What’s up with the so-called “temporary” three-quarter per cent income tax the City of Toledo collects? It’s on the ballot this November as Issue 2. If it’s so temporary, why does the City act like the sky would fall if it went away?
And anyway, why can’t the City just balance money in with money out, like we all do with our checkbooks?
Pretty simple questions, Sparky. The problem is, they’re a bit too simple.
Full house
Let’s think about the basic household budget. You have set payments for expenses already incurred, like a car loan, a mortgage on the house, and credit card payments. Add to that monthly bills like utilities, phone, and cable or internet charges. Then you have expenses on unavoidable necessities like food and clothing. The icing on top is the discretionary spending. A night on the town, family night at the movies, perhaps some educational expenses. With a bit of variation, we all have the same basic budgetary categories.
The income side of the ledger is usually pretty predictable. We have jobs with a certain rate of pay and set pay schedules. We can count on a certain amount of income, and we know when it will arrive in our account. Barring job loss or layoffs, it doesn’t change much. Maybe we have another income stream from investments or the like, and the rates might fluctuate, but usually within predictable limits. The amount we each make varies, but the streams are pretty much the same.
The City works the same way, right? Predictable expenses, a bit of discretionary stuff, and predictable income stream?
Hoo boy, Sparky, do you have a lot to learn.
Cats in several states
Let’s start on the expenses side. Some expenses are already encumbered, like bond obligations from past projects. Other costs change year to year. Personnel expenses from things like overtime and workers’ comp vary wildly, as do health care costs. Construction cost overruns, sewer cave-ins, water main breaks, and annual algal blooms are all unpredictable. Lawsuits against the city come from nowhere, criminal justice costs vary, and inflation can make costs skyrocket. There are thousands of line items in the city budget, and changes in one may affect dozens of others. Projecting this mayhem is more art than science.
The revenue side might be worse. City revenue comes from myriad sources. It comes in fits and starts. The income tax provides a large portion of the general fund, but money also comes from the state, from federal programs, from fee and utility rate payers, from sales of bonds, and from investment. The use of much of these funds is narrowly restricted. Furthermore, funds from other governmental entities can dry up at the whim of the policy makers in charge. The City has lost tens of millions from state and federal governments over the last few years. Downturns in the economy can be disastrous for income tax and other revenue.
Add to that the fact that one-third of income tax revenue is before the voters every three years, and it’s a wonder the City budget is ever anywhere near balanced. The only thing temporary about the “temporary” tax is that it can be taken away if the voters so choose. Removing about fifty six million dollars from the budget. That wouldn’t require belt tightening, it would require surgical removal of the belly.
This brief synopsis is only a glimpse at the complexity of City finances. The City’s budget is upwards of six hundred and fifty million dollars. The annual budget line item book is hundreds of pages long. It’s less like balancing a checkbook and more like herding cats that live in sixteen far flung states.
Think of that visual the next time your drinking buddies complain about City leadership and fiscal accountability. Fix the damn streets? Unleash the cats.
