Monday, July 18, 2011

My latest article informing citizens of the proposed "Road Maintenance Fee" in the Islander

Non-government option for building communities
Subheadline: An interview with Saratoga Springs Mayor, Mia Love

There are good things that communities want—a city rec center and pool—a state-of-the-art playground—a modern library—etc. But these wants compete with economic realities. How should communities pay for these wants? Some cities attempt to close the gap through more government (e.g., taxes, fees, bonds, etc.). Others approach this problem with ideas and methods that recall the past.

Recently, I heard Mia Love, Mayor of Saratoga Springs, Utah speak. Her ideas on the role of government in growing communities seemed to be a refreshing return to a not-so-distant era. I interviewed her to find out more. In this article, I relate my interview with Mayor Love and compare her story from Saratoga Springs to the current proposal by Syracuse City to raise funds through bonding and a fee.
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Two years ago some residents of Saratoga Springs, Utah approached their new Mayor, Mia Love with a request: build a library for their growing community, and they proposed that the city issue a bond[i] to pay for it. Mayor Love’s response? No. “We are not going to bond for it because that would force everyone [to pay for it]. Is it my job to tax all the residents to benefit most or some of the residents?”

Mayor Love went on to explain her opposition to the proposal to fund the library in what has become the typical method for cities: “[Other communities] go and build a library, they go and pay for the brick and mortar or they bond for it. But [then] you have to be able to budget forever in perpetuity what it costs to run a library.” Today, the only costs that Saratoga Springs is obligated to are those pertaining to public safety and the operations of its city building and staff. “We haven’t committed to all that funding.”  

Although Mayor Love wouldn’t bond for the Library, she did offer $10,000 from the city’s surplus budget to get residents started. Mayor Love recalls one resident’s response to her decision: “It’s [insurmountable]. Name one city that’s been able [to build a library] with $10,000!” But the community did start to come together. The Mayor explained, “We started doing restaurant nights, movie nights, gala nights, we started building a community. Everybody started to come together for the same cause. There were people that logged thousands and thousands of hours. The cost was well over $80,000. That didn’t come from the city. That came from the community. I don’t take any credit for that. That was just an example of me stepping out of the way.”

All of the hours to staff and run the library now that it is open come from volunteers. Civic events in Saratoga Springs are also volunteer. “It is the same thing,” said Mayor Love. “We will match funds up to a certain amount. But, if we can’t do it, we’re not held to it.”
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Here in Syracuse, a 28 percent tax increase was proposed by city administrators in May and a public hearing was held on June 11th. At the public hearing the council chambers were packed with citizens who opposed the tax increase. Only a few attending supported the increase.

In the face of this public opposition, Mayor Jamie Nagle, City Manager Bob Rice, and members of the City Council have proposed a new plan: the enactment of a new “road maintenance fee.” together with issuing a $3 million municipal bond. Under this plan, revenues collected from the new fee would be used to pay the required $350,000 annual principal-plus-interest bond payment.[ii]

A City Council vote is scheduled for Tuesday, July 12th.[iii] If the Council approves the new fee, each resident will see an increase of $6, $7, or $8 per month on their utility bill. This fee is projected to bring more revenue than the previously proposed 28 percent tax increase, but it is not forecast to cover the long-term costs of road repair.[iv]

The previously proposed 28 percent tax increase was accompanied by verbiage to revisit and possibly sunset the tax increase after two years. In the newly proposed fee, however, there is no such language. In fact, the wording of the proposal says the fee is planned as “ongoing” and must remain for at least ten years to cover associated bond payments.

Residents of Syracuse have seen their taxes rise consistently over the past four years. Last year the city didn’t raise taxes, but the School District and Sewer District did. Before that the Sewer District raised their fees. In 2007 Syracuse City raised its taxes by 48%. All these increases came during a time when the average income and employment of Utah residents decreased.[v] New to this year’s Syracuse City budget is a 2 percent cost-of-living pay increase for all city employees as well as the provision to hire a new city employee.
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Back in Saratoga Springs today, there are no cost of living increases for their city employees. According to Mayor Love, “Raises or bonuses should come from hard work. We don’t do cost of living increases; we’re implementing a bonus program. We take the market value of what that person should be making from cities around us. We back down off of that a couple of thousand dollars. Then, at their performance review, if an employee is working hard and doing a great job we give them a bonus that brings them up to market value. If they don’t do well, they don’t get that and they’re getting paid below market and that tells us they need more training or they are not the right person for the job. When you talk about paying people just because they’ve been here it causes some complacency.”

Saratoga Springs raised taxes for the first time in 10 years in 2008, but they cut one-third of their city employees at the same time. Mayor Love explained their reasoning: “We said, this is not going to be all on the backs of the residents.”

Last year, Saratoga Springs lowered its taxes.
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To their credit, Syracuse City Manager Bob Rice and Mayor Jamie Nagle have enacted some efficiencies in the operations of the city. According to Mayor Nagle, Syracuse is seeking to save money by installing a centralized fueling station for city vehicles as well as rotating the city vehicle fleet into vehicles that run on more “sustainable fuel.” Also, the city is only using half of the City Office Building to save heating, cooling and other costs associated with the inefficient use of so much space.
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“It’s all well-intended; nobody’s going out there trying to serve so they can ruin people’s lives,” commented Mayor Love. “However, there is systematic causation: things that happen around you so that the goal that you have ends up being completely different than what you intended… Anything we can do to reduce reliance on… government, cut the spending… these things can make our lives better.” 

Mayor Love’s approach is definitely counter to many politicians and may appear new, but perhaps it really is just old-fashioned wisdom. “It’s about making everyone’s lives better,” She said, “Yes it’s going to be a lot harder. But I promise your quality of life will be a lot better. I am putting policies into place so that I can step out the way and let you do what’s going to make your life better. When you do that, you are building communities.”

Inset: Davis County School Board is also proposing a tax increase this year. The public “truth-in-taxation” hearing for the proposed $6,000,000 increase is set for August 11th, 2011 at 6:00PM at the District Office Building, 45 E. State St., Farmington.

[i] Municipal bonds are debt securities issued by states, cities, counties and other governmental entities to finance capital projects, such as building schools, highways or sewer systems, and to fund day-to-day obligations. Investors who buy municipal bonds are in effect lending money to the bond issuer in exchange for a promise of regular interest payments, usually semi-annually, and the return of the original investment, or “principal.” (Source: U.S. Securities and Exchange Commission, see
[ii] Over the ten-year course of the bond, interest payments would approach $500,000.
[iii] At the time of printing, the Syracuse City Council will have already voted on whether to enact a fee increase and/or bond to meet perceived budget needs.
[iv] The $6 version of the road maintenance fee, together with the road funds that the city receives from the state, are projected to bring in a combined $677,288 per year to the city. $350,000 of that would be obligated to bond payments, leaving the city with $327,288 per year available to fix roads. Over ten years, the available road funds would add up to $3.273 million. The proposed bond would add $3 million more. That would give a total of only $6.273 million in revenues to address the projected $14.889 million in road repair/maintenance needs. What the City would do to address this future gap remains to be seen.
[v] According to the 2010 Economic Report to the Governor. See

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