"It's the Economy Stupid"

When Bill Clinton ran for president his campaign strategist, James Carville, made that phrase famous.

Today everyone complains about property taxes and how high they are. And they are indeed high.

All our energy is spent trying to "reform" property taxes with all manner of gimmicks, circuit breakers, exemptions, levy limits. The fact is that what we are really doing is trying to fix spending using our property taxes as the tool. A worthy goal but it doesn't truly re-form Property Taxes.

Even if successful we will have failed most property owners because, with all due apologies to President Clinton, "It's the Revaluation, Stupid".

Revaluations are required to assure that buyers pay fair taxes on property they buy. It's fair for new buyers and should be done at least annually. (Triennially is better than every ten years but it's still not enough).

For existing owners however, revaluation means that thousands of homeowners could get tax increases even if spending is lower than the prior year. This is gross injustice to all existing owners and is simply unreasonable.

We can solve this apparent dilemma but it requires a willingness to revisit and re-think some antiquated ideas.

Please look at this 5 minute video and see if you don't agree.
http://www.youtube.com/watch?v=HdEU_aDr9XU

"Too Tired to Vote?"

It's election time and we are about choose the people that will govern us until the next election. It is both a privilege (one that too few people around the world have) as well as a responsibility.

Each check we make on the ballot deserves careful consideration and it's easy to do; the pens and markers don't weigh twenty pounds. Choosing the "master lever" implies that it is just too much work to mark each candidate. Our founding fathers would be turning in their graves if they knew, and I'd be ashamed to admit using it.

I'd go so far as to say it's this type of mindlessness or laziness that is responsible for the mess in which we find ourselves, both locally and nationally. We have only ourselves to blame.

So now we hear "kick the bums out". It's surely tempting and understandable, but it is just as wrong headed as that master lever. Being a newcomer or "outsider" is no assurance of integrity and competence, just as being an experienced politician is not an assurance of unethical behavior or incompetence.

Are all members of one party good or evil? Are all members of any group the same? Would my only qualification for a friend be that he or she is a member of a particular group? Heaven help us if so.

We have a duty to ourselves and our country to think about each candidate and vote accordingly.

When will we get it?

Rhode Islanders pay more in property taxes than 45 other states, according to a recent article in the Providence Business News. It is no small wonder then, that reducing spending is on everyone's to-do list.

But there is another issue than no one on Smith Hill seems willing to take seriously, an issue that has a much more profound effect on our property taxes - revaluations.

Let me say at the outset that we need to revalue regularly. In fact we should revalue every year instead of every three years, as we do now. Revaluation is the only way we can assure that when someone buys a $1 million dollar property they pay a fair tax on a $1 million dollar property.

But the impact on existing owners is anything but fair. To illustrate, let's imagine that we froze the tax levy in North Kingstown, so that in 2004 it was the same as it was in 2003. Rational people might expect that no one would pay any more in taxes. In fact, if it were 2003 instead of 2004, no one would have paid more in taxes.

But there was a scheduled revaluation in 2003 for the 2004 fiscal year. The result was that in 2004, 49% of the taxpayers would have received a tax increase averaging 23%! The total additional taxes paid by nearly half the property owners would have been just under $2.4 million dollars.

Since our scenario froze the tax levy, no additional money was received by the town. The $2.4 million merely offset the tax reduction of the other 51%. Does this seem fair to anyone? Does it seem reasonable to increase taxes for some people solely to lower other people's taxes? But that's what revaluations do.

It gets worse. The average property value of the people got the increase was $154,000. The average property value of those whose taxes fell was $228,000. People owning more modest homes paid millions to people with more valuable homes. What's wrong with us that we allow this to happen, over and over?

I performed this same revaluation scenario for North Kingstown's 2007 and 2010 fiscal years, Barrington's 2009 fiscal year, West Warwick's 2003 fiscal year, and Cranston's 2006 fiscal year with eerily similar results.

