In public education circles, 2011 was the year that officials quickly learned how to do more with less.
Was it? I must have missed something. No student fees. No furloughs. No voluntary wage freezes. No program reductions. No larger classes. Nope, not Mt. Lebanon. Instead, we approved a construction project that will undoubtedly appear in the 2013 Pittsburgh Business Times Book of Lists for "Largest Active Pittsburgh-Area Construction Projects."
It is December 31, 2011, a time for me to reflect. There are many residents in Mt. Lebanon who tried to make a difference. I am not going to name names since I run the risk of forgetting someone, but we all know who they are. I started this blog and continued the website so that we could hold our elected officials accountable, to allow the readers of this blog to force them to be transparent and provide information when they refused, and to vent when we lose control of our own government.
I will take anonymous comments one last time. December 31 is a time for all of us to reflect.
As James Fraasch would say, "Thanks for reading."
Happy New Year
Elaine
9 comments:
This morning the PG reports that the assessed value of city residential properties is up 46%.
Last year, I calculated that if 38 properties sold in the bubble in May 2010 were assessed at their sale price, the assessed value of the properties would go up 36.4%.
So, my guess is we are looking at no less than a 40% to 50% increase in the assessed value of the bubble.
Last year I shared my 2010 rudimentary analysis with the School District's Audit and Finance committee.
(For those don't remember that committee, it was a pretty decent forum where Board Members could, without a script, dig deeper into the district finances and taxpayers could engage in conversation with board representatives and staff.)
Anyway, I was hoping to encourage some appreciation that following the impending county reassessment, residents who see their assessed value increase greater than the average in the bubble, their taxes will be going up. And in some cases significantly.
The alternative is also true, if a resident's assessed value goes up less than the average in the bubble, their tax bill will be going down.
Some examples:
If the bubble's value goes up 36.4% and a resident's assessment went up 90%, their tax bill would go up about 40%, just from the reassessment alone.
If the bubble's value goes up 47.4% and a resident's assessment went up 90%, their tax bill would go up about 29%, just from the reassessment alone.
The greatest increases could most likely fall to those who have been in their castles the longest; or purchased a castle in the last few years that had not been reassessed for some time.
Far more interesting than these numbers were the School Board Members' reactions.
Assessments: Not our Job
Increasing Tax Bills: Not our Problem
New High School: Priceless
The third reaction, I threw in for levity, the first two though are spot on -- and not so funny.
There was absolutely no measurable empathy for the community, nor any recognition that maybe we should do everything in our power to take the bite out of the reassessment - - before it takes a bite out of us.
The answer to your question - hardly.
Absent from the discussions at the Board in 2011 was the testimony of a reputable economist to educate our Directors in the mysteries of Economics 101. I wrote to the Board, suggesting they ask Antony Davies of Duquesne University to appear before them, but all I got in reply was "crickets in the night." So as to whether the Board has learned to do more with less the basic answer is: NO. And now some observations:
With respect to the new high school edifice, the oft repeated mantra of "if you build it they will come" might work for an amusement park, but in order to move into the Mt. Lebanon School District one must have a job - a high-paying job, I might add. In addition, since our community is "full-up" - or nearly so - that means for every family you attract with the proper "bona fides" you must displace an existing family. Raising real estate taxes (a regressive form of taxation) may force some elderly residents out (or residents that have, unfortunately, fallen on hard times), but it does not guarantee that new families are waiting in the wings to fill the vacuum.
In good economic times a certain amount of voluntary displacement is a good thing. A mixed community with a 10% retired population is showing both growth and a sound economy; a mixed community with a 30% retired rate is not. If the Board could force out 20% of the retired families in Mt. Lebanon, will they be replaced with families making half-again as much money (a rough calculation on my part, admittedly)?
High property values may be a concern for the seller and the School District, but the buyer generally is trying to get the best deal he or she can. There is a "Laffer Curve" of sorts when it comes to "property values." There may be some basis for saying that a community with high property values (and high taxes) is an attraction for a particular kind of family, but eventually there is a point of diminishing returns, where even "those" families looking to buy weigh the benefits of Mt. Lebanon against other communities and conclude they can get a better overall deal elsewhere.
Mt. Lebanon is a bedroom community. There is no major inducement within the borders of Mt. Lebanon to attract economic development on anything like the kind of scale necessary to generate tax revenue sufficient to pay for all of our political leaders' grand plans. Most people who live here work elsewhere. Money has to flow into Mt. Lebanon because there are not enough producers within its borders to pay the freight. And only producers pay the freight. I maintain that if Allegheny County was a hot-bed of economic activity we would not be having this conversation (or argument) on this Blog.
The proponents of the new high school edifice point to an increase in EIT collections as proof that the "money is there." But the figures I've seen indicate that, while the EIT revenue has indeed increased by 2% (ML Annual Financial Report), so has the rate of inflation - to the point that the net economic gain is nil.
The Board is right in saying that the District's major expenses are in salaries, benefits, and retirement costs, and much of that is out of their hands. All the more reason to be parsimonious in those areas they can control. There are solutions to the aforementioned expenses, but they require courage to implement and they won't be universally popular.
HAPPY NEW YEAR TO ALL! - and best of luck..we're going to need it.
Richard, I find this ("The Board is right in saying that the District's major expenses are in salaries, benefits, and retirement costs, and much of that is out of their hands") analagous to the obese person standing at the MacDonald's counter proclaiming: "its my parents fault they raised me on fast food." Then ordering 2 Big Macs, Supersized fries and extra large shake for lunch!
In a TIMEU.S. article they write:
School of Thought
Teachers' $500 Billion (and Growing) Pension Problem
By Andrew J. Rotherham 11/11/2010
Read more: http://www.time.com/time/nation/article/0,8599,2030708,00.html#ixzz1iA1lOGWU
"In Pennsylvania, for instance, a 2002 surplus inspired state policymakers to increase benefits for teachers while decreasing the state's contribution to the pension fund. It was a move that made sense politically but was horrendous fiscally — Pennsylvania's $7 billion surplus by this year had turned into a $10 billion deficit."
And...
"There's also the sneaky little practice of cost shifting. In many states, for example, a school district can raise the salaries of teachers in their golden years [here in MTL its the school board that raises salaries] knowing that the state, not local taxpayers, will bear the cost for the remainder of the teachers' lives after they retire."
Anon 7:15 - and exactly where does THE STATE get the money to pay those generous pension from?
None other than the taxpayers! All government revenues whether Corp. Taxes or Pesonal Taxes eventually fall on taxpayers.
In the PG - according to the PA State Budget Secretary state revenues could be $500 million less than projected in 2012 so it doesn't look like they'll have any extra cash to make up for PSERS shortfalls.
The $500 million shortfall in the State budget is the optimistic case, the base case is a $746 million shortfall. The Governor doesn't want to raise taxes so look for $746 million in cuts somewhere.
Headline:
Mt. Lebanon raises real estate tax rate By Eric Seiverling For The Almanac writer@thealmanac.net
Citing a growing deficit and irresponsible fiscal planning dating to 2008, Mt. Lebanon commissioners approved the municipality's 2012 budget that includes a real estate tax increase.
First sentence, right out of the box... CITING...IRRESPOMSIBLE FISCAL PLANNING! The commissioners are waving it right in front of their constituents faces. IRRESPONSIBLE FISCAL PLANNING!
So what did they consider, and the next group are planning to do once in office (at least according to the Ward 3 elect commissioner)... spend millions developing McNeilly Park.
Are we idiots or what?
Ward 3 hasn't elected a quality commission candidate lately.
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