In City Hall, the County Commission, and most importantly, the school board, politicians will be putting together numbers for the upcoming year.
The schools budget hasn’t been released yet, though it is expected on Tuesday, so a complete picture isn’t really available.
What we do know is thanks to a whole lot of economic factors outside of our control, and many more within our control (though few would admit it) we’re going to see a property tax increase in both Memphis, Shelby Co., and likely many of the municipalities that were once thought above such measures.
While we’re talking about an increase, Nashville Metro is talking about a small decrease in property tax rates.
Considering the overall economic climate, this may come as a surprise. I know I was surprised when I heard it. But the underlying reason Nashville gets a cut, while we’ll most likely see an increase goes to a whole lot of issues we, as a community have been unwilling to face. None of which, by the way, have to do with “spending too much”, though that is the most often cited reason.
Property tax is the single largest piece of the City and County “revenue pie”. As property values increase, the tax rate required to remain “revenue neutral” drops. As values decrease, the tax rate required must increase.
Almost no one wants to see critical services cut: Police, Fire and Trash Collection. Trash collection is its own thing, funded by a fee collected by MLGW, so tax rate has basically NOTHING to do with that (regardless of what Kemp Conrad says), but Police and Fire make up a huge percentage of the City budget. Law and order plays a big role in the County budget as well, though the impact is muted because the Sheriff doesn’t have to staff up the way municipal police departments do. The single largest issue the County has to deal with is education, which we’ll save for after the budget comes out.
The data in the above spreadsheet comes from the Census and from published tax rates and calculations listed in the budgets from each area.
There are a couple of things that should jump out at you immediately:
1. Value – The median home values in each area. As you can see, Nashville’s median value is much higher. This means they can collect the same amount of money without levying a higher tax rate. Shelby Co.’s median home value is one reason for our high tax rate.
2. Vacancies – Shelby Co. has a very high rate of vacancies compared to Nashville, and Memphis is an even higher percentage than that. High vacancy rates depress value and overall collections for two reasons: oversupply and weak demand brings down prices over time, and long-term vacancies not only mean lower collections from that home, but often many of the homes in the area as home values decline, especially if there is a high volume of vacancies in a specific area. (Note: Shelby Co. vacancies include Memphis vacancies, because, you know, Memphis IS in Shelby Co.)
None of this is new. We’ve known it for a long time. I’ll have to address why this is the way it is another day, but for now, lets just say both Memphis and Shelby Co. government have been chasing population rather than giving people a reason to stay. This is also reflected in outmigration information. Again, that’s a different post.
A lot of politicians believe that pushing for a tax hike is like getting Herpes. You might be able to manage it, but it will never go away.
This is due in part to politicians focusing on spending rather than what we get for said spending. Most people prefer a visible police presence in their neighborhood. Fully staffed and nearby fire stations bring down response times and, by extension, insurance rates, not to mention that your chance of survival if tragedy strikes is greatly increased.
Understand, we can’t have these things if we don’t have the money to pay for them.
At the same time, almost no one is talking about the conditions that play in to our tax rate, including oversupply, and vacant, often blighted homes. This depresses our ability to get the same level of service for a lower rate. Note, that doesn’t mean your tax bill will go down. Things still cost what they cost. It means the rate would be less.
The reality is, all this fussin’ about “tax rate” is double talk. Everyone with half a brain in their head knows you can’t field the same level of police or fire presence with substantially less money. It ain’t gonna happen.
But “tax rate” is the thing that fits on most political literature. It’s an easy sell. Its harder to explain to people that a series of policies you put into place helped raise home values.
So, in a sound bite driven world, what we end up talking about is what fits on a postage stamp, rather than the big things that actually play in to that “postage stamp” issue.
For a homeowner with a median value, increasing the tax rate in Memphis by the proposed amount will cost $70/year, or about $6/mo.
If you’re fortunate enough to have a million dollar home, it will run you about $60/mo.
In both cases, its pocket change relative to the income one must have to own such things.
