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With news stories of the revolving door of administrators coming and going, and with the charges and countercharges concerning secrecy, sex, lies, and videotape (or lack thereof), it’s easy to lose sight of the city government’s achievements. Yet the day-to-day work of the city continues, thanks to the city’s outstanding employees, and we have nothing approaching the farce in Rowan County, Kentucky, where the county clerk has been refusing to either to do her job or resign and let someone else do it.
Perhaps the most notable accomplishment is Pat Bridges’s first budget. It’s an impressive plan with much to commend it.
As I mentioned last week, its best feature is the inclusion of funds to complete the phase-in of the salary plan adopted by the city council in 2014. The Pay Plan was inspired by a survey showing that most Stephenville city employees are paid less than the average income earned by their counterparts in comparable cities. Implementing the Pay Plan raises employee pay, makes Stephenville more competitive with other cities when recruiting to fill existing job vacancies or newly-created positions, diminishes the chances that outstanding employees will leave to go elsewhere and basically rewards our workforce for their outstanding service to our community.
Also impressive is the recommendation that the tax rate be kept at 49 cents per $100 assessed evaluation. If implemented the public will be spared a tax increase.
But speaking of tax rates, both the Flash Today and the Empire Tribune reported that a citizen came before the city council and urged it to actually lower the rate, arguing that projected economic growth may generate enough revenue to cover spending even if the property tax were to be cut, given a projected budget surplus despite no new taxes. The Mayor thought enough of his suggestion to ask the Finance Committee to look at the issue one last time before the council votes on the budget next Tuesday.
But how much sense would an actual tax cut really make? Given the success of the city administrator and the finance director in cutting more than $360,000 in spending from last year’s budget, a great deal of sense, but for two concerns.
First, the savings achieved with the spending cuts are being wiped out by the mandated expenditure of about $460,000 this coming fiscal year in economic development projects as mandated by the voters when they passed Prop 1. This is not necessarily bad. Indeed, should the city council use the Prop 1 money to finance projects which will actually grow the economy, we will be able to achieve the Holy Grail of public finance—more revenue, more spending, and lower tax rates all at the same time. But it will take time—and tax dollars—to find the elusive Grail. In the mean time, we must face the fact that contrary to the projections of the Chamber of Commerce, the local economy is not currently growing enough to provide the additional revenue to finance Prop 1; hence spending cuts are necessary.
Second, and of more immediate concern, is the question of whether the spending cuts permanently solve the problem of freeing up revenue for economic development expenditure increases. If the spending cuts permanently reduce recurring expenditures, then the council has taken a significant step toward solving the problem of spending more on economic development without having to raise taxes or cut services, even if the economy fails to grow enough to supply the extra needed revenue. But if these spending cuts were simply one-time cuts, or postponements of needed spending, then the city council must produce more spending cuts next year as well should the economy again under perform. Under the circumstances, a tax cut now might reduce revenue to the point where future spending cuts must be more drastic ( or might even threaten services) or must be softened with a future tax increase.
In summary, the budget as currently submitted projects a surplus. It may be more popular to use the surplus to justify a tax cut, but it would be more prudent to keep the tax rate as is, and generate surpluses with which to help finance economic development with no tax increases or service cuts in the future.
Malcolm L. Cross has lived in Stephenville and taught politics and government at Tarleton since 1987. His political and civic activities include service on the Stephenville City Council (2000-2014) and on the Erath County Republican Executive Committee (1990 to the present). He was Mayor Pro Tem of Stephenville from 2008 to 2014. He is a member of St. Luke’s Episcopal Church and the Stephenville Rotary Club, and does volunteer work for the Boy Scouts of America. Views expressed in this column are his and do not reflect those of The Flash as a whole.
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