Saturday, December 30, 2006

Don't hold your breath.

In the Providence Journal today (Sat. Dec. 30, 2006) there was a letter to the editor asking for legislators who can balance a budget without raising taxes ("Assembly spurned governor's cuts").

The day before, (Dec. 29, 2006, "Treasury appointee once filed for bankruptcy"), Katherine Gregg reported on an appointment by the treasurer-elect Fran Caprio, of Donald O. Reilly Jr.

This isn't about whether Mr. Reilly is qualified for the position. He might be a very nice person with excellent qualifications.

It is about a much more serious problem; the attitude and respect of our elected officials toward our money. It's about finding positions in government for friends (and family) instead of finding qualified people to fill necessary positions. In the piece there is a telling remark:

"In this situation," Caprio said, "Don will be someone that will be dealing with day-to-day issues in the office where his background in government and his professional background will be of use to the office and I look forward to working with him."

Asked specifically what Reilly would be doing, Caprio said that has not yet been determined, but "he is going to be working in the financial side of the office"

It's a small thing really, but for me it speaks volumes. A decision has been made, by the State Treasurer no less, to hire someone to do something "that has not yet been determined" but who will be paid with our money, of course.

Responsible budgets? Don't hold your breath.

Maybe it's just me.

Tuesday, December 12, 2006

NK, RI Town Council Meeting Dec. 11, 2006

Impressions from a citizen:

The new council got off to a good start, I think. The routine of running a meeting was understandably a tad shaky but will get smoother as time goes on. The mood was cooperative and respectful, a very good sign.

The first item on the agenda was an introduction of all the department heads to the council for the benefit of the new members. Maybe there'll be a test next week to see if they remember all their names?

There weren't any fireworks until a request to alter wetlands was before the council. It seems that because a lawyer didn't file a paper in a timely manner that DEM might consider a developer's request to encroach on wetlands to gain greater access to a house lot.

Not one person that spoke before the council was in favor of granting the exemption. The applicant wasn't there.

The council options are: a) lodge a protest or b) veto the request.

The problem is that should a veto be overturned, the town could be on the hook for damages the applicant might demand. The council opted to register a protest and not exercise a veto. Not an easy call for the town but the consensus was that strong town objections were usually upheld by DEM.

There was a discussion about the new tax levy limits, heading down in little increments from 5.5% to 4%. This year it will be 5.25%. The council talked about its own limits which could be even lower than the state's. A limit is just that, a limit; it's not a goal and I didn't see the point of saying that the council might want to spend less than the 5.25% increase. I take it for granted that the council will always try to spend as little as it can for necessary services, not up to a limit. Isn't that the idea of zero based budgeting?

Then came the item about the Elderly Tax Exemption. It makes sense that any exemption takes into account inflationary pressures on values and adjusts the limits of the exemption accordingly. My objection is with the whole idea of elderly exemptions at all.

Exemptions are given presumably on the basis of need. Income is measured as a percentage of the poverty level and the exemption is granted accordingly. Seems to me that a young family who finds that they can no longer afford their taxes on inflated property values are just as worthy of help as older people who find themselves in that position.

Exemptions such as this are a testimony to the need for true RE-FORM of the way we tax property to pay for local government services.

All in all a good meeting and I am very optimistic about the new council.

But maybe it's just me.

Friday, December 8, 2006

Property Taxes. Deal or No Deal?

On the popular TV game show, Deal or No Deal, host Howie Mandel asks the contestant a very important question, "Deal or No Deal?"

The contestant must choose between taking an unknown amount of money in his or her suitcase, or a known amount of money offered by the 'banker'.

What does this have to do with property taxes?

Taxes pay for government. Whether federal, state or local government, we pay for them all with our taxes.

For local government we have been taxing property for centuries. Long before the Industrial Revolution, long before there was a United States, we taxed property. The value in those earlier times was determined by the revenue produced by the property - more revenue, more value, more taxes. In fact one could say that the property tax in those early days was really an income tax.

Things are very different today. The market place determines the value of property. People who own property of equal value must pay equal taxes. No matter how wealthy they are, no matter when they purchased the property, the taxes will be equal if properties are of equal value. (To insure that new owners don't pay unfairly low taxes based on previous values we revalue property every three years.)

Most of us accept that this is a fair way to distribute taxes among tax payers as long as assessments are accurate and up to date. If it's fair, it begs the question:

Would you choose to pay your state or federal taxes based on the value of your house? "Deal or No Deal?"

"Hold on" you say, "no way. Pay state taxes on my revalued property? It wouldn't be fair!".

If it's not fair to pay state taxes that way, what makes it fair to pay for local government that way?

It isn't fair, at least not the way we do it today. Revaluations are indeed necessary to insure that new owners pay their fair share but those revaluations make it harder to hold on to a home, even forcing some existing owners to sell.

Maybe we should do away with property taxes altogether and have a local income tax.

Income taxes would be much more fair than property taxes. But they have serious drawback; they're very unreliable.

Today, when a town sets a tax rate, it is guranteed to produce the revenue required by the tax levy. This is a good thing, and very important for prudent management of our towns and cities.

On the other hand, if towns depended on income tax and sales tax revenues, and the economy stumbles, towns would face the same problems that the state currently faces, deficits and expensive borrowing. Clearly not a good thing.

The challenge is to retain the benefit of taxing property and, at the same time, discard the unfair treatment of our existing long time owners who are forced to pay taxes on homes they could never afford to buy at present day prices, while still assuring that new owners pay their fair share.

It can be done. We have just such a proposal on our web site at R.I.G.H.T.

I welcome your comments.

Monday, November 20, 2006

NK Town Council Meeting

November 20, 2006

First post-election Town Council meeting was about the shortest meeting in recent memory. It took almost as long to recite the Pledge of allegiance as it took to dispatch the agenda items. Way to go!

