Saturday, May 22, 2010

Special Interest v Common Interest

I read an editorial in the Providence Journal on Saturday, May 22, dealing with legislation that would "lock in place pension benefits for public employees..." My comments are not related to the relative merits of the legislation but rather to this part of the editorial - "Mr. Lally, for his part, said he repeatedly filed the bill, originally at the request of the teachers unions - The National Education Association and the American Federation of Teachers."

It is this latter part that caught my eye. Exactly why should a lawmaker submit a bill to become a law? Call me crazy but it seems to me that a lawmaker has as his or her duty, to do what's best for the people whom he represents - all of them, even those who voted against him.

When any group asks a legislator to introduce a bill, the only question to answer is, Is it in the best interest of all my constituents? In my own case, I have been active in promoting changes to property tax law in Rhode Island and was pleased, flattered even, when my town council directed our local representatives to introduce supportive legislation. I do not know if the bill's sponsors agreed with the proposal or if they even fully understood it but this morning's editorial reached me - they should have agreed with it's goals and actively supported it or they should have refused to introduce it.

How many bills are introduced solely for the benefit of the people who lobby the legislator? I cringe at the thought. Let's face it, special interests aren't even special any longer. They're common, too common.

Legislators can't be expected to know everything - their staffs have to help them sift through volumes of data and information. Lobbyists have to present the views of those 'special interests' and that's ok too. The legislator's obligation to his or her city, county, state, nation, is to process all this information and before deciding, answer the question - Is it best for us all? Only then should he or she act. Only then.

Tuesday, May 18, 2010

Sweet Tax is Sour

I too hate to see people abusing themselves by being so overweight so I can understand why legislators would like to curb obesity. But the tax proposals before the RI House and Senate miss the mark.

If we really want to improve Rhode Islanders' health the law would require that the tax money generated would be used solely for increasing education, nutrition and exercise programs. Adding a few cents tax to sweet drinks will simply further burden and mostly for the people who can least afford it.

It won't take too long for the added cost to become 'normal' and any possible behavior modification will slowly return to pre-tax levels.

Be honest. It's at least as much a fund raising effort as an effort to improve the public health. If we were seriously trying to improve health perhaps reducing the cost of those items we find beneficial would be more effective. How about targeted income rebates for milk, fruits, vegetables? I suspect it would be far more effective in changing eating habits in the long run.

We all know that the sweet tax will simply find its way into the general revenue stream for cities and towns and the people will remain overweight.

On a slightly different note I think there is a better way to inform people about the sugar content of foods. Instead of the abstraction of calories I'd recommend indicating sugar cube equivalents. It's much more impressive to see that a cup of apple slices contains 2 1/2 sugar cubes and a Snickers bar is like eating 13 1⁄2 cubes of sugar.

Wednesday, May 5, 2010

Why We Hate Property Taxes

Because Rhode Island has among the highest property taxes in the nation we expect that spending cuts will fix our high taxes.
Not so fast.

An overlooked but vital aspect of the property tax problem is that there are two principles of fairness regarding property taxes that are mutually exclusive.

#1 A person who buys a $1 million dollar home should pay a fair tax on a million dollar home.

#2 The taxes people pay should reflect the budget needs of their town; e.g. if a town eliminates tax increases, property owners should not expect tax increases.

These basic principles can not co-exist because of REVALUATIONS.

Existing owners' property taxes can reflect the tax levy (Principle #2) but only when there is no revaluation. Buyers of properties of (usually) increasing value however, are taxed too little on assessed values thus ignoring Principle #1.

To correct this inequity for new owners, we revalue every three years. As a result, existing owners will pay taxes unrelated to tax levies.

In fact a town could even declare a moratorium on tax increases yet over 50% of existing property owners would pay higher taxes due to revaluation, violating Principle #2.

The typical reaction to high taxes is to look for spending cuts but as I've explained, the results would disappoint the majority of tax payers . This does not bode well for peace, harmony and enthusiastic citizen participation and cooperation.

Saturday, May 1, 2010

Bernie "Madoff" with other people's money

The lead article in the Journal on Saturday, May 1, concerned investing West Warwick pension money and whether or not the pension board made a prudent decision. "The local unions whose pensions are a stake are taking a wait-and-see attitude".

Don't we get it yet? Investments are gambles. It's risky business. If you bet your pension money on a horse race and won would that make it a good decision? Come on people. These are gambles and it's the the risks not the outcomes that must determine whether the decision was appropriate or not, especially when you are responsible for other people's money to be available for their pensions.