First, I don't want to critize or discourage the comments of the poster! In fact, this is exactly the kind of participation that needs to happen so, we as human beings can depress the demise of Freedom of Thought!
Here are the comments that the poster left in response to the first article.
Anonymous stated; "Deliberate this. Employees cost money. Inflation drives wages and benefits costs up. Revenues are flat. If revenues stay the same and expenditures for wages go up, the percentage of revenue to pay wages will increase. It's not rocket science. If taxes raised as employee costs went up, the percentage would stay the same. Tax rate has not changed since 1987. Do you think you could hire a good employee and keep them by paying them 1987 wages in 2011 and beyond?"
Inflation drives wages and benefits cost up?
The City of Portsmouth is experiencing what economist refer to as; Cost-Push Inflation! Cost-Push Inflation is a decrease in aggregate supply, or a decrease in the product that is in demand. In our case; that is money!
The two main sources for a decrease of aggregate supply is:
- An increase in wage rates.
- An increase in the prices of raw materials.
Now, the City of Portsmouth is trying to do is Demand-Pull Inflation! Demand-Pull Inflation is inflation resulting from an increase in aggregated demand, or an increase in the product that is in demand. Again, in our case money!
The three main sources that generate ongoing increases in aggregate demand are:
- Increases in the money supply.
- Increases in government purchases.
- Increases in the price level in the rest of the world.
By, City government covering the cost of employees's pension plans, not restructuring the health care packages, misuse of city vehicles, paying for Life Center memberships, not negotiating better contracts with unions for the sake of the taxpayer's costs etc.; they have decreased the aggregate supply of the city's treasury!
I seriously believe, that elected officials should not negotiate employees pension plans, health care packages, benefit packages or union contracts! Not, with corruption being represented on both sides of the bargaining table!
By, getting involved with the Amerisco contract; certainly a bad judgement call on behalf of our elected officials. No supervision to see that the job was carried out correctly or a system set in place to monitor the cost savings that was promised by such improvements. All the meters were still not installed two years after the contract was signed. Again, bad decision by our elected officials that have decreased the aggregate supply of the city's treasury! Increasing government purchases!
If revenues stay the same and expenditures for wages go up, the percentage of revenue to pay wages will increase.
Unfortunately, this is a very real scenario in the City of Portsmouth. But, why? The City of Portsmouth has experienced a number of events that have contributed to this problem.
- Decrease in the city's population.
- Decrease in the number of business in the city limits.
- Poor tax abatement deals for area business' {More tax load on the citizens.}
- Decrease in employment opportunities, much less good employment opprtunities. {By the way, with exception of the hospital and Shawnee State; working for the city is a great job to have. Some could argue the best!}
- Many city employee's live outside of the city limits; refering to property taxes of course.
- Granting certain entities lucrative contracts that the City should be fulfilling.
- Allowing certain entities to have control of grant writing for the city's development.
It's not rocket science. If taxes raised as employee costs went up, the percentage would stay the same.
I find alot wrong with this comment! Because, now we are getting to the real purpose of why this, Proposed Income Tax Increase is being at the citizens. Keeping the text of the comment in mind; then everytime city employee's contracts are up and they request more, compensation, better health, pension and benefit packages; raise the taxes on the citizens. If we continue to operate in this manner then when is enough, enough!
Then you will drive the population down even further because, people won't want to continue to live here and pay those rates. Then you have created Nominal Cost vs. Real Value. Is the cost of the services worth what you are paying for it?
You are right! It's not rocket science! But, if we would do as you have proposed; I would call it more like Mad Science!
Tax rate has not changed since 1987. Do you think you could hire a good employee and keep them by paying them 1987 wages in 2011 and beyond?
First, of all! The wages for City employees are not at 1987 wage scales. They are at the current 2011 wage scales. You don't really believe that these union represenatives are going to let that slide by in the contract negotiations, do you? So, in all fairness; I think that takes care of your question portion of that comment.
Second, income and property tax rates do not have to raise to keep up with today's budget demands. Elected officials being good stewards of the tax-payers money and making sound economical decisions involving the welfare and services provided to the citizens of the city does! The tax rate could have been set in 1810 and not changed at all over the years and the percent of the tax could still meet the budgets demands. If the 7 things mentioned above are eliminated a much brighter outlook would prevail.
Here is a solution; instead of income or property tax increases how about this. Have a Pigovian Tax!
What is a Pigovian Tax? One of the uses of taxes is to discourage activity that has negative externalities, or we believe is otherwise economically/socially harmful.
Definition: A pigovian tax is a tax placed on a negative externality to correct for a market failure.
Examples of a Pigovian Tax
- A cigarette tax.
- A alcohol tax.
- A energy tax.
- A impervious run off tax. {Big business's like SOMC's water run off into storm sewers have a negative effect on others.}
In conclusion, raising income or property taxes is not the solution to the City of Portsmouth's fiscal problems.
It's is simply this; A lot of people are talking about losing services but, not improving security, electricity, water systems, but that's not necessarily what council and the mayor is intending to do. They'll be passing budgets, they'll be representing the material interests of their constituencies, and that takes a certain level of skill.
Having a government that is principle-centered - that means being good stewards.
And, just to show you that our elected officials are not even good at what they have choosen to do; and thats being politicians! Consider this; Budgets are political documents, and this being a election year, you would thin they would have the goal of trying to show a declining deficit without endangering anyone's re-election prospects. It's unfortunate that those that propose the "Income Tax" are using issues like crime, violence and loss of services as scare tactics.
The city fathers are not good stewards of our money. If this were their own money things would be different. We have got to quit spending more than we make. After reading the PDT today I cannot believe what our auditor has said. I think he is using fuzzy math. They have to make cuts and they don't want to do this. What other job gets the benefits the city workers get? Their salaries go up each year, some have vehicles furnished for them including gas, insurance, upkeep, their part of their pensions are picked up by the city, a lot of them get clothing allowances, they pay almost nothing toward their health insurance. The rest of us have to cut back on expenses and give up things. That is what the city workers are going to have to do. Give them more money to waste?? Hell NO.
ReplyDelete