Of course, the County is most likely going to raise Property tax rates as well. Even still that’s an increase of about $14/mo. Hardly the oppressive increase that we are told it will be.
When you talk to realtors, they give you a three main reasons people move: Crime, Schools, and Space…not necessarily in that order.
I’ve talked to a lot of realtors over the past several years, and none of them have said someone wanted to move out of Memphis because the tax rate is too high. I’m not saying there aren’t some people who do. I’m just saying its a tiny percentage.
Crime and Schools are the top two things that the City and County could actually tackle to keep people from moving (I don’t think they can do much about space) you have to ask yourself what have they done, and to what effect?
Here’s what they’ve done: They’ve inadvertently fed into the notion that neither are solvable problems.
How have they done this? In a couple of ways.
By threatening to reduce funds for public safety, and thereby planting the idea in people’s heads that the city will now become less safe because fewer police will be on the beat. If you’ve ever had your home broken into (and I have) this plants a seed in your mind that will eventually move you to action.
On the schools front, the lack of certainty, some of it real, some manufactured, and some imagined…along with low test scores and a general feeling that all is lost. This comes from leaders who choose to accentuate negatives as a political wedge to ultimately fund schools less in search of lower tax rates.
In both cases, this is about political rhetoric meant to shift blame from political leaders to “bureaucrats” in the various departments, or just any other political leader, rather than seeking real solutions to the County’s top two self-identified problems.
It’s baloney, pure and simple, and it shows a greater commitment to the four-year political cycle than the long-term health of our community…whether they mean to or not.
If we were really committed to addressing the long-term problems our community faces, we would redirect our efforts from the “Tax Rate Tango” to poverty cessation. 26% of everyone in Memphis lives in poverty. Another 36.6% is considered “working poor”. That’s nearly 63% of the total population of the City, or 410,000 people. Enough to fill the Liberty bowl almost 7 times.
High poverty means lower than average wages (about $7000 less than state household median), which translates to lower sales tax collections (less disposable income) and the necessity for lower housing rates (which means lower property values and less revenue per home).
This doesn’t mean the City needs to undertake a huge Welfare program. We already have that for Corporations…they’re called PILOTS. It means we have to do more to support efforts already underway by the Federal, State and County governments, as well as the litany of non-profits that work on these issues. It means we have to stop doing the same thing over and over again expecting different results.
Most of all, it takes a little “outside the box” thinking, and a commitment to correcting this issue.
How does that impact crime and schools? The short answer is poverty, crime, and low educational attainment are all intertwined. Poverty doesn’t cause crime or low educational attainment, but higher poverty rates correlate to them.
I’ll delve deeper into that in my next post.
Forty-Five years ago today, Dr. Martin Luther King Jr. was killed by an assassin’s bullet as he stood on the balcony of the Lorraine Motel in Memphis.
Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals. – Dr. Martin Luther King Jr.
King came to Memphis in support of a sanitation strike brought on by low wages and horrific working conditions that led to the deaths of two workers.
Despite the passage of these reforms, there were still many roadblocks to African-Americans in particular and the poor generally, receiving equitable treatment and access to opportunities that would help them overcome their circumstances.
In the final days of King’s life, he worked to organize a Poor People’s Campaign in search of economic justice not only for African-Americans, but for all of our nation’s poor.
The struggle of the Civil Rights Movement, which was born of a desire for equal rights, came to include the ideas of economic justice. It is a struggle that continues to this day, not only in Memphis, but around the country and impacts all of us.
“An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.” ~Martin Luther King, Jr.
Over the past forty years we’ve seen the fruits of King’s leadership come under consistent attack. Sometimes in ways that are hard to recognize.
The list of incremental changes over time is too long to even attempt to compile in one place, but laws that seek to limit people’s ability to exercise their rights, like the Voter ID bill, and efforts to hamper people’s ability to seek justice, like the Tennessee Civil Justice Act of 2011, which limits a company’s financial liability, have become the norm rather than the exception.