The interim manager, Cindy Olibri, mentioned in her report that the food bank is really low and in dire need of canned goods and non-perishable items. Sure hope that the shelves are filled soon. Donations are more than welcome.

The new Council will be sworn in next meeting at 7:00 to allow some extra time.

The recommendations for the new audit committee will be presented to the TC the following week, December 11.

During the public comments section a resident spoke of his concern for Quonset's plans for the new Gateway Project. He was very unhappy with the prospect of huge mega-stores as the main features of the project. It sure would change the character of North Kingstown and something on a smaller scale such as the Garden City mall would be more in keeping with the quality of life her in NK. I see much merit in his position. President Miccolis assured him that several councilors shared his view and they would try to maintain the more rural nature of the town.

See you next week.

Thursday, September 28, 2006

Cure The Cancer of Terrorism

It seems clear to most people by now that our administration's policy to defeat terrorism has not had the desired outcome. As I write this, terrorism, sympathies for fanatic fundamentalism, deaths in the mideast are all on the rise. We haven't had another attack in the US yet but no one believes we are immune to one, that we are really safer today.

Administration policy is based essentially on an attitude that the only thing terrorists understand is brute force and they must learn that America won't stop until they change or they are all dead. Unfortunately, our efforts likely have created more terrorists. It sounds to me a lot like a failed treatment for cancer.

As we all know, cancer is a tumor that can grow uncontrollably, can invade surrounding tissue, and can spread to healthy parts of the body. Left untreated it will ultimately kill. We acknowledge that the best solution is prevention, but once discovered, what is the best way to treat it?

There are many kinds of cancer and good doctors understand that the best treatment must be tailored to the specific tumor. Terrorism is like a tumor with poorly defined borders that has begun to spread and invade. Our leaders appear to believe they can cure any cancer by hunting down and cutting out all the cancer cells, like a surgeon run amok. Doctors know that this naive and simplistic approach would most likely spread the cancer even faster, not cure the patient.

For a patient to have a chance for survival, this cancer needs to be deprived of its blood supply, the nutrients on which it depends to grow and spread its death. The patient might undergo the partial removal of the most diseased tissue but if the blood supply to the tumor can be cut off, if the patient stops activities that encourage more cancer, such as smoking, toxic food etc. and works to rebuild the body's immune system, the chances for survival are vastly improved.

Terrorism's revenue source, its 'blood supply', arguably is oil. If we are serious about removing terrorism's malignant threat we must do the smart thing and cut off this revenue source. As we did in WWII, we will need to make sacrifices, we will have to endure limited supplies of oil and increased energy costs, we will have to conserve energy, and embark on a crash program to develop alternative fuels. With the right leadership, we can do it.

Our current leadership's suggested treatment? Ignore the 'cancer', don't let them think they've won, blow smoke in their face, go to the mall, shop.

What we need are leaders who learn from mistakes, leaders who can inspire, leaders who can think, leaders who can lead.

But maybe that's just me.

Thursday, July 13, 2006

Justice For All

Justice For All

The Pledge of Allegiance ends with those wonderful words and we know exactly what they mean. “All” means each and every one of us; not most of us, not most of the time, not the average. It means everyone.

Our Rhode Island Constitution proclaims that the “burdens of the state ought to be fairly distributed among its citizens.” Not most citizens, not the average citizen.

Are local taxes distributed fairly among all citizens, all the time?

Providence, 2004 - 57% of property owners got tax increases while 43% got decreases.
North Kingstown, 2001 - 61% paid more and 39% paid less.
West Warwick, 2004 - 73% got higher tax bills while 27% had lower tax bills.

While community expenses rise, large numbers of citizens pay lower taxes. Why?

In a word, Revaluations. In the years between revaluations, property owners pay taxes in direct proportion to the changes in the tax levies resulting from changing budgets. If a tax levy increases by a certain percent most tax payers’ bills increase by a similar percent.

This is a sensible process. But property values tend to increase over time. When new owners buy properties at higher and higher prices they might pay taxes inherited from the previous owner. This is highly unfair to existing owners. New owners buying the more expensive properties would not be paying taxes commensurate with their ability to pay as measured by the value of the homes they are buying.

The ‘solution’ has been to revalue. This results in more realistic and fair taxes for new owners, but unfortunately creates very unfair taxes for the majority of existing owners, as the distribution figures above suggest.

The truth is that after revaluation, most of your tax bill increase is used to pay for a decrease for someone else.

In our present (and ancient) system of tax distribution, a tax levy increase of 3% or 4% might be good for “all” but it certainly isn’t good for “every” taxpayer.

Maybe some are more “equal” than others. I sure hope not.

But maybe it's just me.

We have a proposal at R.I.G.H.T. that is fair to all and we mean everyone.

Thursday, June 29, 2006

Is There Global Warming? It's The Wrong Question.

There are four possible truths regarding global warming:

1. There currently is no global warming.
2. There currently is global warming.
3. People do affect global warming.
4. People don't affect global warming

and two possible actions:

A. We change our behavior
B. We don't change our behavior.

There are eight possible results.

Outcome 1-A. If there is no warming, behavioral changes make no impact and produce only this:
Lower consumption of fossil fuels, significant changes in daily life, new technology, development of mass transit, significant economic impact on energy producers and automobile makers, new emphasis on renewable energy resources, cleaner environment, lowered dependence on foreign oil etc.

Outcome 1-B. Nothing changes. Unless of course, we run out of fossil fuel and are unprepared for it.

Outcome 2-A. The same as 1-A but there would be a beneficial effect on global warming, though the results will take years to occur.

