original owner of seized property first chance at buying back any land seized, but not used, by the state after twenty years, at no more than original compensation given.

Just a few of the more notable, and passable offerings follow. HB 1495 would require the Attorney General to formulate a “Landowner's Bill of Rights, “in plain English and posted to the OAG website”.

HB 1387 would limit ED by School Boards, they would have to provide impact studies and evidence that all viable options to purchase land in a voluntary transaction have been exhausted before filing for condemnation.

HB 252 is one of my favorites, and bearing the name of the Land & Resources Management Committee Chair Anna Mowery, would seem to have good prospects. This bill says that local zoning changes may not decrease the value of the affected property by more than 10% unless the zoning entity is willing to move to ED condemnation and compensation. It includes in consideration collateral damage to contiguous, but unrezoned property belong to the same owner and provides compensation for legal costs of a prevailing appealant. These are pretty much the cream of a 56 bill crop, but by no means the only worthwhile ones out there. One thing that did surprise me on ED bills, none I have found directly require the taxable evaluation of a property be used as baseline floor for the compensation offered. One of the nastier results of the Kelo decision, one of the affected property owners was only given $150,000 for property New London had cheerfully taxed at an evaluation of $240,000 for 10 years. Seems a simple proposition to me, if the property is worth x when the city's hand is out to take, it should still be worth at least x when that hand extends to give.

HB 1678 is a modified version of a bill Gov. Perry vetoed last session, providing for more use of probation in place of prison time for non-violent felons. Yes, this largely means drug offenders, but no, I don't regard it as “soft on crime” so much as way softer on our wallet. Prison time is horrendously expensive. When one considers that in inmates per 100,000 Texas has an incarceration rate 10 times that of Communist China, the possibility we need to rethink the system comes to mind.

SB 3 will be worth watching, it and its House companion bills move many elements of the Regional Water Planning we have been developing for over a decade from recommendation to statute. There will no doubt be amendments along the way, but needless to say, this package is critical to West Texas and bears watching. Something based on this will almost assuredly pass, this has the big dogs behind it. High on my “alert” list.

Our new Representative Drew Darby has done well, landing a plum appointment to the critical Appropriations Committee. In that he voted for a recorded vote in the Speaker's election, I hope he will support HJR 77, a Constitutional Amendment requiring recorded votes on all bills and resolutions. As befits a freshman Representative, his docket of proposals is modest. One to enhance the legal penalty for defrauding people on charitable donations reflects a local case and closes a loophole that needs closing. He also authored HB 1617, which would amend the Economic Development Corp. act to allow a person not a city resident to be appointed as a director of COSADC. It amends the current 20,000 population limit on this to 100,000. The existing exemption allows smaller towns to use county residents to fill unpaid positions, quite reasonable. I wasn't aware San Angelo had any difficulty seating seven COSADC members.

I post this bearing in mind Mark Twain's caution that, “No man's property or liberty is secure so long as the Legislature is in session.” Humor aside, Texas really does have some very good people in Austin, but there are rascals and mere incompetents as well. Never hurts to keep an eye on them. Feel free to contact them. Listening to us is in the job description.

Rates & progress

If you have been paying attention lately, one thing is clear. Water and sewer rates are going to have to go up. We may be lucky and get state or federal assistance to fix our infrastructure. We must get creative and figure out how to use the 4b sales tax to pay for some repairs where appropriate and legal, but in the end the rates will have to go up. The only question left is how do you raise the rates.

A flat, $15.00 per meter increase is too simplistic. It's not equitable and it's very regressive. To use a very overworked term, it isn't fair.

There is a strong case for putting at least the majority of the increase into the meter charge or a separate capital fund charge on the water bill. It makes sense to have capital projects paid for by the fixed part of the bill, but make sure that the meter charge is raised proportionally. At the current rate and a $15.00 increase, a 5/8" meter users rate would rise from $10.08 to $25.08, an increase of 149%. An 8" meter users rate would go from $136.03 to $151.03, an increase of only 11%. A Rough estimate tells me that a 140% to 145% increase on all the meters would still raise the same money, with a more equal distribution of the capital repair costs, and a savings to the smaller user of $.30 to $.60. Not a lot but significant to those on a fixed income.

