Ever wonder why local governments have so much trouble meeting their budgets, which inevitably leads to tax increases? The answer is a lack of planning!
Let's take a look at the Point Pleasant Borough and the Point Pleasant Borough Council.
In this Sunday's edition of the Asbury Park Press there is an article about the necessity of the Borough to replace its aging sewer pumping stations. The cost of the replacement is $1.6 million dollars. Mayor Schroeder appeared to be proud of the fact that half the cost will be borne by the federal government through a grant program. The remaining $800,000 will be paid by the Point Pleasant tax payers. Where will the money come from? The Borough will borrow the money, thus increasing debt. You have to wonder where the Mayor thinks the federal grant money came from. If you are thinking federal tax dollars, you thought correctly.
Look, if the pumping stations have to be replaced they should be, but my criticism is how they are being paid for. An utter lack of planning is the culprit, and the Borough Council continues to lack planning foresight. In this case, the Council is sorely lacking in knowledge about Tax Policy, which is almost an academic discipline.
Tax Policy is used to obtain the funds to provide a reasonable amount of services to a community. But, it is also used to influence people's behaviors. For example, there are enormous taxes on tobacco products. Part of the tax is use to offset the cost of medical care for those who will inevitably become seriously ill from the use of tobacco. But, the high tax is also aimed at deterring people from using tobacco at all. Tax policy is also use for social engineering. In 1965, President Lyndon Johnson, had a problem. He felt he had to fight the Vietnam War, which was disastrously expensive not to mention a toll on the treasure of life, but he also wanted to leave behind a personal legacy, The Great Society. His problem was how to find funding for both. His solution...he convinced Congress to permit the federal government to borrow money from the Social Security Trust Fund and leave in its place an I.O.U. Then, Congress approved funding for the Great Society...think social welfare programs of gigantic proportion the cap-stone of which was the high-rise low rent condos in large cities all across America. You know, the ones that are now drug infested, gang infested dilapidated buildings that are in such deplorable condition that they are regularly torn down as a community blight.
You would think that the actuaries and demographers would have have forewarned back then that emerging changes in the age of America's population would likely lead trouble for the Social Security System. They didn't, and now we have a Social Security System on the verge of bankruptcy, America is nearly $18 trillion dollars in debt with 10's of trillions of future financial obligations. America is facing a crisis in Tax Policy.
New Jersey has the highest tax structure in the U.S. Working and living here is tremendously expensive. How did happen? Well, part of the blame lies with local government just like the one in Point Pleasant Borough.
Do you think that the Borough Council has ever sat down and had a meaningful discussion about Tax Policy? The answer is NO! Why, you may ask...probably because they don't even know they should.
Let's talk about hotels...that's right hotels. Maintenance of hotels is expensive, and since room rentals are elastic (subject to marketplace circumstances) and can't always be depended upon to fund maintenance, another way had to be devised. Did you ever plan an event a a hotel...like a wedding? If so, you are a familiar with the 20% gratuity that is attached to the final bill. If you thought that fee was for the hotel service personnel you would be wrong. Actually, 5% of that fee goes into the hotel coffers and is used for maintenance and much more. The point here is that hotels have figured out a way to fund maintenance so as to take the pressure off hotel room rentals that has its ups and downs. Wouldn't it be novel for local government to examine Tax Policy to devise a means to lighten the burden of huge outlays that are inevitable. If a couple waked into the office of Councilman Wisniewski, an accountant, and said we are planning to send our two boys to college and could you advise us on a way to pay for the education, what do you think he would say to them? Most assuredly, he would advise them to set up a restricted college education fund and employ a very safe investment strategy, thus permitting the market help a bit. In the same manner is he suggesting the Borough do the same thing to fund long term capital needs? No! Why the difference in thinking?
Let's see now...wouldn't it have been wise for the then Council to have on the very day that the sewer pumping stations were built to create a set-aside fund for the replacement costs that would surely come? The reality is that politicians don't think that way! They have unlimited taxing authority that the citizens gave them and they are of the mindset that when capital expenses occur we either just raise taxes or borrow the money, thus encumbering future tax payers. The same goes for community equipment, and other costs that will require maintenance or replacement...think police cars, etc.
While on the subject, you are aware that Point Pleasant Borough hired four new police officers over the past few years. The Council suggests we need them to fight the "War on Drugs", and the cost of the new police is rather small...after all they are paid low starting salaries. The Council never talks about the hidden cost of municipal hiring. Each of the officers gets several uniforms, a gun, a tremendous pension, health care etc. They also climb the pay ladder rather quickly to a $100,000 job. Then too, there will be a need soon for there to be additional police cruisers and each one of the new policemen has to assigned and supervised...think more supervisors. The public is being deceived about the true cost of more police.
The Borough Council is again flying by the seat of its collective pants. There is no Tax Policy and they are falling into the same trap that has led NJ to be the most heavily taxed people in the nation...NO PLANNING!
The Borough Council just bought highly desirable land. Where is that money coming from? Think borrowing it! I am sure that each Council member had some vague notion in mind when they voted for the purchase, but that is not the way taxpayer money should be spent...spend and then think of a reason. Did anyone see an analysis of all the Borough's land holdings? In other words, what land does the Borough own and what is it being used for? Did anyone see an analysis of purchase plans...a plan how to consolidate, sell other land or otherwise modify the use of the land owned? Probably not, because there is no analysis and this most recent purchase was done in the "dark" with no plan. Now a committee is at work with the instructions to figure out how to use the land purchased. It is almost guaranteed that the committee will consider the new land use in a vacuum without a thorough analysis of how already land owned is being used, and whether it is efficient and productive...think the skate board park on prime real estate on a busy thoroughfare.
The Borough Council is a highly reactive body. In other words, they spend most of their time dealing with problems that come up. They steadfastly refuse to strategically plan and Tax Policy is a topic that is not even a consideration. What does it take to get the Council in Point Pleasant Borough to plan strategically?
What do you think?
PS The new Master Plan for land use is sorely lacking. There is not a single word in the Plan about how to upgrade the community...in other words make it more desirable to live here. There is a reason Spring Lake looks the way it does and why the land values are astronomical and recession proof...a group of people planned it that way! The single most important job of the Council is to INCREASE land value. Just think about that for a moment. Suppose the value of your home or land rose and continued to rise as a direct result of the policies of your Council. Would yo be happy? Do you think that such an action would stabilize the tax rate? Do you think it would help the community attract business, thus creating jobs? There is not a word in the Plan about getting boats and mobile homes off people's lawns. Not a word about using Tax Policy to encourage home owners and businesses to "beautify". There isn't even a clear and precise Mission Statement as a preface to the Master Land Use Plan to signify to the public what the Council is trying to achieve. A Plan like that would be helpful and important. As it is the Plan is nothing more than an action by the Council to get something on paper to satisfy legal requirements! When asked, each Council member says, "I am trying to make our community a great place to live and grow a family". That is a platitude, a campaign slogan! We have yet to see a vision of how to do that and a strategic plan to implement that vision!