Outcome 2-B. The world continues to support economies dependent on oil revenue, we continue to promote environmental pollution and hasten the global damage resulting from greenhouse gases in the quest for cheap oil.

Outcome 3-A = 2-A
Outcome 3-B = 2-B
Outcome 4-A = 1-A
Outcome 4-B = 1-B

We should be talking about consequences of being wrong in our assumptions and how quickly and effectively we can remedy any damage caused by a wrong decision.

We will either have to rebuild an economy disrupted by a fear that never materialized or we will have to restore the climate and environmental damage (perhaps impossible by the time it's acknowledged) caused by the continued use of and exploration for fossil fuels.

It seems to me that being wrong about the environmental damage is a far greater disaster than if we are wrong about the economic consequences.

But maybe it's just me

Wednesday, June 21, 2006

"Without fair treatment from government, little else matters"

Which of the following would you choose?

1. Property taxes bills unrelated to town expenses. Budgets increase, yet about a third of property owners pay LOWER taxes.
2. Onerous tax increases force many long time homeowners to sell.
3. New owners taxed on market value of property are often shocked by tax increases after revaluations.
4. Expensive revaluations add to budget costs.


1. Property tax bills are directly related to budgets.
2. Tax burden increases are fairly and equitably shared by existing owners.
3. New owners taxed as above but become existing owners after purchase.
4. Lowered revaluation costs saves money for towns.

If both methods will produce the same revenue, which would you choose?

The first system is what we do today.

The second is what we propose at RIGHT.

Take your pick.

Wednesday, June 14, 2006

The RIGHT tool for the job

Please forgive this paraphrase an old expression, “If the only tool you have is a screwdriver then everything will get . . .”. Well you get the idea.

Our property tax problem is a little bit like that. It appears that the only tool or remedy anyone ever proposes to fix the most hated tax in America is to control or cut tax levies. Prop. 13 in California, Prop. 2 1/2 in Masachusetts, the proposed TEL here in Rhode Island, are all such examples.

At first glance it seems like a reasonable approach. After all, the reason we have a property tax in the first place is to help fund the tax levy, that portion of the municipal budget not covered by other revenue sources such as state reimbursement from income and sales taxes, parking tickets, fees, such as dog licenses etc.

Since we all share in the services provided by our towns, we should share in the tax levy needed to provide them. Thus the efforts to lower those total expenses would appear to be a rational and fair way to reduce the tax burdens on property owners. And it would be, if we each paid our fair share every year.

We used to many years ago. We paid taxes based on the value of our property. Then someone noticed that properties were increasing in value and people were buying homes at ever increasing prices yet paying taxes based on the older values.

The solution? Revaluation. This way, the people who were paying those high prices would be taxed on the fair market value of the houses they were buying.

But, we revalued everyone. That meant that there were lots and lots of people who found themselves living in homes that were getting more and more valuable. Their taxes were climbing faster than their incomes, faster than inflation, faster even than budgets.

Folks were finding it hard to keep their homes. Indivdual tax bills were being driven, not by the needs of towns, but the real estate market.

After a typical revaluation about two thirds of the people get huge tax increases but the remaining third were getting tax decreases! Clearly not everyone was paying their fair share.

And those decreases were going to primarily commercial owners whose property values weren’t rising as fast as the homeowners, so owners like Home Depot and Wal-Mart were getting large windfall reductions on the order of 15-25% while owners of the most modestly priced homes were getting increases of from 11-13%. These numbers are for North Kingstown after its last revaluation but are pretty typical. Not exactly a fair distribution, is it?

Any marketplace, no matter how well regulated, is at its core, a gamble. There is simply no justification for using marketplace gambling as a basis upon which to tax our citizens for the municipal services we receive.

Our website offers a different approach, another tool, to use in this battle against the most hated tax in America, the Property Tax.

Take a look and share your thoughts.

Click on RIGHT for the website.

Wednesday, June 7, 2006

Sex and Taxes

Property taxes are all over the news again, or more correctly, still. Everyone is trying to bring relief to the beleaguered property owner, as well they should. Our collective property taxes in Rhode Island are way too high.

The goal of the lawmaker is to receive credit for lowering those taxes while permitting towns to continue providing needed services. The one who does that will be hailed as a real hero and is assured a prominent place in the Legislators' Hall of Fame. It's 'sexy'.

Sad to say that the real answer is a very unsexy, practical, boring one. We need to make the distribution of property taxes fair before we make them lower. Any tax increase, no matter how small, will be unfair as long as there will be those who pay increases based on the increased market value of their property, which often is anything but small.

The market price of property is not unlike prices in any market, the stock market for example. It is what buyers are willing to pay and is simply a gamble. True, we expect the dice not to be loaded and the market value (assessment) to be honest and accurate. But why should gambling have anything to do with the taxes we pay simply to live in our communities?

Nothing. Not one thing.

But maybe that's just me.

Thursday, May 25, 2006

Recall. A Serious Matter

The democratic process includes election of individuals to office by a majority vote of the people. In the event that the people become dissatisfied with the performance of those they elect they can remove them at the next election.

But what happens if the people believe that the elected officers are simply unable to perform the duties for which they were elected and that waiting for the next election could cause irreparable damage to the public good?

Is there another option? Recall. An election held to remove someone from office. It is an awesome responsibility to overturn a vote of the people in a second election when it is possible that the majority might be a very small number, far less than the number of people of who voted for the candidate the first time.

The Charter Review Commission is considering a recall provision for the North Kingstown, RI Town Charter. They have presented two drafts of a proposal and have invited the public to speak their minds on the issue. It is an excellent process with everyone being given adequate time to speak and the commissioners listen. The next meeting is on Wednesday, June 7.

The proposal currently has three requirements.

