Put the Cap on Local Taxes, Spending

More inspiration from around the country. I last posted about the upcoming November recall election in Michigan for a wayward tax-increasing legislator — or 10. Today, we derive inspiration from, and pay tribute to, the revolutionaries whose license plates read “Live Free or Die.” Come this November, according to an April 29 Union Leader article, the New Hampshire Advantage Coalition seeks to have initiatives on the ballot in 11 communities, giving many Granite State residents the opportunity to cap taxes and spending, tying both to the rate of inflation. Stayed tuned. Stay inspired.

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  • eagle eye

    Good luck on getting that in Oregon. Wasn’t it slaughtered about 70-30 last time it was tried as an initiative?

    And what is so sacred about “the rate of inflation”?

  • Steve Plunk

    The initiative was soundly beaten last time but cities have added even more “fees” in the mean time and are looking to add more. The climate is changing quickly enough it may have a chance.

    The state adopted measure 5 limitations only to see local jurisdictions bypass those with service fees. Now we all know these fees are just additional taxes disguised to fool judges. In my case I know it’s a tax since the supposed service I’m paying for with this “fee” isn’t being provided. When asked the city merely replies it charges for it because it can.

    As for tying it to the rate of inflation I would propose not doing that and instead forcing the governments to ask for increases at the ballot box. That would be a quick way to get out of control spending under control and Oregon’s economy back on track.

  • Bob Clark

    AMEN to capping the rate of government tax and fee increases. Wasn’t it something the day after Tuesday’s election reports surfaced of city water, sewer and garbage rates being raised some 8 to 9 percent, or more than twice the rate of inflation and probably three times the rate of wage increases excepting city government and union contract wage, salary and other benefits. How much of these proposed rate increases are due to government and contract labor costs? It would at least be nice to see more transparency in what the line item increases are broken out by materials and supplies, wages and salaries, and how much is capital expenditure.

    The continued rapid borrowing of Portland is also making me anxious. I don’t want to get stuck with some sharp tax/fee increase to help keep cityhall afloat.

    One bit of good news is the school district has postponned its big bond measure for fixing school buildings. But then there’s the coming PCC and Zoo property tax bonds. Property taxes went up some 10% or more last November. This effectively wiped out my cost of living adjustment, putting me behind the curve on escalating energy costs. I think I’m in the majority on this account. As for the zoo, I haven’t been to the zoo since the 1960s when I had to go on a school trip. I guess that’s the big city…pay for a lot of services you don’t even use and could care less about.

    Never the less,
    cityhall needs to give us a break, and maybe freeze government wages and benefits and contract costs for awhile so the rest us can catch up. I doubt very much many government employees would walk away from their retirment packages.

  • Dan Phegley

    The revolution has come to Oregon ! It is alive and well in Damascus. The citizens there voted overwhelmingly for no new taxes or increases without a vote of the people just last March. They also voted in large margins for two measures supporting property rights.

    The City has since instituted measures limiting the right of Citizens to petition their city government. This is currently being contested by citizen initiative 2007-02 which will prohibit the city council from tampering with the citizen initiative process. The only way tax and planners win is by stopping the vote.

    WATCH DAMASCUS ! !

    • dean

      Yes Dan…alive and well. Your “revolution” probably will cost Damascus property owners up to 2 billion dollars in lost opportunity value. Keep up the good work and you can really show them.

      • Steve Plunk

        Perhaps that lost $2 billion can be offset by the new opportunities available to property owners and businesses that will locate there. Nevada was a state that recognized low taxes attract business and diversify the economic base. I would expect a few overtaxed Portland businesses to look at Damascus. Especially when the bills for all the new borrowing come due.

        • dean

          Steve…that might be the case if they actually could locate here to take advantage of the low taxes and absence of fees. Unfortunately, absent those fees (in particular Systems Development Charges) there will not be funding for the infrastructure to allow any development, hence the $2 billion in lost opportunity.

          Damascus is a rural area with rural infrastructure. 2 lane roads, no municipal water, no municipal sewer. Due to Mr Phagley’s efforts, we are likely to remain so. That is our new reality.

          • Steve Plunk

            Dean,
            There are other ways to pay for “impacts”. I don’t like using that term since local governments tend to ignore the positive impacts growth can have.

            In the old days government would pay for infrastructure improvements with current tax revenues or bonding based upon those revenues. Later they learned they could double dip and not only charge SDC’s but also bond on future revenues. This sort of thinking led to wasteful spending on not only capital improvements but also regular expenditures. The old system worked fine until staffers convinced elected officials to game it. Thanks.

