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Taxes, Rants, & Tea

How Democratic wimpiness empowers local Palins

Poor Chris Collins. The current Erie County Executive is about to become Joel Giambra, the previous County Executive, and Ned Regan, the one who proposed raising county property taxes over 70%. That’s because the same fiscal circumstances that faced Erie County under Regan and Giambra are returning for 2011 under Collins—a huge growth in the cost of unfunded mandates, insufficient local revenue to cover those costs, and the unavoidable, distasteful task of telling taxpayers that the same choice that faced us before faces us again, a choice between gutting services and raising taxes.

But let’s reduce the emotional temperature by taking away the names, because it’s a structural problem, not a personality issue. Before Christmas, this community could once again see an ugly confrontation between a state-appointed fiscal oversight board and an elected county executive. The messaging will be bad for democracy—because once again, we’ll be told, the people whom we elected cannot be trusted to govern. Once again, we’ll be told that they cannot be trusted to collect the taxes, manage the services and serve as stewards of the community’s assets. Once again, we’ll be told that only “business” people can handle the people’s business.

We got a preview of this message last month, when the Erie County Fiscal Stability Authority (ECFSA) issued its analysis of the County’s four-year fiscal plan. The ECFSA pointed out 8 flaws in the County Executive’s plan—including his assertion that he is going to cut the Erie County library system by 10%, unilaterally pull out of a sales tax-sharing agreement with the towns, and cut staff that do the work that Federal and State law require the county to do. The ECFSA report warns that County property taxes will have to go up at least 28%—and probably much, much more—but nowhere in the County Executive’s plan is the reality of a property tax addressed.

“Only the receipt of approximately $76 million in stimulus funds has allowed the county to produce balanced budgets for 2009 and 2010,” said the ECFSA report.

That report was issued on October 16th. But during the recent election, strangely, no campaigns were run on the issue of President Barack Obama’s $76 million gift running out, nor on the issue of the coming tax increase in Erie County. Nor were campaigns run on the inevitable choice that elected officials will have to make—the choice between keeping libraries, parks, cultural organizations and services to veterans, impoverished single mothers and at-risk children going, or just paying for mandated services, the jail and some roads.

Why the silence?

Balancing pain with gain

Think back to 1994. It was the mid-term Congressional election after Bill Clinton’s great failure of 1993. That was when, in his first year in office, the new President tried and failed to get a comprehensive healthcare reform bill passed. Worse, Clinton’s Secretary of the Treasury and the Chairman of the Federal Reserve had convinced the President, and he in turn had convinced Congress, that the only way to head off the nightmare economics of huge deficits and job-killing inflation was to raise taxes. Clinton and Congress bit the bullet on taxes, but dropped the ball on healthcare.

Political disaster was the result of stifled reform. The voting middle class felt the tax pain but not the policy gain. With the help of then not-yet-Congressman Tom Reynolds and his campaign team’s “morphing” ads, in which individual members of Congress morphed into the image of the tax-raising president, the House of Representatives went Republican—and stayed Republican until 2006. The Democratic National Chairman at the time, David Wilhelm, complained to me at the time that Democrats who abandoned Clinton on healthcare were his biggest headache, because Democrats can’t win when they’re in a fearful crouch.

Democrats locally and across New York State certainly seem to be flexing their knees once again. Instead of running campaigns in defense of public services, and rallying constituencies that all demand public investment, they do a faint version of “me too” when the issue is taxes. Verifiable facts about how our economy gains from public investment go un-mentioned by Labor, by Democratic elected officials and by opinion leaders, while the anti-government, anti-spending rants of the Right are amplified unrebutted in the major media.

Item: the nose-counters New York State Department of Labor say that thousands of jobs have been created in the hospitality industry in Western New York over the past several years, which happens to be the time period over which major public investment went into arts organizations, architectural restoration, fisheries development and bi-national tourism development. There’s a measurable increase in the size of the hospitality-tourism-arts sector of the economy here. Yet none of this stuff is the stuff of campaigning, even as the County Executive cuts the arts budget and has zero plans for increasing investment in attractions.

Item: healthcare in the region, and specifically inside Buffalo, remains a huge employer and economic force. Of the more than 50 organizations testifying before a recent New York State Senate hearing on the state budget, the entities with the biggest requests for state help (i.e., tax dollars) were Kaleida Health, Roswell Park Cancer Institute, Erie County Medical Center Corporation and SUNY at Buffalo—all of which survive principally on public money. Yet the consistent messaging in the news media, especially from the local business community, is that public spending somehow is injurious to the local economy.