1. How to get a petition started.
2. How many petition signatures will be required to place the question before the people in a referendum election.
3. How many people should have to vote in the referendum for it to be considered a valid election?

It is generally agreed that the bar needs to be set reasonably high to avoid frivolous petitions and expensive elections at the whim of a few discontented voters.

On the other hand it should not be so high that it is nearly impossible to mount a successful petition drive and achieve the desired result.

For the first requirement the commission proposes that 50 valid signatures from registered voters be obtained to be eligible to receive petition papers.

For the second requirement there needs to be a number of petition signatures equal to 20% of the number who voted in the most recent general election.

And third, for the measure to be successful there needs to be a simple majority and the total votes cast must be at least 40% of the qualified voters in the last general election.

I have come to the conclusion that the third provision should be eliminated thus rendering the referendum the same as for any election - a majority of the votes cast regardless of how many people vote. Since there is a danger that a relatively small number of people can overturn a prior election there must be built-in protections.

I believe the best protection is to make the second hurdle significant. In order to place a question on the ballot the petitioner(s) must gather a number of signatures equal to 25% of the votes cast in the prior non-presidential election.

The Charter Review Commission might modify the percentage to reflect their best opinions and the link to elections might be altered to include an average of several prior elections. There is no universally agreed upon best answer.

The next draft will reflect the collective wisdom of the commission.

We look forward to the people receiving the ability to rectify their mistake in a fair and democratic fashion. This is a good thing.

Thursday, May 4, 2006

Our Dirty Little Secret

The 5.5% tax cap myth - our dirty little secret

False Advertising
Any advertising which is misleading in any material respect is considered to be false advertising.

In 1986, RI Gen. Law § 44-5-2 was passed apparently to limit local tax increases to 5.5%. This law clearly qualifies under the definition of false advertising. Let me explain how.

We assume that the 5.5% limit means that taxes won't go up more than 5.5%. But that 5.5% limit is very misleading.

You see, the 5.5% limit can be applied to either the tax levy, in which case there would indeed be a true limit of 5.5%, but it also can be applied to the tax rate, at the discretion of the town, and this is where deception comes in.

First, a short refresher in fractions, ugh! Sorry, but it will I'll try to make it painless, I promise.

First, remember that if the top number of a fraction increases the same as the bottom number, the value remains the same. For example, multiplying both top and bottom numbers by 2 gives the same fraction: 1/2 = 2/4 = 50/100 etc.

The decimal equivalent of any fraction is determined by dividing the top number by the bottom number and in this example is 50%.

A tax rate is a basically a fraction; the top number is the tax levy and the bottom number is the value of the taxable property. Converting this fraction to a decimal is done the same as any fraction; divide the top number by the bottom number.

We express tax rates as dollars per thousand instead of percentages so the conversion is modified slightly but the bottom line is that a tax rate of $25 per thousand is the exactly same as 2.5%. Both will produce the same tax bill on a $100,000 property, $2,500.

With me so far?

Now for the shenanigans. Just remember that a tax rate is a number derived from a fraction - Levy ÷ Value.

Let's say a revaluation increases a town's total value by 25%. (The bottom number in the fraction).

If the levy (the top number) also increases by 25%, the tax rate will remain unchanged! In any fraction, if both the top and bottom number increase by the same proportion, the result remains unchanged - remember our fractions lesson?

If this town chose to apply the 5.5% limit to the tax rate it would satisfy the law, since the increase in the tax rate, zero increase in our example, would clearly be below 5.5%. And yet taxpayers would be paying 25% more in total property taxes!.

Clearly the law is at least a deception if not an outright scam. It's a shameful loophole and should be plugged immediately.

An ambiguity or unintended omission in a law, rule, regulation, or contract which allows a party to circumvent the intent of the text and avoid its obligations under certain circumstances.

The legislature owes it to us to fix this now.

Wednesday, April 19, 2006

We're Lousy Doctors.

There was an interesting article in the Providence Journal the other day. It was an account of a speech given by Dr. Ruth Simmons at the annual Urban League of Rhode Island luncheon. The topic was how and why we must fix failing schools. The 'why' is obvious. It's the 'how' that is that hard part.

All the usual suspects were addressed, high dropout rates, low incomes, the widening income gaps, segregation.

"My God, that was the reality I grew up in decades ago, and we're still talking about it again"

And we will be talking about it fifty years from now too because we treat these issues as causes when they are really symptoms.

When a doctor prescribes pain medication for pain without also trying to find the source of the pain, the doctor is guilty of malpractice. We see discouraged teachers, decaying buildings, inadequate tools and equipment, leaky toilets, broken windows and we ask for money to fix them. We're treating the symptoms not the causes, the equivalent of medical malpractice.

Try this experiment. Imagine a school where students are late to class, if they show up at all, where they swear at and threaten teachers, where they have their mp3 players turned on listening to their favorite rappers during class, where any student who wants to learn is ridiculed or worse, where there is no discipline or respect, where the halls are littered with trash.

Now plow millions of dollars into that school, give money to the families to equal middle class incomes, paint the halls, put computers on every desk, fix the toilets, hire the best teachers in the state and hire janitors to clean the halls.

Will those students magically want to learn? We just don't get it. Money is like a crutch we use to allow a broken leg to heal. But what if it doesn't heal? We just ask for more crutches!

It is a responsibility of government to make education available to all. No amount of money pumped into any school will make students want to learn. This can come only from family, and family must be required to assist when their children disrupt the classroom.

Parental accountability and responsibility are more important than anything. With it we will grow strong, without it we will never heal.

But maybe it's just me.

Monday, April 17, 2006

No More Little Guys

Question: When is the "Little Guy" not the Little Guy?
Answer: When there are millions of them.

