COMMENTARY: Cut Taxes to Reflect Lower Property Values

By TIMOTHY J. KRAWCZEL

April 29, 2013

Ronald Reagan famously said, “Government is not the solution, government is the problem.”

A Cape Charles town employee told me last summer, “We don’t need anything except money.”

The thinking seemed to be: Money is supreme, run government like a business, we know more about it than you, don’t argue with us, we’re technocrats.

A few weeks ago, my wife and I bought a new fax/printer. It cost $125 and is better than the one we paid $400 for four years ago. Why? Because when there is competition, prices go down and quality goes up. That is the free market.

If the cost of a product is too high or the quality is too low, a consumer is free to buy somewhere else. Business responds by cutting costs and improving quality.

Not so with our Town government. It has a monopoly on service, and the Town Council year after year has allowed monopoly power on setting prices, i.e. tax revenues.

The taxpayer has no choice — pay the tax or face a penalty and a property lien.

This year the money numbers are indisputable. Real estate assessed values are down 20-38 percent, depending on the source of the estimate. Undeniably, the sale value of real estate in Cape Charles has declined from the last assessment five years earlier.

In real terms, many taxpayers have seen the market value of their investments evaporate, and some have lost their life savings.

But what is happening with the cost of local government? Has the Town reduced the burden of taxes in response to lower property values? No. All the Town taxpayers have gotten is a flaccid discussion of whether taxes will go up or stay the same. There has been no discussion of actually cutting tax rates, — of making choices that every homeowner and investor has to make, namely, how to do more with less.

CONTINUED FROM FIRST PAGE

At this point, a defender of the status quo will ask, “Well, what do you propose to cut in the budget? Make the tax cut advocate say how to do it, identify a specific program or a project.”

What happens then? A defender of that program or project will come forward and argue, blunting the proposal and often personalizing the discussion.

My response is different: I have no desire to debate the quality of any program or project or the effectiveness of any member of staff or department. That is what the Mayor and Town Council are elected to do and the Town’s managers are paid to do.

And make no mistake, they advocate self-interest: keep revenues up, make sure the budget rewards what we like, and don’t allow questions about expenditures (we know more than you do).

Rather, my perspective is that the highest priority is to address the greatest need – that of the taxpayer.

Town Council, in light of falling real estate values, should lower real estate taxes 10 percent this year and 10 percent next year. Personal property taxes should be cut 33 percent this year.

Cut taxes, establish a bottom line, and let the Town staff develop options for spending.

If there is money for a pay increase, if there is money for new projects, it there is money to donate to worthy non-profit causes, great.

Evaluate the costs and benefits of competing priorities, and allocate funds accordingly.

As to levels of service, the job of the Town managers and department heads is to deliver and improve services — not just when revenues are increasing, but always.

Just like a business, declining revenues mean cutting costs and finding creative ways to improve quality.

In terms of policy, I propose the following guideline: In light of declining real estate values, there is no salary increase, no capital improvement expenditure, no capital equipment expenditure, and no non-profit donation that is a higher priority than giving the people who are paying the bills — the taxpayers — relief by cutting real estate and personal property taxes.

A few months ago, the federal government cut expenditures across the board. The country has not stopped working – in fact, just the opposite, the economy is improving.

President Obama volunteered to return 5 percent of his salary to the general fund, which was admirable.

For years, Town Council has solved every problem by spending more taxpayer money. Not their own money — the taxpayers’ money.

Today, Town spending is not the solution — it is the problem.

Local resident Timothy J. Krawczel was Town Manager for Cape Charles from 2005-2007. 

Submissions to COMMENTARY are welcome on any subject relevant to Cape Charles. Shorter articles will be published as a Letter to the Editor.

Share

Comments

5 Responses to “COMMENTARY: Cut Taxes to Reflect Lower Property Values”

  1. Anthony Sacco on April 29th, 2013 12:33 am

    Well, well, well, a fighter has risen to call a spade a spade. Mr. Krawczel, I commend you on your analysis of the decline caused by the Town Manager and Council.

  2. Don & Deborah Bender on April 29th, 2013 9:38 am

    Well said Tim! Now if our Town managers and Council will just read your commentary and put their thinking caps on, maybe, just maybe, things will change for the betterment of our little town. Again Don & I say WELL SAID TIM!

  3. Deborah Bender on March 27th, 2014 8:41 am

    After reading this commentary again I must comment. The town of Cape Charles has become a CASH COW. Spending is out of control, and no one (except Frank Wendell) seems to realize that it needs to stop. The citizens of this town need to elect a new breed of councilmen that will take what the citizens say at meetings and work with them instead of totally ignoring them.

  4. Dana Lascu on March 27th, 2014 11:38 am

    This is sound logic and a good lesson on how to truly serve your constituents.

  5. David Gay on March 27th, 2014 2:33 pm

    Tim I couldn’t have said it better. You have just stated in a few paragraphs the common thread in the Wendell, Mitchell, Bender and Gay platforms. The upcoming elections provide a chance for Cape Charles taxpayers to be represented, not ignored. Thank you Tim — I am glad you are moving to my neighborhood!