Reasons why I am voting No on the Reading Override

Reasons why I am voting No on the Reading Override for the first time ever.

It is with deep regret I am voting no on the upcoming override. While the reasons are complex it has absolutely nothing to do with my willingness to support the Town of Reading nor my ability to pay. Indeed, my analyses for my adult life shows the amount paid in higher taxes for better services and schools is a good investment when measured by the appreciation in property values. [This argument is less strong for residents who cannot afford to buy and rent their living quarters.] The amount of additional non-tax support I provide to Reading is orders of magnitude more than my annual property taxes. Beyond Reading I support substantial programs in other cities and schools in the U.S. and other countries for children in need or services considered important for the future of society. It is not a question of ability or willingness to pay.

I am conflicted in supporting this vote based on what I see as intentional and unintentional splitting and fractionalizing of residents by our elected officials and administrators. There are many examples of this which are too numerous to cover in such a letter. I have spoken to many people on these issues and while I would like to think no one sets out to divide their friends and neighbors to conquer for what they see is important, it is happening to a greater extent now than in the more than 30 years I have lived in the Town. Perhaps this is the nature of today’s democracy. We can all see this division playing out nationally but as they say, all politics is local, and a bit of self-reflection in our home town is in order.

In the interest of brevity I will focus on just two examples of this trend. But before presenting the two examples, a financial analysis of the longer term budget trends provides support for the difficult trade-offs the Town faces. Once again the Town budget reflects much of what is happening at the Federal and State level. The Town’s budget has increased over the last 10 years more than 3%, greater than inflation. Property taxes over the same period increased faster than the overall budget and now make up a higher percentage of the overall spending meaning other sources like state aid, other revenue, excise taxes, and user fees have declined in “real” (after inflation) terms. The fall in real government revenue is a global trend that is highly unlikely to reverse yet government spending continues to increase in real terms. Total Reading property revenue has increased faster than inflation since the last override (for which I voted) for a number of reasons including the expansion of the tax base with the conversion of farms, office complexes, land-fills, etc. to higher density, higher yielding property taxpaying residents. Some of these new property taxpayers, like retail stores, do not use the Town’s services and thus pay more than they receive. If one considers a longer term analysis including the Proposition 2 ½ overrides, taxes have increased much faster than inflation. Now let’s look at the two examples of how this is impacting the Town and how it is becoming divisive. Let’s look at one example each from the revenue and expense tradeoffs the Town’s elected officials and administrators have had the most difficulty trying to balance.

One is from the above-mentioned category of other revenues and the second example is within the school budget. In an attempt to recover from lower sources of Other Revenue the Selectmen increased parking fees at the train station justified by an analysis from the Town Manager showing an allocation of expenses related to train parking spaces. The increase in parking fees at the train station fractionalizes residents and forces one group of residents, who must pay to travel to work, for a disproportionate share of the Town budget while other residents do not. Following this letter I include a possible legal challenge to such fees. The Town of Rockport recently attempted to raise mooring fees and a local attorney/ local resident there wrote a strongly reasoned legal challenge to taxing one group of residents over others justified by a loosely justified expense/taxing argument. Reading’s parking fees are Rockport’s mooring fees.

Historically Reading families including my own have registered multiple cars to park at the train station depending on when family members are using various cars. Since I have lived in Reading from 1990 the parking fee policy is that the cost was a base fee for the first car sticker plus a nominal charge of ~$10 per additional car. This policy reflects the fact that families have multiple cars and the property taxes paid by the residents support the necessary services to maintain any infrastructure. It should be noted the train station parking has become quite short as more people commute via train. The marginal value of a space is lower as competition for spaces increased. Not only is public transportation a service that hopefully increases economic efficiency it can save local wear and tear on the roads and transportation infrastructure the Town and State must also maintain. Further, not all people take the train each day so the cost per day is more disproportionate for them. The new parking fee policy implemented for 2018 is any car parked at the train station must pay $150 per car, with no lower fee for multiple cars. For a family with multiple cars this will cost $300-$450 per family. User fees which are really just taxes by another name is effective because only a minority is affected and as such regardless of how much they protest the majority doesn’t care because they are not paying, it’s someone else’s money and their problem. This is why user fees are so helpful for elected officials who admittedly are trying to solve a hard puzzle. But it creates more division among residents.

It is estimated the override will cost an average resident $300-500. I know many other families have also been singled out to pay about the same amount to park in an increasingly limited number of parking spaces near the train station. These residents have already paid an amount they would be assessed in the contemplated override. Unless such fees will be reversed if the override is passed, then the parking fee residents must now pay double other residents and these double taxed taxpayers must question why they should support an override. In this case dividing the Town with user fees harms the ability of the all of us to raise taxes from all of us.