I was somewhat bemused today when I read a letter in the paper about the dangers of Voter Initiative. The writer was particularly worried that that minorities would be hurt by discrimination by the majority and affirmative action would be overturned. Let's take these in order.

There is no doubt that workers (little guys) have been disabused by powerful business interests in the past, and even today in some cases. Unions wre formed to protect those without a voice and have done a good job at it. Unfortunately the 'little guy' is not so little any longer. They are a powerful force, and when it comes to municipal unions, even more powerful than 'management'.

And as their management counterparts used to do, they often have performed equally badly. Unions frequently have exchanged their mission to protect disadvantaged workers and instead try to extract as much as possible from the taxpayer for their members with too little regard for the very people whom they are employed to serve (while taking much of that money from their membership as dues to support their bureaucracy in the process) .

Legislators have caved in under unions' powerful influence; they represent a lot of votes. When taxpayers feel strapped and their representatives fail to help and protect them, they see Voter Initiative as one way to have their voices be heard.

There is always the possibility of tyranny of the majority over the minority in a pure democracy. Democracy means 'majority rule'. Our founding fathers knew this and addressed it so elegantly in the first ten Amendments to the Constitution, The Bill of Rights. Nevertheless, laws are interpreted and enforced by humans with all our faults. Slavery was legal until 1862 remember?

On the writer's last point, I fear we don't have affirmative action in this country. At least not in practice. As I understand it, affirmative action applies when candidates of equal qualifications apply for something, preference should be given to the minority. This would help minorities receive fair treatment and is the intention of the law.

Unfortunately, this is not what happens. In order to avoid affirmative action law suites, many organizations reduce the standard for minorities. In this way, they are sure to choose a sufficient number of minorities and thus avoid the risk of discrimination charges. The same happens often in college entrance requirements.

The goal of such laws is noble. We have treated minorities badly and we should demand that this un-American behavior stop. But unfortunately, the well intentioned law has in practice actually done more harm than good.

When standards are lowered, the candidates who are accepted, either for employment or school admission, are less likely to perform at the level of others who are hired under a higher standard. This lower performance only serves to further the myth that minorities are indeed inferior and fuels more discrimination and resentment.

Affirmative action laws have become de facto 'quota' laws and it is this that voters wisely reject.

Voter Initiative is not a panacea. Far from it. And both those for and against have legitimate concerns that should be respected and discussed, honestly and openly. We can only hope that our efforts to govern are the product of the very best we can do, working together, for everyone, equally.

As a great man once said, '... of the people, by the people, for the people..."

But maybe it's just me.

Wednesday, April 5, 2006

What is "Truth"?

The Providence Journal had a report on Wednesday, April 5, 2006, that property taxes on commercial property in Providence were among the highest in the nation.

The data comes from RIPEC, Rhode Island Public Expenditure Council, so we know the statement is accurate - the "truth".

But take a moment to peel away the surface. Property taxes are levied on the value of property. It is possible, even likely, that after a revaluation, properties do not change in value evenly - some go up a lot while others will increase in value just a little.

Under these conditions some property owners receive much greater increases than others, and some might even see their taxes go down after a revaluation. And this is even more likely with residential property.

Just as we Americans consume more food than any other nation, no one can deny the serious issue of hunger in our country. Distribution is a more critical part of the issue. We simply ignore this when it comes to local tax distribution.

In the same way, while the total tax revenue from commercial property is clearly too high, some property owners might actually be paying lower taxes and thus not paying their fair share, while others shoulder a disproportionate amount of the tax burden; in other words, the distribution is the more important problem.

If we make our tax decisions based only on the most aggrieved segment of the population and ignore the distribution of tax burdens, many will be hurt, needlessly.

There is much more to the property tax story than the simple "truth".

A visit to our website might help to explain this more and what we can do about it.

Sunday, March 26, 2006

Life Is No 'Do Over'

I hate to be the one to tell you this but, unlike children's games, there are no 'do overs' in real life.

Our legislators are talking about easing our expungement laws. Simply put, expungement is a lie about the past. What happened happened. We can't make it un-happen with an eraser.

On the other hand we should do everything in our power to help a person to reclaim his or her life and to allow for a second chance.

The rights of individuals are protected by our Bill of Rights and other amendments to the U. S. Constitution

Amendment XV

Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

I'm no lawyer but perhaps imprisonment for a crime could be considered a " ... previous condition of servitude", in which case it would be a violation of our US Consitution to discriminate against persons who have paid for their crime (or are on probation for less serious crimes).

It would be a much better way to protect the rights of individuals if we added similar language to our own Rhode Island laws than to pretend that something did not happen when, in fact, it did.

We have enough laws, let's use them.

But, maybe it's just me

Friday, March 17, 2006

It's debatable

The Providence Journal recently ran "Voter initiative threatens R.I. elites" which was a response by Sen. Marc A. Cote to Rep. John Shanley's earlier column opposing voter initiative legislation. It was excellent and shed important light on a timely issue.

These two articles symbolize the best tradition of a democracy - debate. The Journal has performed a valuable service to the people by providing a forum for debate which allows people to consider both sides of an issue before making up their minds. What better way is there to insure the success of our democracy?

When ballot questions came up in Massachusetts, where I spent most of my life, I was especially gratified that the Secretary of State mailed a brochure to everyone in which each question was explained, along with two opinions, pro and con. The opinions were written by people chosen by each side to represent it's views.

This was extremely helpful to me, and I am certain, to most voters. I called the Secretary's office in Providence and asked that they do this in Rhode Island as well. I never received a response nor have they done so.

Here is what is currently required of a ballot question: 

1) Descriptive Heading. The descriptive heading shall be a brief caption of the question including the purpose of the question and the dollar amount, if applicable.  The heading should be limited to 12 words and a dollar amount, if applicable.