Yesterday I wrote about the value of work and how the notion of work has been turned on its head in recent decades. I wrote about a bill before the state legislature that would make it harder for people hurt in the actions of their work to be taken care of.
This kind of injustice is exactly what Dr. King fought against in his later years. In the years since his death, the concerted effort of one group to limit the access to justice has become commonplace both here in Tennessee and across the nation.
“He who passively accepts evil is as much involved in it as he who helps to perpetrate it. He who accepts evil without protesting against it is really cooperating with it.” – Martin Luther King, Jr.
Over the past forty years, there has been an organized assault on the ideas of economic and social justice.
This effort has taken many shapes, and been played out in many venues…from school boards to legislatures at the state and federal level, as well as everything in between.
It is well funded, and organized for a single purpose: to further tilt the playing field in support of those who have plenty and seek to accumulate more, in opposition to those of us who are seeking to simply make a life for our families.
Newscoma wrote about one such group, ALEC an organization that crafts model bills that are personalized for each state. As she notes in her post, we’ve had several of them.
These bills, which have been labeled “conscientious reform” by supporters, seek to make holding people accountable more difficult, especially when they have more resources. They represent an attack on economic justice for people who have few resources to fight for themselves.
By and large, there have been few organized attempts to bring light to the impact these bills would have on regular people. The struggle has been fragmented while the attack has been organized. The end result has been a steady erosion of justice by limiting access and stifling accountability.
The function of education is to teach one to think intensively and to think critically. Intelligence plus character – that is the goal of true education. – Martin Luther King, Jr.
The cause of true education, as King describes it, has been under attack by forces seeking to cripple public education for the past two decades. An increased focus on testing has led to curriculum focused on teaching to the test rather than critical thinking and problem solving skills that empower people regardless of their chosen profession or trade.
While the effort began before the passage of No Child Left Behind, this bill had a devastating effect on education by forcing educators to focus on rote memory rather than broader ideas of personal development.
The philosophical foundation of the act ultimately makes learners “consumers of education” rather than active participants. True education can no be based on a passive “consumerist” model. Students must be active participants engaging in a dialogue to truly gain the “intelligence plus character” that Dr. King mentions.
This notion of consumerism is furthered in legislative efforts that have followed.
The concept of “school choice”, either through transfers, charter schools, or voucher programs, resonate with parents seeking to give their children the best opportunity to gain a quality education. This idea is based on this same consumer model predicated on personal resource availability, time, transportation, and money, that, by default, exclude those who lack resources.
In Tennessee, bills seeking to hobble teachers unions, state nullification of local charter school decisions, school voucher programs, and stiff economic penalties for the poor who do not meet state educational standards, AKA “Starve the Poor” bills have made, and are making their way through the state legislature.
These initiatives seek at once to reduce investment in education, place public dollars in the hands of private entities that are largely unaccountable in the public sphere, and most importantly, distract from the economic circumstances brought on by decades of economically unjust fiscal policy in the service of wealth concentration for the mighty few rather than opportunity for the common good.
This is similar to Dr. King’s opposition to the Vietnam War, which sucked resources away from domestic programs, and led to a global financial showdown that paved the way for the trickle down economics that would dominate the 1980′s and begin a trend of wage stagnation that continues to this day.
The righteous care about justice for the poor, but the wicked have no such concern.
Dr. King’s work is most closely associated with social justice and racial equality, particularly through his I Have a Dream speech. But his legacy cannot be defined by that one awe inspiring event.
Dr. King’s vision went beyond the struggles of his day, and is owed the consideration of his later efforts, including those that led to his life being cut tragically short here in Memphis.
His later work focused on the broad ideas of justice and were targeted at helping the economically disadvantaged.
I think it was and still is difficult for people to understand the potential outcomes of this effort.
While focused in the south and primarily on African-Americans continuing their struggle for equality, his work didn’t just apply to one race, but to all who fell under the grip of poverty. I feel confident that over time this effort would have expanded to poor white coal miners in West Virginia, and migrant workers in California.
