[north-takoma] Fwd: [PEN] FW: A FINANCIALLY UNSUSTAINABLE BUDGET APPROACH
- From: "Lorraine Pearsall" <dmarc-noreply@xxxxxxxxxxxxx> ("ljpearsall")
- To: north-takoma <north-takoma@xxxxxxxxxxxxx>
- Date: Fri, 29 Apr 2022 17:22:42 -0400
Dear Neighbors,
Frances asked me to circulate her very good budget analysis to North Takoma. Only 3 people testified this week on the budget, please read and email your comments to the Council.
Lorraine
Sent from my iPad
Begin forwarded message:
From: PEN [mailto:pen-bounces@xxxxxxxxxxx] On Behalf Of Frances Phipps via PEN
Sent: Wednesday, April 27, 2022 6:52 PM
To: 'PEN' <pen@xxxxxxxxxxx>
Cc: Frances Phipps <frances.phipps@xxxxxxxxxxx>
Subject: [PEN] FW: A FINANCIALLY UNSUSTAINABLE BUDGET APPROACH
Apologies for a second long email in one day. If not interested in the budget, please stop reading:
The City is awash in funds: its pandemic funds ($17.5 million), its enhanced Montgomery County reimbursement funds ($20.5 million phased in FY 2023-FY 2025), and its, halleluiah, property tax funds. Never has the City, in my 52 years here, had so much money either in hand or in the queue. It reminds me of the song of the Broadway musical Call Me Madam, “Can you use any money today?” with the lyric “ money, money, money, we’ve so much that it gets in our way.” What’s the City’s response to this knee deep abundance? Well, the first response was to propose to raise the tax rate! The second was to propose to hire more staff to handle all this money! This is insanity on steroids. The total budget proposal is +$40 million. Was it only 2 years ago that it was +$30 million?
Let’s review who we are, and see if there’s a disconnect between the facts and the budget proposals and process. First, we’re a very small landlocked community of 2.4 square miles and +/- 17,000 residents – a number which hasn’t changed statistically in the half century I’ve lived here. As a population, we are about equally divided between homeowner and tenant. We also have the highest tax burden of any area in all of Montgomery County and arguably in the State of Maryland. At the same time that we pay the highest tax burden, we are exempt from providing and paying for our educational facilities which represent the highest single cost of any jurisdiction’s budget. These educational facilities are paid for by Montgomery County, and/ or private/religious institutions. Not only does the City not have to pay for them, these institutions have tax exempt/or in-lieu status. They are many and also disproportionally land intensive. This results in taking a lot of our 2 square miles off the tax rolls. Other institutions such as churches, hospitals, fire stations and non-profits are also tax exempt. Additionally, most of our multifamily apartment buildings are also eligible for varying degrees of tax exemption and for varying lengths of time – some in perpetuity for providing a degree of affordability. Moreover, we do not have a strong business sector capable of paying its way in taxes. So, what does that leave to tax? For the most part, the property tax base is single family residential.
Keep in mind, we are in Montgomery County, we have the option of the County’s providing more or all essential services just as they do for education. I once owned property in a small Chevy Chase jurisdiction which choose only to provide its own trash service and rely on the County for all else. So, I know we can pick and choose.
HOWEVER, and this is important to emphasize, we have specifically CHOSEN to provide our own services which have become numerous and ever expanding. Each and every cost associated with a service is one the Administration is choosing for us to pay. All the minutia and the staff necessary to support this approach is detailed in the budget. So, let’s talk about the process and how the budget is developed and then look at how reason dictates it should be developed.
There is a lot of confusion and anger as to why the new City Manager would, given we’re awash in funds, proposes to raise the tax rate this year. I can’t read his mind, but as a new City Manager and a rational professional, I can’t imagine that he has developed his target budget without extensive discussion and early strong guidance from the Mayor. This is a Mayor who has consistently supported increasing tax rates during her tenancy and this year, despite our sudden wealth, is not a departure from her past. The fact that there is so much money coming in is simply seen as an opportunity to add additional services and staff to the Administration. At least, that is how I read it.
Secondly, I’ve been saying for over a decade that the process is “a** backwards”. Most human beings do two things in forming their budget – identify what is essential, and identify what funds they have. They then work to ensure that essentials are covered within the budget and hopefully something is left over for fun.
