18 April 2011

Tax reform key to saving cities, but where's the leadership?

By Eric Menzer

So here we are. Our city government is in the news regularly, faced with difficult decisions about facilities, overtime, taxes, infrastructure and goodness knows how many other vexing decisions on a daily basis. All local governments, including the city, continue to be beset by declining property values that are now being translated into assessment appeals and reductions. The economy is clearly brightening, but the state revenue picture is challenging, and it is pretty clear nobody in Harrisburg is in any mood to provide any new direct financial assistance to any local government. Even counting on past levels of economic development funding appears risky.

Courtesy Downtown Inc.
The first block of North Beaver Street in
York is one reason for optimisim about the
future of downtown York. But the state
needs tax reform that reduces the burden
of property taxes and allows cities
to thrive in today's climate of economic
This grinding governmental fiscal crisis plays on like a weary symphony with different aspects coming periodically to the forefront against what is actually a pretty optimistic outlook for the city of York as a geographic place with a wonderful, authentic walkable urban environment. It is frustrating, to say the least, that 15 years (that’s right – 15 years!) after David Rusk presented some pretty obvious ideas about how to lift the oppressive financial burden that’s preventing the real estate market in the city from responding to this opportunity, we continue to ignore the elephant in the room. We continue to debate what amount to pennies when we need dollars, and the frustrating thing is that the dollars are there for the taking.

Many economists will tell you that over long distances, tax rates are a consideration but not a definitive factor in business location or investment decisions. But that’s not what the city faces. We all know that one can go less than a mile from Continental Square and enjoy most of the benefits of living or working downtown or in a city neighborhood at a lower cost. We all know that trying to draw increasing revenue from the city’s geographically-limited tax base is like trying to draw blood from the proverbial stone. And we all profess to agree that a healthy core city with amenities that can be enjoyed by all is good for the region as a whole.

So, why can’t we talk about tax reform – both in terms of how they tax burden is spread, and where we derive local government revenue? Why are none of our elected officials willing to say that we should have a regional sales tax add-on to fund public-safety services that truly transcend municipal boundaries? Why can’t we have a county-level local income tax redistributed to municipalities to fund the tax-exempt property they host (including all those wonderful county and state parks in suburban and rural areas)? Why won’t a single leader say that property taxes levied at the local municipal level should be replaced by a system that would remove the oppressive yoke of fiscal doom from around the city’s neck?

Until we can go back and re-read the Rusk Report and find some courageous leaders who will come up out of the fox holes and lead on this issue, I fear that we’ll continue with the Titanic deck-chair arranging exercise we’re currently in. It would be a damn shame.

Eric Menzer is president of the York Revolution professional baseball team and manages the Codo Development Group, a real estate development company working in downtown York. Eric is active in community affairs and civic leadership at both the local and state level. He chairs the York County Community Foundation and serves on the boards of Downtown Inc, Better York, YorkCounts and the Crispus Attucks Association. He just concluded several years as Chairman of 10,000 Friends of Pennsylvania, a statewide policy-research and advocacy organization that promotes smart growth and urban revitalization, and he remains active on that board. Eric was previously the senior vice president of Wagman Construction in York. Prior to that, he served for eight years as York’s director of economic development and previously as the executive director of the York County Transportation Authority. He is a passionate baseball fan and lives in York with his wife and daughter.


Jim Shultz said...

I am as frustrated as Eric Menzer about the lack of tax reform at the municipal level. Why the lack of leadership on this issue? The State Legislature controls the laws that are used for local taxation and legislators see little or no benefit politically for prescribing changes. The State Legislature is controlled by interests outside of cities and they are indifferent or hostile to the idea of regional taxation. Unless and until suburban communities feel that the current taxation system is broken, it won't get fixed.

Bill Swartz said...

Suburban municipalities have multiple reasons why they should join in the chorus demanding action by state legislators. First of all, they suffer from the same inelastic borders and declining tax base. The state level solutions necessary for urban renewal will also benefit all the other municipalities. Secondly, despite being divided up into 72 articificial little boxes, we really are one community, one York. We all benefit if the heart of York county is strong. We all benefit from being a part of a strong vibrant community.

When someone comes to visit you from the west coast or Europe, do they comment on York as one place or do they describe the town municipality by municipality as though somehow West York and Spring Garden Township are a different place than York city? Obviously we are essentially one place suffering under a set of outdated divisions that our state legislators haven't yet developed the courage to address.

That points to the third benefit to non-urban municipalities if they successfully join the reform chorus: If York is to compete in the world economy, we need to start acting like one place.

The heart of York county has a lot of opportunity right now to benefit from national trends and all of York county will benefit from the renewed strength at the heart of the county. As Eric points out, though, we can only benefit from these trends and positive demographic shifts if our state legislators have the courage to act.

In order for them to develop this courage, there needs to be a carrot and a stick in my view. The carrot is a bottom-to-top public outcry demanding change that gives our legislators the political cover they need to be on the right side of the tough decisions ahead. The stick is that this enlightened populace will vote them out of they DON'T quickly develop the courage to act. As a result of multiple national and local trends, York is on the road towards success. But this success can only happen if our legislators help dismantle the barriers. It's time to push. And we need both the carrot and the stick.

Patrick Fero said...

But who are we going to vote out of office? Our York County delegation? While they aren't leaping to the ramparts risking all for the sake of tax reform, they aren't really the problem anyway. The problem is that the majority of legislators serve areas where the present tax "system" is working just fine. They're the ones not willing to risk suicide by joining the tax reform band wagon.
And even when they do look into it, no one can find a single answer or set of answers that suits everyone.
This is why I continue to call for a smorgasbord of tax options from which localities can pick those most effective for their circumstances.
(The best I can tell--and I hope I'm wrong--the tax options answer doesn't get support because most state legislators don't trust local elected officials.)
In any case, success cannot be achieved working on a local level. We need a statewide outcry. I don't see it happening.
Patrick Fero
Shrewsbury Township