To repeat; towns can freeze budgets and hold levy limits to a zero percent increase and still, thousands upon thousands of tax payers would get onerous tax increases for no rational reason, simply because of a reassessment of property value.

So we face a dilemma; how can we tax existing owners fairly and, at the same time, tax new buyers fairly on the values of their purchases?

There is a way outlined on the Rhode Island Gets Honorable Taxation website. We can tax both existing owners AND new buyers fairly and reasonably, every year, fund levies as we do now, and eliminate assessment appeals for existing owners.

Only when we get this fixed can we expect real results from any tax decreases. Or maybe we just don't care care?

Drugs in School

Senator John Tassoni wrote in a commentary Sep. 9 in the Providence Journal that we need to bring a "recovery high school" to Rhode Island to help students avoid falling back into drugs in regular high school.

I agree with the senator that it's time to fight back against the prevalence of drugs in schools but setting up yet another school system for ex-addicts seems more like avoiding the root problem rather than facing it.

Maybe we would do better to revisit our drug policy and the consequences of bringing drugs to school in the first place.

Polarized Express

This group is pro-business. That organization is pro-union.

The sad truth is that "pro-business" is actually code for anti-union and "pro-union" is code for anti-business.

Is it any wonder that we're stuck with such poor governance? To be the best we can be we have to become pro-business AND pro-union. Once upon a time, long ago, it was called working together toward a common goal.

And speaking of goals, do you think we spend too much energy and time fighting over the means, which seem to have replaced the ends, the true goals of America. Our representatives in government would do well to spend far more energy on discussing the ultimate goal(s) of this great country.

Maybe it's just me.

"Providence Property Taxes"

Regarding The Providence Journal's front page on Monday, "Steep Drop in Value" about Providence's revaluation there are several statements which are misleading or should at least prompt questions. Here are some.

1."A potential 30% drop in the city's ... assessed property value ... could mean a significant loss of revenue" makes no sense. If the total value goes down the rate will compensate to provide the needed tax levy. The strength of the property tax is that it always produces the revenue. It's simple math.

2. "Cicilline has pledged not to raise the property-tax levy — the total amount the city raises in property taxes — over this year’s $274 million." The article then goes on to say that he has not ruled out an increase in the tax rate. It's simple math once again. If the levy remains the same but values have dropped, the rate MUST go up or the money raised must be less. Unless he has found a way to bring in more revenue from other sources.

3. With regard to Finance Chairman John Igliozzi's comment regarding the redistribution of taxes resulting from the revaluation, "The values are being reset to what they should be", how do we determine "what they should be"? Since we have accepted that market values shall determine our taxes then we have to accept that they are what they should be according to what the market says. But.

I share Mr. Igliozzi's concern when our housing market shifts the burden from poorer areas to wealthier ones. However, his gratitude when the shift is back in the opposite direction is misplaced. He must realize that it will shift back again one day. That's how markets work.

It is this reliance on markets that must be corrected and I have been trying hard for the past several years to do just that. Please visit http://righttax.org.

"Did I do it or not?"

"Not guilty by reason of insanity" appears to be a verdict that causes problems for the court. The term itself suggests a paradox. The person did do something but didn't do it too. Might the plea be more truthful if it were "guilty by reason of insanity" which admits to the act but acknowledges mitigation as well? It seems a much more realistic and honest plea.

A bit like expungement of criminal records where something that happened didn't happen.

We're sure confused.

"What Will it Take?"

What will it take to turn on the proverbial light bulb? Revaluations are at the heart of the property tax problem, not local spending. Revaluations are always responsible for the perennial outcry from tax payers, that their "taxes have gone up more than the tax levy", and they are right. Of course, the people whose taxes go up less than the tax levy are silent, as any of us would be.

The only reason to revalue is to assure a fair tax rate for owners who have just purchased their home, NOT for anyone else; market values are valid for taxation only for people who purchase at market value.

We will never be fair with property taxes until we admit this truth. For more see my website.

Maybe it's just me.

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.

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.