How does Takoma Park form its budget? Well, it starts by asking the Council to identify their wants and goals, and then sees how they can fulfill this wish list and then calculates how much the tax rate needs to be. This approach is administrative malfeasance. It is for that reason, that for at least a decade, we have been faced with an ever rising tax rates as predictable as the rising tide. City Managers have changed, the process and the Mayor have not. I think it was about 2 years ago that a Citizens committee presented a public discussion on how to improve the budget process. It was thoughtful, detailed and understandable with specific recommendations. The then City Manager and the Mayor were in the audience and heard the proposals. I am not aware that any of them were pursued much less implemented.
What happens next in this established process? Well, everyone is provided a dense, difficult budget to examine, understand and comment on in a tight timeline. It is then that both Councilmembers and residents, if they want any changes, are required to make suggestions on what to cut - holding them responsible for fiscal discipline. It is no surprise that the comments focus on marginal issues/expenses – such as police dogs, or a recreation program – issues which do not begin to impact the total $40 million proposal. This is a failure of financial rigor on the Administration’s part. Their role is to design a budget financial target, based on the health and essential needs of the community, and then craft a budget that is at or under target yet successfully addresses essential services. If staff have been efficient in the process, there may be something left over for non-essential services. It should be glaringly obvious that a small residential tax base should not bear the burden of the Administration’s lack of fiscal discipline. As a community, we have the right to expect efficient government. One that is consistently and reliably over budget is not efficient. One that burdens an aging population, or those dependent on Social Security or other programs by taxing them out of their homes is not efficient, much less compassionate and inclusive. We are becoming a community that only the wealthy can afford, not only due to increasing land values, but to the highest tax burden in the County. How do our actions square with what we assert are our beliefs?
I strongly recommend that a constant yield tax rate be established for this year and that the staff come back with budget options that meet this goal. Secondly, I recommend that the assumptions and the process be changed in such a manner that this tax rate is assumed as the basis for future budgets unless there is a dramatic change in circumstances. Finally, I suggest that all residents hold all their representatives responsible for fiscal restraint and vote as if their future security depended upon it.
Frances on Holly
From: PEN [mailto:pen-bounces@xxxxxxxxxxx] On Behalf Of Priscilla Labovitz via PEN
Sent: Wednesday, April 27, 2022 2:42 PM
To: Philadelphia-Eastern Neighborhood list <pen@xxxxxxxxxxx>; Donna Scarboro <donna.scarboro@xxxxxxxxx>; Matthew Hamilton <mwhamilton@xxxxxxxxx>
Cc: Priscilla Labovitz <plabovitz@xxxxxxxxxx>
Subject: Re: [PEN] Comment on FY 2023 Tax Rate
I think minds will change. It’s the city manager’s proposed budget. The City Council adopts the budget. It’s bound to be controversial beyond Ward 1. I believe that cuts will be made. And that the coming council meetings will be well attended. My personal view is that Jamal Fox has kicked the can to the Council.
What are people willing to give up?
That’s the hard question. It’s not enough to protest the tax hike. Everyone who’s opposed to the tax jump must review the budget and suggest what they are willing to give up. Arts? Grants? Police training? Trash pick up? Lay offs? Free programs? New library? Translator services? Redoing the atrium? Parking enforcement? Neighborhood services? Borrowing? I suspect each city department gave the CM its wish list.
Priscilla
Birch
On Apr 27, 2022, at 12:08 PM, Matthew Hamilton <mwhamilton@xxxxxxxxx> wrote:
I agree with Nina; it seems to me that the default position ought to be not to duplicate services. That's not to say no duplication is warranted, but that each duplication should be explicitly and individually justified. And, I would argue, justified exclusively on grounds of their current practical value to citizens -- "we've always done it thus" is not a valid reason.
As a separate point, I think it's pretty clear that assessed property values have increased far in advance of inflation in recent years -- 40% in Chantal's case. That means the City's real revenue will have gone up substantially, even at the current tax rate. Can someone explain why the rate itself should increase, on top of this? As with service duplication, I think any increase in the City's real revenue (which is to say, accounting for inflation) ought to be explicitly justified to us as citizens.