We never got to see what would come of Dr. King’s leadership on economic justice. His life and work was cut short.
We can continue to take cues from his leadership, and push on, continuing the struggle, through out tireless exertions and passionate concern, dedicated to the service of justice.
In fact, we have a duty to that very thing.
To my dismay, it was not.
Politicians did react, almost immediately. This message from the Tennessee House Minority Leader, Craig Fitzhugh is one of the more comprehensive statements. As I mentioned yesterday, Rep. Mike Stewart (D-Nashville) has the quote of the day, simply calling Haslam a coward.
There’s been little analysis of the walking away from the positives expansion would have brought…not to mention the additional 10,000+ jobs that would almost immediately follow. Nor has there been much mention of the 300,000 working class people left in the lurch, or the 1.1m people who live in counties that will have no hospitals…and likely lose most of their doctors as a result.
The map above is just another visualization of the map I published in yesterday’s post.
Numbers don’t tell the personal stories of those impacted, but they can give us an idea of the scale, size, and scope of a problem, and how that might negatively impact people.
While everyone needs healthcare, there are some groups that, because of their circumstances, need it to be closer to home than others. Those groups are: Children, the elderly, and the poor.
Below are some charts that detail just how many people will be directly impacted in each of those groups for the counties that are most likely to be left without a hospital (Hospital Deserts).
As the last chart shows, nearly 49% of the people in these 30 counties are at risk of having a catastrophic health event and suffering more than they should due to the lack of hospital availability.
Does that mean 49% of the population will have a catastrophic event?
Not necessarily, but placing people in undue risk for political purposes says something about a person. It speaks to the weight they put on the value of people’s lives and livelihoods.
While these 30 counties will feel the impact more harshly than all the counties that will lose hospitals, all the counties will feel an economic impact.
I’ll cover that in more detail in a future post.
Even those who are doing better than average are nervous about the economy.
What we’ve learned in the past several years is that no one is immune from the poor decision making of others…and when those poor decisions involve billions of dollars, the impact is far reaching.
But the money I’ve been thinking about has less to do with my personal financial situation (decrepit as it is) and more to do with the impact of the sequester, which is predicted to send the economy into another recession if it goes into effect.
I’m not really interested in going into the guts of the cuts involved in sequestration. Rather, I’m more interested in looking at the impact on all of us, beyond the D.C. rhetoric. Even further than that, I want to look at the impact of government spending on our economy.
Total government spending in the US economy (Federal, State and Local) is about 35% of our GPD. This includes everything from Social Security to Defense spending to road construction. That number has steadily increased from 17.1% in 1948.
There are a lot of people who feel this spending is bad. They believe that private enterprise can put this money to more efficient use.
I’m not sure that many private businesses are interested in building roads or providing for defense and history has shown us that private business will raid pension funds when times are tough. With those realities in mind, the thought of private business providing for anyone but private business is laughable.
But there’s another thing to consider…we haven’t really been spending all that much more on stuff. We’re just getting older.
Where we’re spending
In 1948 government spending accounted for 17% of GDP. Social Security, which was in its infancy, accounted for .2% of that.
In the 65 years since, we, as taxpayers, have been paying into Social Security and later Medicare for our entire working lives. We did this because the government decided, on our behalf, that by doing this we would not be left destitute in our older years. We would have something…though not that much, but better than nothing.
Since 1948 Social Security and Medicare spending has increased from .2% of GDP to 8.6%. And rightfully so. We’ve had two whole generations of workers who put money into the system…many of whom are now getting that money back.
This is how it was supposed to work…and, it’s working.
The truth is, government spending outside of Social Security and Medicare have only increased about 3% to 19.7% of GDP. Considering how much we’ve grown in stature and reach over the past 65 years, this meager increase doesn’t seem like a whole lot.
Is it more money than before? Sure it is. A lot more. But a soda also isn’t a nickel and gas isn’t a dime a gallon anymore.
