Marohn: The Real Reason Your City Has No Money

If you haven't tuned into the writing of Charles Marohn over on StrongTowns.org, you should drop what you are doing and head over there to get immersed.  If nothing else, he'll make your mind race and turn some of the things you think you knew about government, financing and taxpaying citizens on it's end.  The first place to start on your journey there is this piece:  The Real Reason Your City Has No Money.  We were turned onto Mr. Marohn by a FotB (Friend of the Blog) recently.   And we've had his stuff open in our Chrome Tabs ever since.

In this first piece, he examines the ordinary city of Lafayette, Lousiana.  And uses the 'predicament' - as he calls it - to shine a light on one of the current dynamics playing out across America: what to do about infrastructure and infrastructure investment.

The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure (more is paid to the schools and regional government). A fraction of that $150 – it varies by year – is spent on actual pavement. 

To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year. That assumes no new roads are built and existing roadways are not widened or substantively improved. That is $3,300 in additional local taxes just to tread water. 

That does not include underground utilities – sewer and water – or major facilities such as treatment plants, water towers and public buildings. Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year. 

The median household income in Lafayette is $41,000. With the wealth that has been created by all this infrastructure investment, a median family living in the median house would need to have their city taxes go from $1,500 per year to $9,200 per year. To just take care of what they now have, one out of every five dollars this family makes would need to go to fixing roads, ditches and pipes. That will never happen. 

Thus, Lafayette has a predicament. Infrastructure was supposed to serve them. Now they serve it.

He goes on to lay blame for the insolvency of municipalities large and small on the programs and incentives that were put in place and championed by the federal and state government to induce growth through infrastructure spending.

Got your attention, yet?

He closes with this provocative positioning while tying together new President Donald Trump's promise for increased infrastructure spending.

So what do we do now? Well, we're about to create a huge pot of money at the federal level that we can spread around to try and solve this problem. Only, it's not a problem. It's a predicament; it has no solution, only outcomes. 

It's a predicament that nearly every American city, with very few exceptions, finds itself in. Even if there was enough wealth and productivity to fix all of this -- and there isn't anything close to that amount -- we would be fools to spend it so unproductively. 

All this infrastructure is a bad investment. America needs a different model of growth and development.

Property Values in DuPage and Across The Suburbs Dropping, Forcing Pressure On Higher Property Taxes

Top 10 Communities that lost the most in home values since 2007 via DuPage Policy Journal

Over at the DuPage Policy Journal, the Local Government Information Services (which publishes dozens of local news outlets across the State of Illinois), is out with an important read for every taxpayer and homeowner in DuPage County.

For those keeping track at home, that means that Bobby McNeily, who is running for Wheaton City Council in the West District, can pass reading this.  Why?  Because he doesn't pay any property taxes.
But the rest of you, if you aren't already, this should make you pay attention:

Homeowner equity in DuPage County is eroding quickly as property taxes soar, driven by surging local government spending and massive municipal debts. Every DuPage County community, including its most-affluent enclaves, saw home values plummet over the past decade. 

...How much will DuPage County homeowners take before homeownership here is no longer affordable? 

Assuming a decline at the same pace as the past eight years, LGIS analysis projected median home values by DuPage community in 2023. 

If trends hold up, a Hinsdale home worth $939,000 in 2007 will be worth $684,988 in 2023. And its homeowner will have paid $242,525 in property taxes for the privilege of having their name on the title for a sixteen year period.

We've pasted the top 10 losers since 2007 that tops out with Willowbrook homeowners losing - on average - almost 50% of their home values.

The results of these depressed home values?  Higher property taxes to feed the beast that is local government and the empire building that is taking place in schools across the collar counties.

When we go to the polling place this year, let's all remember these facts and begin to ask questions about school board members and local elected officials about what cuts they're planning to make to our local governments.

And the biggest questions have to be about the plan on pensions at the municipal level.   If you come across a candidate who is asking questions and talking about pensions and the problems at the local level (teachers, firemen, police, municipal works), you should pay attention.  That's somebody who is working on the tough issues and likely warrants your support.

Naperville City Council: Abandoning Pensions for Council Members

Some sensible news coming out of the City of Naperville where the members of the City Council have formally decided to not allow future members of the City Council to participate in the Illinois Municipal Retirement Fund Pension program.  

From the Daily Herald:

It’s the end of the line for pension benefits for Naperville City Council members. 

Members of the council last week deleted pensions from the list of benefits they receive and amended the city code to reflect the change. As of March 4, council members no longer are eligible to participate in the Illinois Municipal Retirement Fund. 

...Future council members cannot contribute to or receive benefits from IMRF because a resolution passed Tuesday says their position no longer requires enough work each year to be eligible.

If pension obligations are already our biggest problem when it comes to government finances, this is asmall, but smart step that we here at the Truth Team would like to see followed by other local units of government.  Good for you, Naperville.  

The news coming out of DuPage County is getting better.  First it was Dan Cronin eliminating a unit of government, now it is pensions going away for elected officials.