2) Authorization. The authorization shall be a line containing the cite to the authority for the question to appear on the ballot.

3) Text of the question.  The text of the question shall be the exact language of the referenda/question that shall appear on the ballot.

In my view there should also be a summary of the pro's and con's of each question to help the voter.

Respectful debate. Then let the people decide.

But maybe that's just me

Sunday, March 5, 2006

Legal isn't good enough

When I talk to groups about changing the current ad valorem system of property tax distribution I am frequently challenged by those who feel that tradition has value and this tradition has withstood the test of time.

The system we use is specified in RIGL §44-5-1 "The tax is apportioned upon the assessed valuations as determined by the assessors of the town as of December 31 in each year at 12:00 A.M. midnight,"

Those assessments are driven by the marketplace, unlike the original intent of the law which developed long before the industrial revolution. In those early days, value was assessed on the basis of the income derived from property - we were an agricultural society after all. It was much closer to an income tax in those earliest days and it was quite fair. The wealthiest always paid the most.

Today, things are very different; the wealthiest can receive tax reductions, many average people get increases that force them sell their homes, yet after thousands of years, the law remains unchanged. The fact that it is legal simply isn't good enough.

It was once legal for white people to own black people
It was once legal for women and black people to be unable to vote.

We change unfair laws and this law is no exception. The American Industrial Revolution started in Pawtucket,
RI in 1793. It would be only right for the Property Tax Revolution to start here as well.

You can visit our website to see how at RIGHT

But maybe it's just me.

Wednesday, February 22, 2006

Tax Levy Limits. Good? Bad?

You have a headache. Take aspirin for the pain and it goes away - for a while. What if the headache comes from a tumor?

Taxes are the symptoms of budgets, not the cause of them. Taxes are how we pay for the government services we expect.

What if the spending levels are not in agreement with the services for which we pay? Do we just take it on the chin year after year?

What if education spending is near the top of the nation but student performance is near the bottom third in the nation?
What if our taxes are among the highest in the nation but our infrastructure, roads, bridges, are sub par?

I suppose one can make a case for saying "No more taxes, We've had enough".

Let's institute tax levy caps.

Tax burdens will be lowered for the property owners. That's a good thing, right?

But government needs to produce services and, unlike a company which must compete or sink, it will always be there and go to the people for money, in one way or another.

When the property tax revenue is limited (Prop 13, Prop 2 1/2) governments will find other sources - increased user fees, more taxes on other things, higher sales taxes, bonding with associated debt, or else services will deteriorate.

Both Massachusetts and California are at their pre-legislation levels in spending, only the revenue sources are different. Tax payers, the people, must take the money from a different pocket, that's all.

One also needs to ask if property owners, as a group, are generally more affluent than those who don't own property. Intuition suggests that this is indeed true.

If so, then lowering the tax burden as a whole for the property owners will move the burden to non-property owners. This shift is not in the overall best interest of the state and is likely to be counterproductive.

The only fair measure would be to place realistic limits on SPENDING, both at the state and local levels. Limits are not created in a vacuum, and to be truly effective they should not be arbitrary and fixed, but respond to and reflect the economic realities of the times.

Any limit must be indexed to some agreed upon benchmark and be subject to periodic adjustment both in terms of the benchmark and the indexed amount.

Nothing else makes much sense and, in the long run, could merely postpone the best treatment until the patient actually dies.

Maybe It's Just Me.

Monday, February 20, 2006

How to eliminate poverty

There is much written about the relationship of poverty to education. It can be easily demonstrated that poverty and education are inversely related, thus the reduction of poverty is a worthy goal.

However, we cannot reduce poverty by giving money to the poor and/or poorly educated.

Instead, may I suggest that only when people wish to become educated and demonstrate a willingness to pursue knowledge can we have any hope of reducing poverty.

The goal isn't how to find more money for the poor. It is how to inspire the poor to value education and in this way lift themselves from poverty in the only sustainable way, by determination and hard work.

Anything else is a pipe dream.

But maybe it's just me.

Tuesday, February 14, 2006

The Recall Option - Democracy or Intimidation?

At the North Kingstown town council meeting on February 13 there was discussion of adding recall to the town charter.

It is not currently legal for a group of citizens to require a recall election. Councilor John Patterson has suggested that the Council request the Charter Commission explore the possibility of recall and report back to the Council for discussion and a vote. Councilor Mark Zaccaria opposed the recall proposal for several valid reasons, all of which must be considered should recall become a reality. Councilman Ed Cooney offered that a two year term instead of the current four year term might be a solution.

Recalling an elected official must not be so easy that petitions become frivolous and personal - (elections cost money to the tax payers). Elected officials must be able to do what they believe is best for everyone without fear of being targeted for recall by a special interest group. The requirements for a recall petition should insure that recall is done only under the most dire circumstances.

A shorter term might be counterproductive since, as Mr. Bill Mudge pointed out, it does take time to learn about the job before one becomes truly productive and effective.

On the other hand, if citizens believe that an elected official is not performing in the best interests of the people or is an impediment to the performance of the committee on which he or she serves, is it not their right, their duty, to remove that individual? Wouldn't it be nice if all candidates could be rated as to their qualifications to serve on the committees for which they seek election before they are elected?

Democracy can be dangerous if the majority of those who vote have very narrow interests, or are ill informed on the issues or the candidates themselves don't have the qualtites needed to effectively discharge their very serious obligation to the people .

But maybe that's just me.

Sunday, February 12, 2006

Taxes: Part Three

In the previous two post I have tried to outline the problem as I see it and to explain why the limited view of addressing only the total tax levy (a problem which I freely acknowledge needs to be rectified) will not trickle down to the people who pay taxes every year as one might hope.

