Friday, August 13, 2010

Congratulations! The Beast is Starving. Now What?


Dallas City Manager Mary Suhm has submitted her budget to the city council and now the debate begins.

Will there be a tax increase or not?

Suhm was able to present a balanced budget proposal to the council, even though just three months ago she faced a projected shortfall of more than $131 million. In and of itself that was a masterful piece of fiscal wizardry that combined lay-offs, furloughs, salary cuts and cuts in services. I've known Ms. Suhm for some time and I know that the tough choices made were not made lightly. The majority of the council didn't have the guts to call for a tax increase of any sort.
Or do they?

Perhaps there was indeed some second guessing once they say that proposed lay-offs of 450 city employees, parks, recreation centers and library services were far deeper than comfortable.

"...during a briefing Monday on Suhm's proposed budget, five council members said they will vote for some tax increase."

"And three more members, Angela Hunt, Delia Jasso and Pauline Medrano, say they remain undecided but are open to the possibility."

""I have serious concerns about where our budget is heading. We've been deferring fundamental maintenance for the last three years. It will end up costing us more in the long run," Hunt said."

"Hunt, Medrano and Jasso all said they want to hear from constituents before making a decision. If they decide to support a tax increase, that will make a majority on the council."

"Many council members who are seeking to increase the tax rate say they are particularly worried about the effect Suhm's budget has on parks and recreation centers, where maintenance and operating hours stand to be cut deeply."

"Even as the council met Monday, about 200 park workers who have received layoff notices gathered a few hundred yards away at the Dallas Convention Center for a city-sponsored workshop on finding new jobs."

"Mayor Tom Leppert continued Monday to be the most vocal opponent of a tax increase. But what once seemed like solid support from a majority of the council has withered."

The facts are, there comes a point where one has to examining the diminishing returns of continual budget cuts, especially when they begin to impact basic services that affect the quality of the lives of citizens. Is Dallas there yet? Maybe not. But the budget isn't the tipping point. That comes if police and fire response times get slower. It comes next summer when recreation center and libraries have severely reduced programming for populations which really depend on them.

Paul Krugman, Nobel Prize winning economist and New York Times columnist gives an example of such a tipping point reached by this extreme tax aversion mentality:

"Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno."

"Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: In a number of states, local governments are breaking up roads they can no longer afford to maintain and returning them to gravel."

"And a nation that once prized education – that was among the first to provide basic schooling to all its children – is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead."

"We're told that we have no choice, that basic government functions – essential services that have been provided for generations – are no longer affordable. And it's true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn't be quite as cash-strapped if their politicians were willing to consider at least some tax increases."

It is the bill of goods we've been sold for the past 10 years: we can do anything we want in this country - have a world class health care system, prosperity for the middle class (represented by credit based consumerism, not savings), the best of art and culture, safety and security and we won't have to pay for it. We can rescue those who fall behind through charity, we can tolerate the cheapest labor with the confidence that the price tag will always be low. We were so certain of this, we paid no attention to stagnant wages, an overheated housing market and an overall economy made of paper mache and based on the idea that if we just allowed the wealthy to become more wealthy they would take care of the rest of us until we became one of them. Now in the midst of all the pain caused by those bankrupt notions, there are those who believe that rather than pay to maintain what we've created during those years is to cut even deeper. Or as Krugman puts it...

"In effect, a large part of our political class is showing its priorities: Given the choice between asking the richest 2 percent or so of Americans to go back to paying the tax rates they paid during the Clinton-era boom, or allowing the nation's foundations to crumble, they're choosing the latter."

"It's a disastrous choice in the short run and the long run."

"In the short run, those state and local cutbacks are a major drag on the economy, perpetuating devastatingly high unemployment."

"It's crucial to keep state and local government in mind when you hear people ranting about runaway government spending under President Barack Obama. Yes, the federal government is spending more, although not as much as you might think. But state and local governments are cutting back. And if you add them together, it turns out that the only big spending increases have been in safety-net programs like unemployment insurance, which have soared in cost because of the severity of the slump."

Eventually we feel the pain of this ideological 'austerity' in places like Colorado Springs and Dallas and Fort Worth, and cities throughout this country, where we congratulate those in charge for artful budgeting and forget something equally important...

The 450 employees laid off buy less. They miss mortgage payments and car notes. At Central Dallas Ministries we see them at our food pantry. Some of them delay getting medical care making health issues worse. Children in low income communities where recreation centers are closed and library funding is cut have fewer alternatives to mischief and few police to deal with them when they get in trouble. Seniors who live in housing inadequately cooled in summer or heated in winter have fewer options than those homes.

"...services that everyone except the very rich need, services that government must provide or nobody will, like lighted streets, drivable roads and decent schooling for the public as a whole."

"So the end result of the long campaign against government is that we've taken a disastrously wrong turn. America is now on the unlit, unpaved road to nowhere."

Soon the 'starve the beast mentality' becomes the means by which we court what we've sought to avoid - the need to raise taxes because we've cut taxes so deeply.
In Dallas, Mary Suhm has done the bidding of the majority of the city council. Now that they've gotten the picture, its time to realize that sound fiscal management includes a balance of cuts and revenue. After continual cutting, you've got to be courageous enough to correct the imbalance. Expecting to achieve balance by doing the same thing we've done in the past is the worst form of insanity.

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