I'm relatively new to Takoma Park, so I assume I'm missing a lot of context, restating what others may have said many times before. But I consider these two points as basic components of the City's responsibility to us all.
Matt
7304 Birch Ave
On Wed, Apr 27, 2022 at 6:41 AM Nina Falk <arcovoce@xxxxxxxxx> wrote:
Thank you, Chantal, you could not have made this comparison more clear. At this point, I would love to revive the question of whether it is worth it to have services duplicated by the city, and whether we have been properly served by the city government. I don’t feel represented, I feel powerless. I will write my own letters, but do they ever change any minds?
Nina, Cedar
On Apr 26, 2022, at 9:37 PM, Chantal Worzala <cworzala@xxxxxxxxxx> wrote:
Good evening –
For those not interested in the City budget, please feel free to stop reading and delete this email!
For those who are interested, however, I am sharing a note that I sent to the Mayor and the Council ahead of tomorrow’s hearing on the FY 2023 Tax Rate.
I would encourage folks to speak up at the hearing, which begins at 7:30pm tomorrow (Wednesday, 4/27) in the City auditorium. Folks can also sign up to comment via Zoom (sign up by 5pm Wednesday). Link to the agenda and sign up instructions: City Council Meeting Agenda – Wednesday, April 27, 2022 | City of Takoma Park (takomaparkmd.gov).
Peter has hosted a number of opportunities for Ward 1 to share views with him. His ability to represent us is strengthened when we also share our views with the rest of the Council.
Thanks for listening – and have a lovely evening!
Chantal on Maple
From: Chantal Worzala
Sent: Tuesday, April 26, 2022 9:31 PM
To: 'peterk@xxxxxxxxxxxxxxxx' <peterk@xxxxxxxxxxxxxxxx>; Cindy Dyballa <CindyD@xxxxxxxxxxxxxxxx>; Kacy Kostiuk <kacyk@takomaparkmdgov>; Terry Seamens <TerryS@xxxxxxxxxxxxxxxx>; Talisha Searcy <talishas@xxxxxxxxxxxxxxxx>; Jarrett Smith <jarretts@xxxxxxxxxxxxxxxx>; KateS@xxxxxxxxxxxxxxxx
Cc: Jessie Carpenter <jessiec@xxxxxxxxxxxxxxxx>
Subject: Comment on FY 2023 Tax Rate
Dear Mayor Stewart and Members of the Takoma Park City Council –
Thank you for all of your hard work on behalf of our community.
I am not able to attend the public hearing on the FY 2023 Tax Rate, so am sharing my perspectives via email.
I urge the Council to adopt the constant yield property tax rate of 0.5195 per $100 of assessed valuation for 2023 as part of its commitment to affordable housing.
According to data from the State of Maryland, the current property tax rate for the City of Takoma Park is significantly higher than any other area in Montgomery County, making it the least affordable place to live from a property tax perspective. [See tax rates on this State website: 2021-2022 COUNTY & MUNICIPALITY TAX RATES (maryland.gov).]
Most residents in Montgomery County pay only the county property tax, which is currently 0.7178 per $100 of assessed value.
Today, those in Takoma Park pay an additional tax rate 0.5397 per $100 of assessed value.
That means that residents of Takoma Park pay 75% more in property taxes than those who are only paying county taxes (1.2575 per $100 of assess valuation when County and City taxes are combined versus 0.7178 for those only paying County taxes).
Several other incorporated cities in the County also leverage property taxes – notably Rockville and Gaithersburg. According to State data, their tax rates are:
Rockville
0.292
Gaithersburg
0.262
These rates are much lower than that of the City of Takoma Park.
Doing the math, the City of Takoma Park property tax rate is 85% higher than the City of Rockville (0.5397 versus 0.292) and more than twice as high as the City of Gaithersburg (0.5397 versus 0.262).
The proposed budget would widen these gaps even further by increasing our tax rate to 0.5697.
On top of the tax rate, of course, is the factor of increased assessments. The assessed value of my house increased by more than 40% this year. Other residents of the City saw significantly increased assessments, as well.
The constant yield property tax rate will not offset increased assessments or bring our tax rate in line with that paid by other County residents, but it will, at least, not make the problem worse.
Thank you for considering these perspectives.
With best regards,
Chantal Worzala
7131 Maple Ave.
Ward 1
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