            So now we have local jurisdictions creating rules requiring upgrades they no longer provide and then charging taxes like they provided the upgrades. This quickly eats away at slim profit margins and drives business away. My money is on a low tax environment like Damascus will have. When residents need upgrades I expect they will find an efficient way to pay for them with the voters approval. Isn’t consent of the governed what we are all about?

          • dean

            Steve…sure. I think a large majority of the 45% or so who voted for the charter changes did so because they want to have as much control over spending and taxes as possible. That is understandable. But there was no economic analysis done by the proponents, so I do not think anyone here (myself included) fully thought through the potential consequences before they voted.

            Unlike just about every city in Oregon, Damascus is starting from near zero. We don’t have any of the “normal” fees and charges that others routinely charge, for anything from photocopying reimbusement of city documents to systems development charges. We will now have to vote on every one of these, no matter how trivial or ctitical. And we will have to vote again any time the city council proposes to raise them. And since there is a double majority requirement we can only stage these votes every other year. This is beyond local control. It is a recipe for gridlock, and it creates a cloud of uncertainty over when and if anyone can ever develop their land. That uncertainty can and already is keeping developers and their money away. Those who are at or near retirement and thought they might be able to sell and move on are left in limbo.

            I don’t know how the city could possibly up front bond infrastructure expenses because bonds have to be paid back with something. Our property tax rate is not sufficient to do that, and I can assure you that the majority of the existing residents have no interest in financing development with their property taxes in any case. They expect developers to pay for the infrastructure, and the only available means to do this is through SDCs.

            When I claim that Damascus land owners may have cost ourselves $2 billion in forgone increased property value, I am not blowing smoke. I admit these are back of the envelope calculations, but they are based on verifiable statistics. Developable urban land fetches 5-20 times undevelopable rural land in the burbs on a per acre basis (minus existing improvements). Damascus has 10,400 acres in total, and around 50-70% of that is potentially developable. So at the very low end we are talking $1.2 billion in potential increased private property value, with $2 billion as a middling figure. No one, including Mr Phegley, has so far shown my estimate to be in error.

            On the bright side, most of us did not want a city here to begin with, so Mr Phegley may have provided the means for us to stay rural, though based on his past statements I do not think that was his intent.

  • Anonymous

    dean the dishonest wing nut arrives again with his Metro propaganda.

    His contrived figure and notion is just so much BS. And it flies in the face of the sweeping financial burden his planning regime has inflicted upon most of Oregon with their mislabeled overreaching regulation and planning.

    dean would have Damascus and the region pay for yet another “master plan” outcome like the Beaverton Round, SoWa, Cascades Station or any other rat race mess his planners have created. Armed with public money and zero integrity dean’s cabal of activist groups and extremists at multiple government agencies are on the march with their continued public deceit and their fanatical agenda.

    His disservice to his own community, Damascus, makes phony dean one of the worst around.

    Congrats Dan and battle on!

  • Jerry

    Did it ever occur to anyone that maybe Damascus should quit trying to be something it is not? Go back to an unincorporated entity. You are not a city and never will be a city.
    It is simply a rural area with a bunch of politician wannabes who have already proven they know nothing expect how to cause misery and problems for everyone.
    Who cares about lost opportunity? These crazies are to blame for everything that has happened.
    I am pleased the public took matters into their own hands. Very pleased.
    Viva la unincorporated township!

    • dean

      Jerry…yes, that has occured to a number of us, If Mr Phegley’s charter changes end up hobbling local government to the point it can’t create the financial structure to facilitate development of a city then disincorporation is an option that we ought to seriously look at.

      Disincorporation would take our tax rate back to what it was earler, saving most residents hundreds of dollars on property taxes. So if saving tax money is our true goal, then we ought to consider the meritsw of that direction.

      But here is the rub. The Damascus area would still be in the urban growth boundary. Landowners who want to sell for development would be able to petition for annexation to Happy Valley or Gresham (some have already attempted this). The earlier land use plan, which was adopted by Clackamas County in 2005 and is expected to be soon adopted by Happy Valley would be the governing plan for this area. Mr Phegley and his supporters say they do not like this plan because it is “too green.”

      I disagree with your characterization of local elected officials as “political wannabes.” These are volunteer positions that take a lot of free time and have no real rewards. The Damascus city council is hardly a stepping stone to higher office.

      Who cares about lost opportunity? Good question. The charter changes were sold to the community as protecting our property values. So one would presume local landowners (including Mr Phegely and his supporters, who are anything but anti-development) care about how much their land is worth. An agggregate increased value of $2 billion plus or minus would not be distributed equally, since the land is not owned equally. Based on economics, about 25-35% of the total landowners would be the ones who might care the most about the lost economic opportunity. As one local farmer put it, his land is his IRA.

      But hey…majority rules. Easy come easy go.

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