To further emphasize the unfairness when governments extract more and more of the paychecks of average citizens I present the following figures. The train fare from Reading to Boston is $6.75 one way or $13.50 round trip. For a young family commuting daily taking 2 weeks’ vacation this amount to an annual expenditure of $3,375 per person. This does not include additional costs for a subway or bus pass to commute after North Station. A family that must register two cars now pays $300, up from $35, making the total commute cost $3,675. On an arbitrary average starting salary of say $75,000 this is almost 5% of gross salary and of course a much higher percentage of take home pay. Reading property prices make it very difficult to buy in Reading so the Town must be sensitive in extracting ever more money from the paychecks of its residents. Since the MBTA is also government owned it is hard to see how the cost of just getting to work is also a not so hidden tax. I see many young people on the train who are just starting their careers. The fixed cost of commuting and parking is a highly regressive tax on lower income families or those starting out in the working world. I could support the override if the parking fee is rolled back if the override passes. However after speaking with some town officials there has been no promise the override will result in a rollback of fees. We are all in this town together and we must all share fairly for paying for the costs of running the town. Justifying a user fee by coming up with an analysis that it costs a certain amount of money to plow one group of parking spaces, or allocating other services to those spaces is highly divisive. I could come up with enumerable analyses to show one group of residents costs the town a specific amount of money. But to then assess an additional tax or user fee to those residents over other residents to specifically pay for such expenses is nothing but highly divisive and dramatically harms the ability of a government to fairly and equitably pay for the expenses we all benefit from.

We have looked the revenue side of the equation now let’s look at the expense side of the problem and I deliberately examine a politically incorrect and emotionally charged topic for full affect. The other difficult problem Reading has attempted to deal with is the continued and seemingly endless increase in funds expended for special education. For thirty years I have listened to the annual threats made by the school side of the budget that we must raise taxes if we want good schools. As mentioned above I have and continue to support great schools here and in many other places. However, this latest warning and action is the most divisive example of this annual debate yet. The decision to fire teachers for the general student population while hiring special needs professionals goes beyond anything in the realm of reasonable and politically correct. This fractionalizes the town like never before, pitting one group of taxpayers against another. Using the politically correct special education card, regardless of how strongly one feels about the incredible needs, is another example of how divisive politics has become, locally and globally. Again, one must point out that the overall school budget proposed is higher and increasing greater than inflation. The argument is that this time is different than all prior years, we are really cutting into the core. Yet the budget is still increasing above inflation. When we consider real wages for the country and for many people locally have not increased for over 40 years we must consider how much we really want to divide ourselves to get what we want. To a person, everyone I have spoken with whether they be local residents or in other jurisdictions, town meeting members, finance committee and selectpeople overwhelmingly agree the special education budget is increasing at a rate much faster than virtually everything else in the town. The Town budget analysis and discussion by the Town Manager shows many examples of how the Town has diligently controlled costs and in many cases like power consumption, safety services and other examples have in fact spent less money over the last decade. To further emphasize the point, I fully understand the need and benefit from special services. I personally experienced the need for outside of mainstream services. From personal experience I have seen how a family can become caught up in intense desire to get the best education for a student who might need more help. Indeed, I have seen first-hand an entire eco-system of professionals, organizations, testing systems, administrators, teachers, and the list goes on, who are more than willing to provide the documentation to fully qualify a student for town paid-for programs. This is a special education industrial complex like many other industrial complexes in society. In my case we decided not to mount a drive to burden the town with the cost of providing special assistance. Instead I have paid privately for such outlays at a time when the financial cost was not welcome. As a finance professional, I have spent many years advising families and institutions. I have seen first-hand how many families struggle with extremely difficult special needs children, as well as other family burdens, and the extra difficulty this causes in all aspects of a family system. I developed comprehensive financial, investment, and family plans to deal with all manner of circumstances so I fully appreciate the need and benefits of so many different programs and the great results they provide. I fully understand the financial implications and what people must do to manage the finances and all of the other difficulties it brings to family life. I have worked with some families for many decades and have seen the ups and downs and the end results; great, unfortunate, and sometimes tragic. We all face life and we all make choices, but it seems the more “other people’s money” is available there is an insatiable demand to spend it and in turn endless ways to develop programs, systems, and individual needs to make it bigger, better yet more taxing on everyone. Given global trends balancing these needs and the ability to pay will most likely get worse. But at some point we must stop dividing ourselves, pitting one group among us against another to justify that which we see as more important than what we think someone needs or wants. If we all want to work together to spend money we also must try to pay for it, a society must know its limits. I have decided to vote no on the override to send a message to our elected officials that we must stop creating divisions among ourselves. We must stop creating constituents, all organizing against one another to grab from other people to pay for what another constituent wants. My message to our town is to come back rapidly with a budget that treats all residents fairly both through taxes and benefits. I will vote for a budget that if fair, equitable, and limits spending such that families with average incomes can raise their level of real income after tax. Specific to the examples above I propose we roll back parking fees and come up with ways to limit spending like special education that has historically grown much faster than the overall budget. I have heard proposals that limit the annual and lifetime benefits a family receives from social services like special education but I would not in any way suggest this is the only program that should be limited. We have seen too many times that programs like drama, music, sports, languages, etc. all must be paid for by families that were previously part of the town budget. Talk about shooting ourselves in the foot. In today’s global economy with competition from every global citizen for jobs, cutting these programs harms our ability to compete globally. Over time our town budget has grown faster than inflation and despite this growth has chosen to fund other programs and cut those just mentioned above. In part these problems are partially related to choice at the state and federal level. These problems will not go away and in my opinion will get worse as government revenues will be challenged in real, inflation adjusted terms. The federal government is borrowing every day to make payroll, social, defense, interest on an exploding national debt, and all its other expenses. In short there is no more money in the checking account. This means there is less money from federal sources for state programs and less money from state budgets for local programs, which is exactly what Reading is experiencing. Like the private sector has done the public sector must use all manner of ways to work more efficiently including everything from technology to common sense and human ingenuity. Efficiency gains mean hard decisions, actions the public sector seems hard wired against. Assuming that if there is a need we should spend it, and if we spend it tax revenues will come is not a way to manage declining real tax revenues. Nor is the insatiable demand for other people’s money in a democracy a way to balance budgets.

