Everything is bigger in Texas

The Employment page is updated with listings from the great state of Texas.

The Bell doth toll: another California corruption scandal

The city of Vernon, California was incorporated in 1905 by a rancher and a merchant. In the last 100 years, the city's assessed property tax base has grown to $4.1 billion. Compare this with next door Bell, infamous for last year's city corruption scandal, who has an assessed property tax base of $1.1 billion. There are between 1,800-2,500 businesses in Vernon, according to different sources. The city has 55 police officers in its force, while Bell has only 38. Bell has approximately 40,000 residents.

Vernon's population? 96.

Vernon uses low taxes to lure business and factories to the city. With such a large industrial base and a huge metropolitan area to supply workers, Vernon has never really encouraged residential growth. Within the city's administration, power has been passed from one generation of family members to another. Some city council members have served for more than 50 years while receiving large paychecks. According to one southern California city manager,

"Bruce V. Malkenhorst at one time served simultaneously as Vernon's city manager, finance director, city clerk, redevelopment director, treasurer and chief of light and power, drawing the highest salary of any public official in California. After 33 years as city administrator, he passed the job to his son, Bruce V. Malkenhorst Jr. His annual pension payout of $509,664.60 remains the highest in the state."

Another city official, Eric Fresch, "has raked in $7.5 million in salary and fees in the last five years."

Some local and state officials are understandably upset about Vernon's family business. State Assemblyman John Perez is leading a fight to revoke Vernon's state incorporation by introducing a bill in the assembly that would eliminate all charters for cities with fewer than 150 inhabitants. Given the recent scandal in Bell, both state and local officials are eager in lending their support.

The businesses in Vernon, however, fear the bill's passage. Losing incorporation would mean transferring administrative authority to L.A. County and higher property tax rates. Currently these businesses enjoy preferred tax benefits for headquartering their businesses in Vernon. Business leaders are threatening to leave the state if Vernon is disincorporated.

It gets worse. Perez' bill could prove disastrous for the local economy. While the businesses and factories are located in Vernon, the workers come from surrounding communities, such as Bell. Both the workers and their home cities are, to one degree or another, dependent on the industry that Vernon provides within its small borders. What will happen to all those jobs and the economies of neighboring cities when Vernon loses its charter?

Ethics, taxes, or jobs. What should win out? Or can they find a balance?

Employment Updated

New job postings in Ohio, Georgia, Florida, and Colorado listed under Employment.

Alliance for Innovation Webinar

Citizen Involvement in the Budget Process
Wednesday, May 18, 2011
1:00-2:30 PM Eastern time

Learning Objectives:

• How to most effectively communicate your financial “picture” to elected officials, staff (including unions) and citizens and model sound “Fiscal Health” practices
• Practical strategies and real-life examples to show you how to align strategic planning with budgeting decisions and performance measurement and management
• Provide a framework for involvement of community stakeholders in validating the organization’s results
• Evaluate programs and services to identify those areas that are of the highest priority in terms of accomplishing the organization’s overall goals and objectives

http://www.regonline.com/Register/Checkin.aspx?EventID=962690

Garbage

Tomorrow I'm going to put out my trash for collection. It could be sitting there for a while.

As funds from the federal stimulus dry up, local governments are learning about the fiscal pecking order the hard way. As Michael Cooper reported in the New York Times, "budgetary pain flows downhill" (NYT article 3/23/11).

Many states are cutting aid to local governments in order to bolster some of their own structural budget deficits. At the beginning of the recession, local governments used state aid to keep property taxes low and continue to provide a stable level of services while using reserve "rainy day" funds to fill their year-to-year deficits.

Now, as recession-level budgets are starting to dry up at the federal and state levels, individual states are eliminating the cushion that has helped local governments operate. Unfortunately, local governments are already operating on a "lean" budget, having probably instituted hiring freezes, eliminated nonessential programs, raised property taxes, or a combination of any or all three or more.

Now, without a rainy day fund or state aid, municipalities may be forced to make even more serious decisions: cutting personnel and/or essential services. Historically, the largest components of local budgets come from public safety (police and fire). And, as Mr. Cooper's article insinuates, some municipalities may also be forced to eliminate specific programs as well. In order to avoid these realities, local governments may raise property taxes and fees for services more than they have already have in the recent past.

What does that mean for you? It could mean that tomorrow there will be fewer police officers or firefighters; your garbage pickup may occur less frequently; educational programs may be cut; capital projects (roads, pipelines, sewer systems etc) will be pushed back - meanwhile, the potholes will still be in your street, the 70-year-old pipes will rust over and the sewer system may remain backed up.

I think we naturally react negatively to raising taxes. However, if you highly value your current tax-service ratio provided by your city, be prepared for lower service levels and higher taxes.

(For example, see this article. This isn't the greatest article written on the subject but serves to demonstrate residents' unwillingness to pay higher taxes to retain normal service. Also, the author fails to date the last time the auto repair shop was appraised which leads to a biased report).

Another excellent article published recently on this topic can be found at this link.

Las Vegas Underwater

One of the greatest threats facing Las Vegas is drought. The Southern Nevada Water Authority publicized water conservation several years ago with a slogan along the lines of "Water: Our #1 natural resource". Growing up in Las Vegas public schools, I still remember water conservation specialists from the SNWA coming to school to encourage short showers, not wasting water while washing hands, and not over-watering the lawn (which my parents quickly changed to a more desert-friendly landscape).

It then comes as a shock to me to learn that most of Las Vegas is underwater. An underwater mortgage occurs when a home is valued at less than what the property owner paid for it initially.

The effects of the sub-prime housing bubble continue to stifle economic growth in this desert oasis, including the coffers of local governments. In some parts of the valley, mortgages can be found as low as $150 per month. The overall value of property has dropped so much that Clark County may lose one-fifth of its projected property tax revenues as reported in The Economist.

Meanwhile, demand for services - both governmental and otherwise - is on the rise.

Read more in the News page.