Monday, January 10, 2005

Laffey's 3-Point Property Tax Reform Plan

Stephen Laffey, Mayor of Cranston, has put together an editorial piece in today's ProJo in which he offers a 3-point plan for providing property tax relief
1. Mandates: State lawmakers (and federal officials) must fund, relax or eliminate unfunded mandates. These mandates run the gamut from busing to special education to property revaluations. They bring enormous cost to communities. . .

2. Educational accountability: Our elected state officials have, by law, established a system that provides little accountability for how taxpayers' dollars are spent on public education. An ever-increasing percentage of our property taxes is going to education.
In Rhode Island, approximately 60 percent of education funding comes from the regressive property tax; and because the state and federal governments have failed to step up their share of funding, about 70 percent of each new dollar of education funding comes from the property tax. Few would argue against investing in public education, but it is how that money is invested that many find bewildering or even maddening. . . . In most of Rhode Island, school committees hide in the shadow of city or town councils and mayors or town managers. They enjoy the luxury of determining how the money is to be spent (indeed, mayors and councils are prohibited from this) without having the sunlight shined on their decisions. . . . in exchange for the autonomy that school committees ask for, we should let them send out their own tax bills, as do many of the country's school districts. Responsibility and power go together.

3. Labor costs: To bring down property taxes, we have to mitigate the cost of labor and benefits in the public sector. In Cranston, at least 85 cents of every tax dollar is spent on the salaries and benefits of government employees, almost all of whom are protected by public-sector unions. Unfortunately, state laws (e.g., all-encompassing mandatory arbitration for many public-sector unions) make it extraordinarily difficult for city and town officials to limit the seemingly insatiable appetite of public-sector unions. . . . Regarding pensions, a state law is needed that protects taxpayers from powerful special interests: an age requirement far north of age 40 to collect a pension; reduced cost-of-living adjustments; and a defined contribution plan (e.g., 401[k]) for new public-sector employees. These changes alone would save tens of millions of taxpayer dollars.

In addition, state law should allow cities and towns to reduce pension benefits for municipal and school employees. At a minimum, state law should exempt all pension issues from collective bargaining at the municipal level, as is done today at the state level. It is outrageous that cities and towns are denied a cost-saving measure that the state makes available to itself.

As for health care, legislation should require that all public-sector employees pay a share of their health coverage and/or encourage participation in consumer-driven health-care plans that provide incentives for employees to make smart health-care choices. A 20-percent "co-pay" of health-care premiums in Cranston would represent a nearly 5-percent reduction in property taxes!

Most of the problems arising with public-sector unions stem from inattention to management rights -- i.e., the rights of the taxpayers. The private sector no longer provides the benefits enjoyed by public-sector employees; accordingly, those who work in the private sector should not have to pay for those in the public sector who enjoy such benefits.
Let's hope other politicians are listening. If not, we'll have to elect those who will.

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