There are probably other questions that need to be asked about how to do this rate. I will grant that prior rate increases were too heavy on the per gallon charge for the politically popular goal of keeping meter rates low, but we need to be wary of going too far the other way. An 80% to the meter with 20% to the per gallon charge would leave a per meter increase of $12.00, and if the 20 split is based on a very conservative usage rate of 140 gpd (the Texas conservation goal) which is 13 gpd below current usage we should be safe. Sewer rates definitely need to be raised so that waste treatment is more self supporting.

In the end, there need to be rate increases. We still need to fine tune where and how much they will be.

Wednesday, February 21, 2007

Capital Idea (updated)

I felt sorry for the City Council yesterday. They have been hearing about infrastructure problems for the last few months. Yesterday they saw the final sticker price. They ended up with a bad case of sticker shock. They are searching for additional ways to pay the bill, but in the end local water users will suffer from sticker shock sometime this spring.

Our infrastructure problems are nothing new. They are a result of past policies of neglect, political pandering, and a policy of ignoring capital problems until they became serious. They ignored infrastructure problems because they could do it so easily. There was nothing that required them to look at capital problems.

It's interesting that this is happening at the same time they are forming a charter review committee. I am on this committee and have been doing some research. I looked at reports such as this one about what is happening in city charters in Texas. I noticed that there is something interesting included in many charters, especially the newer ones: a capital budget. (Our charter is here.)

We are not the only city that is having infrastructure problems. The upkeep on basic capital assets is not something that gets a lot of attention until something breaks. Flashy projects like arenas or tennis courts are much more appealing and have a higher visibility. Everyone likes to talk about the great stereo and seats in a new car. Nobody talks about what it takes to change the oil or check the brakes. Basic maintenance isn't sexy but it has to be done. There has to be some way to make sure that basic maintenance is done.

What I see happening is many cities are building a requirement for capital improvements into the city charter. They are spelling out that each annual city budget must include a capital budget. They are requiring a capital improvement plan, often as a section of an overall comprehensive plan, and they are requiring that capital projects be looked at as part of the overall budget process and that a separate periodic review be held, with every 2 years being common.

As part of our charter review, we need to add a capital improvement improvement plan along the lines I just described, and put it before the voters. We need to ensure that no future city government can ignore the city's basic capital and infrastructure needs.

Monday, February 19, 2007

Information Freedom

You have probably heard this verse "And you will know the truth, and the truth will make you free. (John 8:32)." This is one of the reasons we are doing ConchoInfo.org. Easy access to information is necessary to get at the truth. Easy access to the truth is absolutely necessary for freedom to flourish.

Much of the research on any issue is done over the internet today. You can wake up at 3:00 am and check out the facts on that idea you just had. No need to wait until the library opens the next morning. No reason to trek through the cold and spend hours searching the stacks.

The Standard Times, our major local news paper, used to have their complete archive on line back to 1996 for free. This was a great service for politically active or just interested individuals. Use it to research who said what about the sales tax or tennis court or proposed prison. It was quick and easy.

Some time this year, the paper changed their web presence and services. They added some blog like capabilities so readers can comment on articles right there, and they are occasionally publishing these comments like they used to run Speak Your Mind, a great way to get reader feed back.

They also changed their Archives. If you use the basic search, you get any article from the first of the year. Any article older than that requires you to search their archive separately. The titles and first paragraph comes up, but if you click for the full article you are redirected to a site ran by newsbank.com. You will be presented with a price list that starts with $2.95 for a single article, and ranges up to $1995.00 for a one year, 1000 article max annual subscription (they do have a $995 plan that allows 500 articles a year.) Talk about sticker shock.

If you go directly to newsbank, you can save yourself considerable money. It still costs $2.95 if you just want a single article, but if you sign up as a researcher or free lance writer (not sure about other plans) you can get 50 articles a month for $19.95, which they will bill monthly. This access also allows access to a number of papers that are signed up for their news library service. Still a bit high, but affordable.

I understand that print media such as newspapers are facing financial challenges. They are struggling to make money off their articles, etc.. A reasonable charge for past articles, if you can't figure out how to pay for views through advertising, is also reasonable but lets be reasonable. The New York Times has free registration which allows access to current news and a significant part of their articles. They have a full access service called times select that is only $7.95 per month or $49.95 a year. It is hard for me to swallow that Standard Times articles cost that much more than articles from the premier American paper.

In a way, I find this a step backwards. It limits article access to those with deep pockets. NewsBank seems to be archiving a lot of regional and small town papers. With that number of papers they could charge a more modest fee and actually make more money.