Why We Can’t Renege on Our Promise
When we talk about cutting Social Security and Medicare, we’re talking about breaking a promise to people who paid into the system their entire lives.
Many of these people are low income workers. That doesn’t mean they worked any less…in fact, they probably worked more and did harder work. It just means they made less money.
Cutting money from Medicare, which stands to lose 2.5% of its budget under sequestration, will mean that hundreds of thousands of older Americans will have their one link to healthcare cut.
That hardly seems like a way to reward someone for a life of hard work.
Its Not Just Medicare
The vast majority of the cuts under sequestration are not to Medicare, but considering the amount of money we’re talking about, it does mean a loss of jobs.
Job losses impact Social Security and Medicare because it means fewer people paying into the system.
This situation also basically ensures that government spending…of the kind most Republicans abhor, will have to be ramped up at an alarming rate as 1 million workers lose their jobs (bringing more unemployment claims) and the economy goes into recession (which will cause even more unemployment claims).
Make no mistake about it, this increase in the very spending they seem to hate the most will be their fault. They wanted this. They pushed for it. If the sequester holds, they’ll be getting it.
A Real Solution
If Republicans really want less spending, they should be working diligently to improve the economy. They should stop blocking legislation in search of a political win. They should come with real solutions other than tax cuts that haven’t worked for 40 years.
More people working means fewer people needing unemployment and other things they deem “entitlements”.
But real solutions aren’t on the menu. Gamesmanship is. Until that changes, the “out of control spending” that Republicans keep complaining about will continue.
There’s plenty of time to talk about whether or not the Government (at all levels) should play this much of a role in the GDP. Truth be told, businesses of all shapes and sizes benefit from it.
Business doesn’t want this spending to stop…they just want a bigger piece of the pie. That’s where cuts to “entitlements” go if the GOP Congress from the first 6 years of the Bush 43 administration is any indication, and even that didn’t pull us out of a slowing economy. It just created a jobless recovery and stagnating wages.
If Republicans are really interested in reduced government spending at all costs, I suggest they strike it from their districts. Refuse it. Put their money (of absence of money) where their mouth is. The only Republican I’ve ever seen do this is State Senator Brian Kelsey. Good on him. He’s sticking to his ideology at all costs.
For the rest of the Republicans in office it will never happen. Because the true GOP mantra is government money for me, and not for thee.
schadenfreude: pleasure derived by someone from another person’s misfortune.
So I know just about everyone is talking about the NRA’s crazy town response to the Newtown shootings. I think all that needs to be said about the speech delivered Friday is nicely summed up here.
Quite frankly, I’m shocked that anyone was shocked by that announcement. LaPierre has been spouting crazy for the NRA since 1991. Same song and dance, over and over again. It ain’t about gun ownership…its about gun sales. Manufacturers pay the bills at the NRA. Don’t forget it.
So aside from providing a distraction, the NRA event was irrelevant. Unfortunately for everyone, a distraction was needed, in the wake of the massive failure to herd feral cats, some called the display “a clown show”.
It’s important to remember is how we got here, where it started and who is responsible.
November, 2010 – A wave of of GOP wins in Congressional races, led by 40 candidates claiming “Tea Party” affiliations, leads to the composition of the US House of Representatives flipping from 255 Democrats to 242 Republicans.
August 2, 2011 – In the wake of a contentious battle over the debt ceiling limit, the Budget Control Act of 2011 was passed with bipartisan support. The bill raised the debt ceiling and put in place a series of deep budget cuts and tax increases if the Congress could not reach an agreement.
66 Republicans voted against the deal, which would not have passed without Democratic support.
August 5, 2011 – In the wake of the vote on the Budget Control Act, Standard & Poor’s downgraded the US Credit rating stating concerns with the current state of political affairs in the Congress.
February 2012 – Fed Chairman Ben Bernake coins the term “fiscal cliff”.