Item: A review by the Buffalo State College Center for Economic and Policy Studies shows that public employment in Erie County contributes $3.5 billion of the $18.1 billion in wages paid here, about 19% of the total in 2008. Public employment is paid for with tax dollars, but not all those tax dollars that pay those public salaries are from here. Federal, state and most county workers are paid with imported money—so their wages are a net contribution to the economy here from someplace else! When was the last time you heard public unions host a forum of economists to discuss the impact of public employment on the local or regional economy? When have you heard a banker estimate how many mortgages are held by current or retired teachers, cops, social workers, college professors, sewer workers or firefighters—and what would happen to that bank were those borrowers to disappear?

Item: we read endlessly that a lobbying group in Albany has calculated that local taxes in New York State are 60 percent higher than the national average. Now read this: according to the Tax Foundation, taxpayers in New York State ship over $139 billion a year out of state to pay the bills for federal services in states represented by anti-tax Republicans. According to Citizens for Tax Justice, the total tax rate (measured as a share of income) paid by middle-class New Yorkers is almost the same as the total tax rate paid by the wealthiest New Yorkers. Yet we read again and again that the affluent of New York State are streaming for the exits. Why no clarification? Why no facts in rebuttal?

The cost of going rogue

Sarah Palin’s home state of Alaska receives billions of New York tax dollars in the form of permanent economic stimulus funds—for military bases, national parks, environmental cleanup and subsidies for the various extraction industries. Alaska is one of those “red” states that consistently votes Republican. Some clever political science undergraduate should do a term paper about the correlation between the decibel-level of the anti-tax rhetoric from a “red” state and the amount of our tax money that state gets.

Similarly, out here in Upstate New York, we hear “red” anti-tax rhetoric all day long on certain radio stations, and can read it daily in our daily press—notwithstanding the fact that over 75% of New York State revenue is collected in the New York City metro area, but that only 65% of New York State revenue is spent there. The rest of that dough sloshes over us, here, in the state’s flyover country.

Thus it was no surprise that way away up north in the 23rd Congressional District in the Adirondacks, the pattern holds. Folks in Clinton, Essex, Franklin, Hamilton, Herkimer, Jefferson, Lewis, Oswego, St. Lawrence and Warren Counties pay in $1.23 billion in state taxes but receive $1.86 billion in state disbursements. The $630 million extra that that area gets from Albany (i.e., more than 50% more than those folks pay in) comes from the New York metro area. Grateful to the big city, are they? Nope. The politics there was almost typical of areas that receive more than they give: the Sarah Palin candidate for Congress almost won.

Country music, dog-fighting, big-box churches, anti-intellectualism and anti-tax politics with thinly-veiled anti-Semitic code words all feel like imports from the “red” states, like our current County Executive, but sadly, they are well established in our northern cultural landscape. And sadly, despite the ancient northern tradition of flinty Yankee communitarianism—which gave us institutions like participatory democracy, libraries, forest preserves and other “commons” for the public good—these invasive species seem poised, at times, to overrun us.

Maybe the reality check provided by the Erie County Fiscal Stability Authority, if it once again goes “hard” in December, will be enough to remind the community that we do indeed have a choice between the harsh anti-community rhetoric against taxes and the whimpering of appeasers. Maybe this time when the choice between paying for services and doing without them is put to the community, the community’s leading voices will stand up and start citing some of the facts—facts that reflect the measurable, proven local and regional economic benefit of public investment.

Nobody should be particularly happy, though, about the fact that our taxes have to go higher to pay for healthcare costs that are too high or for maintaining suburban infrastructure that is over-extended and overbuilt. We could have equally effective but much, much more efficient healthcare were it organized the way healthcare is organized in Ontario. Our per-capita infrastructure costs would be more manageable, too, were we to stop the expensive sprawl that our lack of county-wide planning dooms us to.

But we’re never going to get to good public policy until the “public” part of that phrase gets better advocacy. As we await the inevitable tax increases from our anti-tax County leaders, who are just about finished spending Barack Obama’s stimulus funds, we should at least shush the “red” rhetoric and get clear about where public money comes from, where it goes and how it works for us.

Bruce Fisher is former deputy county executive for Erie County and visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies

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