If we want higher taxes, and I am willing to support them, the time is now to stop dividing and start working together, fairly, equitably, and in a financially responsibly process. Whether the override passes or not, these issues will persist. Going beyond demanding better behavior from elected officials each and every citizen must stop looking to government to solve all our problems, reduce all of life’s risks to zero, pay for all life’s trials, tribulations, needs, desires, and whatever we think is good and just. Government should limit its insatiable appetite to grow to meet this insatiable demand.

Respectfully,

Bernard R. Horn, Jr.

Public comment and legal points regarding mooring fee increases in Town of Rockport, Massachusetts

If one substitutes the word parking for mooring the comments are applicable to Reading’s increase in parking fees.

“Under Massachusetts Law, see below, towns may collect a fee for services provided to specific users, such as mooring permit holders. It is unlawful for a Town to levy taxes.

It is unclear what services Rockport provides mooring permit holders-and it certainly doesn’t amount to $20 per foot.

There are two small town docks. All dinghies are kept at either at Town Floats or SBYC floats, for a fee.

There are no specific boater services in Town, and even Town floats are launched with volunteer-mostly mooring permit holder-assistance.

The harbormaster’s office does provide assistance around the harbor, but also performs rescue functions at beaches, as shellfish officers, kayak rescues (perhaps the largest drain on their on the water resources), and assists general boaters and divers.

The Finance Committee wants mooring permit holders to pay to pay to maintain general assets, like wharves, docks, walkways and roads-the damage to the end of T-Wharf is on example, and cover the Harbormaster’s office costs. This is a blatant and unlawful attempt to raise taxes through fees targeted at specific groups, which is not legal or fair.

…

The collection of funds to apply to general maintenance of the Town is inappropriate and results in a tax, which the Town is not permitted to levy. The distinction between a fee and a tax is discussed in Emerson College v. Boston, 391 Mass. at 415. Emerson College involved a payment required of owners of certain types of buildings in Boston that consumed a disproportionate share of the city's firefighting budget. The required payments were to compensate the city for the cost of providing augmented fire service availability. If the required payments were taxes and not fees they would be struck down on State constitutional grounds. The court listed three characteristics which distinguish feesfrom taxes. HN5 "[T]hey are charged [***8] in exchange for a particular governmental service which benefits the party paying the fee in a manner 'not shared by other members of society,' National Cable Television Ass'n v. United States, 415 U.S. 336, 341 (1974); they are paid by choice, in that the party paying the fee has the option of not utilizing the governmental service and thereby avoiding the charge, Vanceburg v.FERC, 571 F.2d at 630, 644 n.48 (D.C. Cir. 1977), cert. denied, 439 U.S. 818 (1978), and the charges are collected not to raise revenues but to compensate the governmental entity providing the services for its expenses." Emerson College v. Boston, 391 Mass. at 424-425.

In this instance, the uses of the proposed funds go far beyond the services provided mooring permit holders-as it seeks to maintain infrastructure that is used by the general public and includes services afforded to the general public and other user groups. It is a new tax.”