Sunday, February 18, 2007

Buy the Book

One thing you will discover if you do much research on issues is that there is a tremendous amount of paper involved. The introduction of the computer into government and business has had an unintended result: We are creating more documents today then ever, and they are getting bigger. Lets take a look at some of the paper involved in the Capital Improvement Plan being developed.

The CIP will a number of sections detailing needs and justifications. These, in turn, will reflect what is in the city's Comprehensive Plan. This is a very large document that coordinates all other planning. It is both the starting point and the executive summary of a number of other plans.

One of these other plans is the Parks, Recreation and Open Space Master Plan. This is a 250+ page study plus a large update on what recreation and parks should look like here in the future. This report plus updates cost the city a lot of money, and is only available on paper. There is so much there I doubt many people outside of the parks and recreation department know more about it than the power point slide show that was presented by the consultant who developed the plan. As far as this type of plan goes, it seems to be pretty good, but there are some concerns.

Our paid consultants started with guidelines from the National Recreation and Parks Association. They then did local surveys, polls, and focus groups to fine tune and prioritize the results. A bit of fine tuning, include lists, charts maps of parks and and proposed sites, eight by ten color glossies with circles and arrows and they had a completed plan. So where is the problem.

First off, I find the NRPA guidelines a bit too generic. They start with a plan developed by Kansas City, and then expand it to fit San Angelo and New York City. I will grant you that the hope is that a consultant will really treat each study as unique, but reality, time and money have a way of interfering with that. What most of these reports end up being is a list of about 2 dozen one size fits all sports and recreation activities in the order of their popularity on the last poll and a list of possible sites. They include cost estimates for each.

The problem I have is that we end up with a list with some odd resources on it (do we really need a city owned Ice Rink?) We also see no mention of many locally popular recreations (No, I am not going to mention Mr. Ryans professional Billiard Hall.)

The other problem is that we see project appear on various plans just because some consultant said you should have one so you can keep with New York City, even though the money could be better spent on water, roads, sewer, or even recreations that might stimulate the city.

The unintended consequence of the ease with which computers allow reports and plans to be generated is there are now so many of them, and they are so thick that it is almost impossible to know what is in them. You do have to be careful that some project doesn't sneak onto the budget just because is was one page in a large plan that nobody had time to read.

Friday, February 09, 2007

Capital Fun

The city government is finishing up work on a Capital Improvement Plan. As recent events have shown, it's about time.

At the last City Council, the various departments gave a short synopsis of what they see as the capital needs. They gave out a handout with projects, costs, and justifications for the projects they want funded which I have scanned in and put here on the main web site. This is a wish list of all the capital expenditure type projects in the city. You will find projects such as a new ambulance, upgraded communications, airport public restrooms, etc.. There were nine separate sections in the handout. Lots of numbers and so-so pictures. The power point slides and presentations by the department heads was much better and more informative. The handout was just for background reference.

This handout seems to be very complete including projects that may not be able to justify much priority. Some of the sections, such as IT are pretty thin. Sewer and Water seem thin until you realize the scope of the projects on each page. The thickest section is from Parks and Recreation. Part of the reason is there is one page for each park and recreation center, so that is not too surprising. Still, there are some surprises in this handout. We will cover some of them in future blog articles. Until then, take a look for your self and see what you think should be the priorities, and see what they might have missed.

Citizens Voting Committee

In case you haven't noticed, I am on the Citizens Voting Committee. We had our second meeting yesterday and there are some good things to report.

First off, the elections office is now up to authorized strength again. They could probably use more people, but that will be looked at when we are farther along. They have looked at some of the procedures and paperwork and started making the process manageable. There is still a lot of work to be done.

They are contracting for more training. The consensus is that the majority of the training needs to be hands on. At the same time, there is a serious need for more election judges, clerks, etc.. The pay is low, the hours are long, but the rewards are a functioning election system that is necessary for good government.

We have heard from election workers and party regulars, but we still need input from more people on their concerns about our election system. If you post a comment here, I will take it with me to the elections committee. You can also email them at elections@co.tom-green.tx.us directly.

Your suggestions and help will be deeply appreciated. Don't wait too long, the May elections are just around the corner.

Tuesday, February 06, 2007

School Bond Thoughts

The School trustees seem to have decided to go for the May election date on the school bond. We have reviewed the Long Range Facilities Plan and the results of the Turco poll commissioned by the trustees and talked to people in SAISD administration. In an earlier Blog we mentioned some questions about the poll itself. The trustees have until March 12 to nail down final ballot language, but assuming the information I have so far is in the ballpark, I think it is time to start this discussion. About the only new info out of last night's Trutees/Task Force workshop meeting is that the Trustees feel free to make a very pricey package even more costly if they choose to build a new Crockett on new property instead of the current site.

