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More local taxes won't save anyone money
Published: December 27, 2006
Local governments wail endlessly that they don't have enough money. So why would anyone believe that allowing them to create new taxes will give homeowners a break on their property taxes?
It won't happen. Give local government more money and it will spend every penny of it - on more employees and equipment, on raises and benefits in municipal union contracts, by any wasteful and capricious means available.
Incoming Gov. Deval Patrick during his campaign touted "local option" taxes as a means to reduce property taxes. Local option taxes mean adding a local component to state taxes such as those on meals or hotel rooms. A community might, for example, increase the 5 percent state meals tax to 6 percent on its restaurants. The state would still get the 5 percent on the value of meals served while the town would keep the additional 1 percent.
Patrick has suggested such taxes would help communities reduce their dependence on the property tax. His finance chief Leslie Kirwan has suggested local option taxes would be part of the Patrick administration's policy.
The problem in municipal governments is not that they collect too little money. It's that they spend too much. Even with the minimal reductions in the rate of growth of local aid during the Romney administration, few communities have shown any real fiscal discipline. Managers, mayors and selectmen continue to approve generous contracts for teachers, police, firefighters and other municipal employees. They cave to union demands that expensive benefit packages cannot be altered with other forms of compensation.
It won't happen. Give local government more money and it will spend every penny of it - on more employees and equipment, on raises and benefits in municipal union contracts, by any wasteful and capricious means available.
Incoming Gov. Deval Patrick during his campaign touted "local option" taxes as a means to reduce property taxes. Local option taxes mean adding a local component to state taxes such as those on meals or hotel rooms. A community might, for example, increase the 5 percent state meals tax to 6 percent on its restaurants. The state would still get the 5 percent on the value of meals served while the town would keep the additional 1 percent.
Patrick has suggested such taxes would help communities reduce their dependence on the property tax. His finance chief Leslie Kirwan has suggested local option taxes would be part of the Patrick administration's policy.
The problem in municipal governments is not that they collect too little money. It's that they spend too much. Even with the minimal reductions in the rate of growth of local aid during the Romney administration, few communities have shown any real fiscal discipline. Managers, mayors and selectmen continue to approve generous contracts for teachers, police, firefighters and other municipal employees. They cave to union demands that expensive benefit packages cannot be altered with other forms of compensation.
Local administrators have been able to get away with this fiscal irresponsibility because growth in the number of homes in their communities and increasing home values have allowed them to take ever more in taxes from homeowners. Where homeowners balk at rapidly increasing taxes, local leaders shift the burden to businesses through tax classification. That system permits two property tax rates, one for homeowners and another, higher rate for businesses.
With the housing market hitting its peak, this shell game cannot continue. Giving local communities another source of tax revenue isn't going to save anyone any money. It will simply give local government carte blanche to continue its free-spending ways.