In this part I will propose a new view, one which I believe can address the issue by producing a fair tax distribution without the problems associated with relying on a local income tax as some suggest. So here goes:

This is NOT about preserving bloated budgets; it is not about good guys versus bad guys, businesses versus homeowners, assessors versus taxpayers.

It is about fair taxes, it is about changing the painful consequence of apportioning local taxes using a system that appeared long before the industrial revolution. In those ancient days property was valued according to the income it produced, not the real estate market.

In fact, newly uncovered tablets relating to local ad valorem taxes date back to 5000 B.C. yet we still pay for local government the very same way today!

R.I.G.H.T. (Rhode Island Gets Honorable Taxation) proposes a different distribution method. One that recognizes two types of property owners: (1) people who are existing owners and taxpayers and (2) those who are new owners, through buying or building.

Existing property owners would pay taxes by linking each individual's tax increase directly to the budget increase regardless of changes in their property's value. Everyone will share fairly in the changes in tax burdens. No longer will some owners receive huge tax increases while others receive huge decreases based solely on swings in the marketplace.

At the same time, the new owners in their first tax year, will pay a fair share of the tax burden using standard ad valorem taxes. It is nearly identical to the current system except the tax rates and assessments are always up to date instead of one, two or three years old. The following year, new owners become existing owners and pay their fair share of taxes in the same way that all existing owners are taxed.

Habits are hard to break. But unless and until we understand the structural flaws in an outdated ad valorem system of apportioning all local taxes on property values, no amount of budget cuts, by themselves, will get to the very heart of the problem we face year after year - the unfair distribution of local tax burdens.

Rep. John Loughlin II is one of the sponsors of the legislation that will make property taxes truly fair. Please contact him or contact us here at R.I.G.H.T. for more information. And please, contact your legislators and let them know how you feel.

I have created a presentation that takes about 20 minutes and explains this in much greater detail. I would be pleased to discuss giving the talk to interested parties.

The American Industrial Revolution started here, in Pawtucket, RI in 1793. It is only fitting that the property tax revolution starts in Rhode Island as well.

Saturday, February 11, 2006

Taxes: Part Two

If we ignore the underlying inequity of distribution, whether it be of food consumption or taxes, we will fail. Fair distribution of taxes is the bedrock on which this nation was founded.

In North Kingstown the 2004 tax levy rose just 3.8% over 2003. For the largest group (70%) of homeowners, in the $75,000 to $200,000 range, the 2003 revaluation increased their average 2004 tax bill 19% over their 2003 taxes, five times more than the tax levy increase.

At the same time, another group (25%) of homeowners, in the $200,000 to $500,000 range, received an average increase of just 3%.

If we try to solve the increased tax problem for the majority by merely cutting the budget and eliminating the entire 3.8% increase, note what happens.

The first group, the ones with the 19% increase, would receive a reduction. Their bills would now average 15% above their 2003 bills, still high considering there is no tax levy increase.

But second group of owners, those in the $200,000 to $500,000 range, would actually see their taxes DROP below their prior tax bills! The majority of homeowners gets a hefty tax increase, while others get a tax decrease, and there has been no change in the tax levy. Some property owners, those with the most expensive properties in the city, will have received reductions of over 27%!

If the goal of a budget cut is to relieve beleaguered tax payers, it sadly falls far short of that goal.

We'll offer a suggestion for fair taxes in part three.

Friday, February 10, 2006

Property Taxes 101

This will be a multi-part entry so come back to read it all. I have submitted it to several newspapers but this is for those who might not see it.

Real Property Tax Reform
For a Change

The gauntlet has been thrown. We're spending more than we can afford and change is in the air.

There is little disagreement that Rhode Islanders pay among the very highest property taxes in the country. The budget is the enemy and solutions always point in the same direction; spending limits or budget cuts.

Now, I'm no fan of wasting money and it does make sense to lower budgets; we often spend too much for what we receive. But the larger question, the one always ignored, is whether limits on spending, by themselves, will produce the results we expect and deserve – fair taxes for everyone.

To help answer that question, look at a familiar national problem - obesity.

Americans consume more food per capita than any other people in the world. We, especially our children, are heavier than ever, and diet related illnesses like diabetes and heart disease are rampant and getting worse.

Simplistic answer – cut the food available, everyone reduces food intake by a certain amount and everyone loses weight. Mission accomplished? Problem solved?

Obviously not. While obesity certainly is a national problem, there are people in America who are hungry and don’t get enough to eat. The ‘simple solution' would require these folks as well, to lower their consumption which is already too low.

The issue is clearly more complicated. While total consumption is a problem, an even more important problem is distribution. Unless we deal effectively with the distribution problem, any solution targeting only the total consumption is doomed to fail.

To be continued...

Wednesday, February 1, 2006

Muslim outrage at Denmark

The image of Mohammed appeared in a Danish publication in a satirical manner a few days ago. Islam forbids images of the Prophet Mohammed. The outrage in the Arab world was instantaneous and universal. Sales of Danish goods in all Arab countries fell to zero.

There were demonstrations in the streets and the Arab people were united in their condemnation of Denmark. They have sworn to boycott anything Danish.

Wouldn't it have been great to see such widespread and passionate outrage against the barbarism of Muslim fanatics like al Qaeda and Osama bin Laden? Mainstream Muslims say they reject terrorism but their response has ranged from tepid to none - certainly a stark contrast to the outrage against one Danish publication that printed an image of Mohammed.

It would seem to me that Arab national priorities need to be re-examined

Maybe it's just me.

Monday, January 23, 2006

Ford's Solution to Competition

So Ford is losing market share to the Japanese. Seems the Americans prefer Toyotas.

Does Ford announce that they are going to build a better car? Nah.