First, for context, I supported the last bond in '96, wrote a guest column in the Standard-Times and did what I could to help pass it. I do not want the following remarks to be characterized as those of a constant, reflexively anti-tax “aginner”. I have no doubt a bond can be justified, but we need to look carefully before we bite into this particular quarter-billion dollar apple.

If that figure sounds unfamiliar, it could be because neither the poll or the Plan mentions it. True, the bond we will be asked to approve in May is estimated at $128 million, but it is phase one of three put forth by the Facilities Task Force. Here it gets a little tricky. For everything in the Long Range plan to come to pass, all three will have to be approved, one now; another roughly 2016, or about the time the current bond is paid off, for a ballpark $100 million+; and the third in about twenty years, no price available yet. Administration thinks only the first two are relevant now. Since most of the action happens in Phase I & II, let's go with that, but we are still looking at a quarter-billion before debt service cost. Another reason I am willing to limit discussion to Phases I&II for now is that these two parts are so interdependent in the Long Range Plan, if we are not going to approve both, SAISD needs to drop back and punt anyway. Note here, the Turco poll gave under 10% approval to a bond amount in excess of $200 million. Since the poll discussed the first two phases almost interchangeably, I'm sure a lot of respondents thought they were pricing both phases for $128 million.

The “central” item in Bond 1 is $90 million for a new Central High. I understand we don't have a street address yet, but could we get a clue as to where it will be within a school attendance zone or two? Among other things it might help voters decide whether the on-site athletic practice fields are a “basic need”. It is hard to picture a site for a new Central that would be further from Bobcat Stadium than is Lincoln/Lakeview, from whence parents regularly shuffle their kids back and forth.

Question 15b on the poll measures agreement with the statement, “I would rather enlarge the current high school than construct a new one.” I hold a statement that should have been polled would be, “I would rather expand Lakeview, refurbish Central, and equalize the size of our two high schools than construct a new one.” Please, please don't tell us the controlling factor in deciding to go with a $90 million item was the absolute educational necessity of having a sole 5A football team in town, although that is pretty much what question 16h states. Actually, the very phrasing of 15b is insulting to the northside, it implies that Central need not even be named, that “the current high school” defaults to Central as the one that really counts.

Implied throughout the Long Range Plan, the poll, and a collection of captioned pictures titled “What you see, what you don't”, is that buildings 40 years old are inherently inadequate to allow a proper education. Flatly stated in the Plan is that the cost of upgrading existing buildings would be 60-70% of new buildings. I question both assumptions.

I have shared the pictures, [which can be viewed here] presumably a collection of worst cases, to friends with experience in the construction trades and IT installation and upgrades. This collection of pictures shows some serious problems in ongoing maintenance, frankly many of them problems I had hoped the last bond issue would cure. As to justifying tear-down and rebuild, we were uniformly underwhelmed. A great many people in San Angelo live and work in buildings well over 40 years old, and some of us have managed to install state of the art computers without burning the place down, and ADA compliant restrooms without resorting to the wrecking ball.

Locally, a lot of individuals are contributing millions in privately donated funds to proudly transform the going-on-forty Hemphill-Wells building into a library that will be a centerpiece of downtown revitalization, one which will hold a surfeit of new IT equipment. I suspect Harvard, which still uses some of its 18th century buildings would be amused by our theory that modern education cannot take place in buildings out of the (gasp!) 60's.

Actually, if Harvard did decide to rip it out and go with new construction, at least as the most richly endowed University outside of Dubai, they could afford it. If we were rolling in oil boom cash and had all the credit cards paid off, maybe all this new construction would be defensible. Not only does that description not apply, but since the Task Force forwarded this plan, taxpayers have gone four days without showers and have been hit with a quarter billion dollar plumber's bill which isn't very negotiable. I know SAISD has no responsibility for the city's water problems, but it has a responsibility to take notice of economic reality, which in this case is that all that money comes out of the same well, the taxpayers' pocket.

I really don't want to be the Grinch that stole Christmas, but SAISD needs to quit thinking of the taxpayers as a deep-pocket Santa Claus. I think if we make an honest effort and give ourselves until November, we can come up with an adequate, affordable bond issue that will pass. We can take a lot of ornaments off this tree and still give kids a better education.