That’s Peter Harkness. He founded a magazine in 1987 called Governing. I got my first job as a city manager in 1988. Mr. Harkness is still doing his thing at Governing. I’m still doing my thing as a city manager, except I’ve moved three times since then. He hasn’t.
Governing is a good source of balanced reporting about government at all levels. I read it, and I know that most of my peers read it too. Mr. Harkness authors a regular column called the Potomac Chronicle. His March column is titled “States, Localities Face a Lost Decade.” It’s a good piece and well worth the couple of minutes it’ll take you to read it.
I suppose I like the column because it affirms my personal view of what I think we’re likely to see in the future for local governments. Sad to say: I’m not optimistic. The economy will recover because it has market forces and political forces working together to push it toward expansion. There is no such combination of forces working together to push local government in any coherent direction. Some want local governments to do more with more. Some want us to do more with less. Others want us to do less with less. Fortunately, I haven’t heard anyone say they want us to do less with more, but who knows, maybe that voice is just late getting to the table.
For city governments in Minnesota, our property tax system offers stability and predictability. Those two attributes are similar, but they are not the same thing. It’s a stable system because property values are, generally, relatively stable when you look at them through a long term lens. They are much more stable than sales or income taxes.
In Minnesota, property taxes are predictable because of the lag built into our system of assessment-taxation-collection. The property taxes that are payable in 2010 are based on the value of property in January 2009 which is based on the sales data of comparable properties in 2008. This is what I mean about predictability. We know that sales data from 2010 will impact values that will be set in January 2011 for taxes payable in 2012.
The buffer offered to city governments by this system is important: it protects a key revenue stream from sudden decreases during times of economic downturn, but it also represses quick revenue recovery when the economy turns around. The buffer in our system means that we can reasonably forecast a major element of our municipal revenue stream a couple of years in advance. It’s good to know the future, even if it’s bad news. Our property tax revenue forecast for the future: flat and getting flatter.
A ‘lost decade’ may very well be in store for cities all across our country as revenues flatten and stay flat, and as elected officials fear the public reaction to even the slightest increase in tax burdens. That’s the future I see anyway.
Sorry.
