The campaign for city council is in full swing. Yard signs are sprouting everywhere, and campaign promises are flying. Soon campaign literature will appear in our mailboxes. Tonight (4/9), incidentally, the Erath County Republican Party is hosting a candidate forum for city council and ISD board candidates at 6:30 at the Agave.
One thing I’ve noticed is that several city council candidates are advocating “lower taxes.” But what does that really mean? Do they favor lowering the current property tax rate of 48 cents per $100 assessed valuation? Or do they want to actually lower our tax bills? There’s a difference.
Lowering the tax rate won’t necessarily lower the tax bill—if property values as determined by the County Appraisal District rise more by more than the city council cuts the rates, our tax bills will go up even as our rates go down. Only if the council cuts rates more than the values go up will lower tax rates produce a lower tax burden.
But the most important question—and the most unpopular question—one needs to ask when discussing tax cuts is: What about spending?
I’ve always been amused by the fact that tax cuts get much more discussion, and approval, than spending cuts. During my last, doomed, re-election campaign, as I unsuccessfully sought to defend my vote for the infamous 2013 one-cent tax increase (from 48.5 cents to 49.5 cents per $100 assessed valuation), I would ask angry voters who were angry with me to tell me where there should have been more spending cuts. Invariably, they would say, “It’s your job to cut the spending, not ours!”
And they were right. It’s the job of city council members to determine both the taxation levels and the spending levels they think are right for the city, adopt those levels—and take their medicine at the polls if the voters disapprove. Actually, I never expected anyone to propose significant spending cuts beyond what we had already adopted, so I wasn’t disappointed when my query failed to elicit helpful replies.
The real reason why I used to ask, “What about spending?” was to try to illustrate that you really can’t talk about tax cuts without at least raising the possibility of spending cuts as well, because taxes and spending are too interrelated, at least at the local level, to discuss the one without the other. At the national level, there’s no constitutional level to produce any budget, much less a balanced budget; federal lawmakers (and presidents) can continuously cut taxes and raise spending. But Stephenville is legally obligated to balance its budget.
Now, it is possible to cut taxes (or at least tax rates), without necessarily cutting spending. If property values increase more rapidly than the cost of city services, the city council can win credit for “holding the line” on the tax rate while collecting more money in property taxes to pay for greater expenditures. Growing sales tax receipts will help even more. But while your property tax remains the same, your tax bill will increase. So are your taxes really going down—or up?
Of course, it’s possible that property values can rise so rapidly that the city council can actually cut the rates while collecting more tax revenue anyway, thereby avoiding spending cuts. Here, your rates are going down—but the taxes you have to pay are still going up.
But what if property values aren’t going up rapidly enough to allow the city council to keep rates stable or even lower them and still collect enough revenue to cover expenditures? What then?
Many tax cutters who see the need to also cut spending say they can do so by cutting the “flab,” or “fat,” or “fluff” from the budget, or enacting other money-saving reforms. Sometimes they’re right. Since 2014, the year I was removed from office, the city council has, in fact, enacted various reforms—in Splashville management, pension policy, etc.—which allowed it to cut the property tax rate—by half a cent.
But the 2014 election had produced a council on which seven of the nine members had said the one-cent tax increase enacted in 2013 was unnecessary. So if it were truly unnecessary, then why didn’t they cut the tax rate back by a penny, and not just half a penny? The most obvious answer is that they couldn’t find enough ways to cut spending to allow them to cut the tax rate back to pre-2013 levels. So they had to make do with a higher tax rate than they initially wanted, and implicitly acknowledge that taxes had to go up by at least half a cent, if not the entire cent I had supported.
It’s important to point out that I don’t for a moment think the “lower taxes” crowd was acting with cynicism or dishonesty in opposing the 2013 tax hike or the candidates who had supported it. What I’m certain happened is that they got into office, saw reforms that had previously eluded us, but reached the limit of what spending could be cut. Hence they had to keep part of the 2013 tax rate. They couldn’t cut the tax rate further until property values went up even more. Then, finally last year, they could cut the rate from 49 cents to 48 cents per $100 assessed valuation.
And that leads me to ask what those who are advocating lower taxes now really mean, and how they’ll really implement a policy of “lower taxes.” Do they mean to lower the rates by enough to actually lower our tax bills, even if our property values go up? And if they do so, and actually lower the revenue available to the city, what will they cut to keep the budget balanced? In other words, what about spending?
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.