They decide to fire 30,000 workers. Perfect!

But maybe it's just me.

Tuesday, January 17, 2006

It's an ill wind that blows no one any good.

When I was much younger, that saying never made any sense to me. I have subsequently learned that it means that even what we at first might think of as a tragedy might have some beneficial outcome or result, that a purely "ILL" wind is pretty rare indeed.

Disasters, even of the scope of Katrina and 9/11, have brought people together, people who might never have been able to work together before.

In Rhode Island we face a looming fiscal crisis. The numbers don't lie and the handwriting is clearly on the wall for anyone to read. Taxpayers are simply unable to sustain the yearly increases in tax burdens being placed upon them. It's no secret. People are fleeing the state and the most vulnerable are often forced to sell their homes. Even a cursory examination of the data available at the Rhode Island Public Expenditure Council's website will quickly confirm it. RIPEC.

So we find ourselves struggling with ways to lower taxes, to make living here more affordable. Who would deny that this is a worthy goal? And yet we get resistance from unions, advocates and entitlement program administrators, in short, anyone who depends on our tax dollars, who worry that important programs and benefits might be cut. These are legitimate concerns and need to be addressed as well.

But there reaches a point when the goose runs out of golden eggs. I hope that it won't take a tragedy to get all of us working together to find ways to make our tax dollars go farther and do more than they do currently. We can have the quality of life we want and pay for it too but we must step back and question "business as usual".

For example:

Do we actually need 39 different fire departments? 39 different school administrations? 39 different health insurance contracts? Or is it that we've gotten used to them, that we just WANT them because they're familiar?

Is this the best way to spend taxpayers' money? Might there be a better way?

We have a long way to go and the work will be hard, but boy, it will be well worth it.

But maybe it's just me.

Tuesday, January 10, 2006

A fine state indeed

I have been privileged to participate in a meeting convened to discuss the direction Rhode Island is going especially as it relates to spending. It was painfully clear from the data supplied by RIPEC that the current rate of spending, at all levels is, in a word, impossible.

It doesn't take a rocket scientist to know that as long as outgo exceeds income we are on a collision course with disaster.

The most obvious solutions traditionally focus on how to cut the ever increasing spending. Some facts: (from Lookout TV show January 6, 2005

Third highest spending on total welfare ( averaging $50,000 per family)
Among highest percent of people on welfare.
Seventh highest in education spending
Bottom third in student performance nationally
From 1996 - 2004 40th in getting people off of welfare, among the worst in the country
By 2010 25% of all children will qualify for welfare
By 2010 20% of everyone will be eligible for state aid.
Reimbursement for medical providers are among the lowest:
Low md's pay
Low nurse pay
Low prescription payments

At our meeting it came as no surprise that the most frequently mentioned solutions included:

Cut spending
Force more efficiency
Tax limits to force the above and then
Cut spending some more.

These are indeed necessary. But in the longer view we need to decide on the long range goals.

So I ask the following: Is it enough if we:

Lower cost for education
Lower costs for municipal spending, fire, police, roads etc.
Increase productivity, increase output per employee.
Cut spending on entitlement programs, AFDC, Medicaid, RITE Aid etc.
Force cuts by tax limits?

Is it enough that we have lower spending on education and all the rest? I believe it will be a Pyrrhic victory unless we also:

Make this the best state it can be, not just the least expensive
Have the best educated people. I'd be proud to spend the most on education IF we also had the best students in the country.
Have excellent infrastructure, roads, bridges, and how about putting up enough street signs to help visitors navigate? etc.
Reduce not only spending but dependence on welfare, with compassion.
Have a legislature that will not be deterred from doing the people's business by getting "Abramoffed".

To succeed, we must include in the effort, the recipients of our tax dollars as well as the producers of those tax dollars so that, working together, we can send this message to the legislature - "Listen to the most important 'special interest group' of all, the people of Rhode Island"

Business owners
Town managers
Taxpayer groups
League of Cities and Towns
Citizen advocates.

United we can thrive, divided we shall fail.

But maybe it's just me.

Friday, January 6, 2006

An American Taliban

The latest comment by Pat Robertson is beyond belief. His attitude is precisely the same as the narrow minded Neanderthal thinking of the fundamentalist Taliban. Only the name of their 'god' is different. Below is a copy of an email I sent to channel 12 which broadcasts the 700 Club every morning:

I have always questioned your decision to broadcast a show with a religious agenda such as the 700 Club. This last outrage from Mr. Robertson is the last straw.

I know that it will not mean much to you but it means something to me. I shall not watch Channel 12 again as long as this bigoted program is broadcast by your station.

I'm only one person but one has to do what one feels is right.

Society = One person at a time.

Harvey Waxman

Thursday, January 5, 2006

"It's for the kids". Yeah, right.

This morning's Providence Journal reported a sad fact. Education Week gave Rhode Island a "D" in resource equity and an overall grade of "C", among the lowest in the country for its education system. Shame. What's worse is that this is nothing new. Since I have been talking about property tax reform for the last five years these numbers have changed little if any according my research.

Leadership on both sides, management and employee, legislators and unions, have to stop spending all their time arguing money issues ( we already spend among the most in the country on education ) and begin to concern themselves with performance and attitude.

Only then will the claim "It's for the kids" mean anything.

But maybe it's just me.

Monday, January 2, 2006

Is it a tax incentive or a bribe?

Bribe: make payments in exchange for favors or influence.

When we provide tax incentives to certain companies to entice them to locate here in Rhode Island, are we being fair to other businesses in our state? I don't see much difference between those incentives and bribes. Don't they both try to influence behavior that otherwise would not take place?

Our entire tax system, federal, state, and to a lesser extent local, appears to be riddled with influence peddling.

Maybe it's just me.