Koby Granville for Tempe City Council

No final decision made here yet, but Koby Granville found my blog.  Check him out in the comments section.  This led me to re-look at his white papers posted on his website, and prompted a pretty detailed e-mail with some questions.  I definitely expected a reply but I did not expect to get a response as quickly as I did.  I appreciated the time e took to read my e-mail and give a really quick, thoughtful response.

I have not read all of his white papers, but I intend to.  His first talks about the reason why feels the need to get his thoughts down in this way.

As a 20 year resident of Tempe, and a person who has generally followed Tempe elections, I have always been amazed at the amount of information NOT provided by the candidates.

I say no to truncated politics. I believe the people of Tempe want to really learn about policy issues for each candidate. I believe the people of Tempe will understand that, although they may not agree with all of my opinions, I am actually willing to give you my opinion. Beware the candidate who only agrees with you, it means they are telling you what you want to hear.

 So, he made some attempts to get down to details in a series of white papers.  I read his position on taxes first and he makes what should be an obvious point here, but in today's world where we believe we can both cut taxes and raise revenues, this point must be made:

Taxes should support the services the majority of the residents believe add sufficient value for the required cost. When residents want additional services and believe the value of the new service warrants the new cost, taxes should be raised to cover that cost. If the residents want to tax themselves for increased police, increased public transportation, increased library hours, or for that matter increased anything, and they must be willing to pay the price for the service. That said, if the people are willing to pay the tax, they should be allowed to raise the taxes to cover the cost.

He also takes about how city government funds these services - through a combination of sales tax and bonds paid down through property tax.  In my email I asked him to get specific with the general direction he wanted Tempe to take and offered my general suggestions.  My thoughts:

First, I love Tempe and I think the city is doing a lot of things well:

We obviously need to at least maintain the infrastructure and services already in place - our parks, our schools, our other services.   So, we have a baseline of revenue that's required to maintain the status quo.  I'm pretty happy with the status quo and would be disappointed if anything was rolled back.

 But we can get better:

I do believe though we can be more visionary than this.  I obviously would love to see a better downtown.  I would like to do something about the blighted strip malls that have popped up around us.  I want better schools.  I would love to see a greater injection of the arts here.  And more interconnectedness and cooperation with our cities.  And I'm willing to pay more in taxes to support this broad vision.

Our funding mechanism, though is flawed:

The problem, though, is that sales tax is regressive and is highly volatile based on status of the economy.  Property taxes have obviously been volatile as our home values have increased rapidly and have dropped just as rapidly.  Another problem is at the same time we need government services (during downturns) our revenues drop.

He agreed with my general vision and then provided these thoughts on how to deal with tax revenue volatility:

 The real issue is this, when the city gets more money (for example) from rising home prices and the ability to bond, how do you keep it from resisting the temptation to simply spend the money that comes in the door?  Then, when the market falls, you are stuck where we are now, having to cut services.  So, the real answer is, to solve this problem, you need to solve the human issue of government spending whatever money it has in its pocket.  Clearly, you can't rely on the people to have this foresight, you have to create a structure that requires it.

So, you need to set up a structure that prevents a city from spending into new found money during rising times.  The easiest way to do it, but nobody would be willing to discuss it, is viewing the budget as a lagging average revenue stream over a 5 year period.  So, for example, if the revenue were $5 (year 1), $7 (year 2), $7 (year $3), $8 (year #4) and $10 (year #5), that the city average those years to determine the budget for year #6 ($7.40), even though the actual revenue for year #6 might be $10.  The difference then goes into a rainy day fund.  So, the city isn't tempted to spend into the temporary revenue, because their is a structure in place the prevents it from happening.  The other thing to do is to cost items based on the lifecycle cost rather than the purchase cost.  So, if you want to build a park, you don't simply look at the cost of building it, but the cost of building it and maintaining it over a 50 year period.  That raises the price of the park, and better reflects the true cost.  The city has actually started to do this of late, but it required the downturn to learn this lesson.

You might also review my paper on property tax rates, it outlines why I think what the city is doing now as it relates to property tax rates is the entirely right choice.

I'm obviously not an expert on this, but this seems like a reasonable answer to this problem.  The last recession was obviously devastating and any amount of reasonable rainy day fun is likely to get more than obliterated by such which is why it's on the federal government (which in times of deep recession has access to cheap credit when no one else does) has the obligation to try to fill in the gaps.
But the more local government can do to budget thoughtfully and prepare for times of distress the better.

One final thought, we as a voting public need to be smart about issues such as these.  I was pleasantly surprised that I could ask detailed questions and get a long thoughtful rapid response.  I hope to do this more in the future.