July/August 2012 – On July 25th the US Senate passed a proposal that would have avoided the tax increase portion of the fiscal cliff. The proposal was rejected by the House on August 1st.
November 2012 – Elections result in more GOP moderates losing. Democrats gain 8 seats in House. Incoming makeup of the House: 201D – 234R. Incoming makeup of the Senate: 55D – 45R
December 2012 – Negotiations between Speaker Boehner and President Obama net a compromise. Said compromise not brought before the House. Boehner’s bill pulled for lack of support. The House did pass a bill dealing with spending cuts, however that bill has little chance of passage in the Senate and faces a Presidential veto.
This list is hardly exhaustive, but mentions most of the highlights. Had Republicans not tried to make political hay over increasing the debt ceiling, we wouldn’t be where we are today.
Now I want to be very clear here: while I do get some pleasure from the outright #FAIL that was the Speaker’s effort to pass a watered down version of what he and the President were negotiating, I also understand that a failure to act by the end of the year will have some serious consequences for regular folks. Those consequences will be immediate for all of us, though many of them will have a limited impact.
If they fail to act, the payroll tax cut will disappear, the Bush era tax cuts will disappear, and some pretty stiff spending cuts that no one seems to want will be enacted.
What does this mean to you? Well based on the median household income you will see about $1000/yr less as a result of the payroll tax hike, about $1500 less as a result of the income tax hike, and a whole lot fewer services.
Interestingly, if the Obama proposal were to pass, a household making the median income would see a tax DECREASE of about $225/yr (payroll and income) rather than the increase of $2500 House Republicans seem to favor in the wake of their inaction. You can see how the fiscal cliff and the Obama proposals would impact your income here.
(Note: The tax calculator is provided by the anti-Keynsian, pro-business group The Tax Foundation. They bear responsibility for any inaccuracies.)
The financial impact of failure for household incomes is pretty dire. Considering that inflation adjusted incomes have been flat since 1967 for 80% of the population, losing $2500 for a median income represents a nearly 5% hit in real purchasing power. That’s not going to be good for an economy that is just really starting to emerge from weakness. Add to that increased instability from a potential market panic and Joe 6-pack is going to take a huge hit.
Investors know this. They make lots of money knowing this. And while we haven’t seen an increase in incomes to rival the increase in markets (1967 Dow was 825, 2012 Dow was 13190.84 as of the closing bell on Friday, a nearly 1600% increase), the panic that will ensue due to uncertainty if the fiscal cliff is not avoided will hurt average Americans more than investors, who will certainly lose wealth, but not much standing.
Investors have more ways to make money in the face of a market panic that regular folks don’t, including betting on failure. This kind of risky bet is usually only played by the wealthiest individuals and huge investment houses. It may seem counter-intuitive and to fly in the face of what we consider to be patriotic, but remember, in the church of the almighty dollar, anything goes that makes you rich.
Plenty of folks profited from the pain of the Great Depression and the more recent “Great Recession”. There will be winners if a huge market panic ensues come Jan. 2 as well.
Joe 6-pack won’t be one of them, so don’t even think about it.
I feel confident that a solution won’t be found before the end of the year. The House Republicans don’t seem to have the will to give any ground, and in their disarray they have given their Democratic counterparts some resolve to stand their ground. With 201 incoming votes, it will take just 17 Republicans to pass a Democratic measure…should it reach the floor. That seems like a possible scenario now that people are starting to point to conservative recalcitrance as the problem.
The Senate has already passed a bill, which was rejected by the Tea Party led House in August. The House could take the measure back up if they chose to. I can’t imagine that happening before the end of the year. I just don’t think the votes are there before the end of the year.
This means that a market panic is almost a certainty come Jan. 2. The next Congress convenes the next day. We’ll see what they do, but I’m putting my money on passing something like the Senate proposal and dealing with the spending side later…probably right before the next debt ceiling vote which will need to happen before February of 2013.
In the current climate, I just can’t see this leadership actually…you know…leading.