So, it's "budget season." And our crack Commissioner/Architect/Attorney/Accountant/Manager/Arborist is on the case again. He sometimes says he's been through five budgets in his tenure to date. Others say he's been through one budget, but he's been through it five times. The latter appears to be more accurate in that he asks the same questions of two different Managers and three different Finance Directors, and no matter what answers he's given, or how many times he's given them, he always votes against the budget. He seems to approach this exercise by saying, "The answer is no; what's the question?"
And his methods are always the same. He asks a million questions, in much more detail than anyone else, he insists on asking them in advance and getting advance answers, and then he asks them again in workshops and again at budget hearings. He appears to have forgotten that under his leadership, a Charter Review Committee recommended a significant change in the Charter, the Commission agreed with him, and a majority of voters also agreed with him. The change was to use a professional manager to oversee the functioning of the Village. But from the day he became a Commissioner himself, he has been inexorable in bucking one Manager, then another, at absolutely every step along the way. He has been explicit in letting it be known he does not want a Manager making decisions for the running of our Village. It appears he wants to make the decisions. It's never made clear what he intended in suggesting we switch to a Manager form of management, or what he thinks the Commission at the time meant by agreeing with him, or what he thinks the rest of the residents of the Village meant in agreeing with him. Perhaps he anticipated that he would become a Commissioner himself some day, even explicitly attempted to install himself as Mayor, and was simply arranging for the Village to hire him an Executive Secretary. It was a very significant and expensive change for us, so I hope he was expecting to be Mayor, or Emperor, or whatever he had in mind, for a very long time.
So now, he is complaining about Village finances. Central among his complaints is that oversight of them is tardy. In case anyone thought he had no insight about why they might be tardy, he himself airs a quote from the Manager: "Continuing to answer your ongoing e-mails and requests is putting us in a position of halting our operations." This is in English, and he quotes it. In bold. So we have to assume he understands it. He is creating the problem of which he then complains. But in case anyone thought the Commissioner was entirely without empathy, he does address the Manager's complaint. He declares it untrue. We learn from him that his hectoring, nagging, dragging, gnat-like, time-consuming, spitball-launching approach to dealing with our administrative staff does not in fact interfere with their ability to function, and we know this because the Commissioner tells us so. So there.
Do you know the joke about the mother who gives her son two ties for his birthday? He goes to his room, and comes out wearing the blue one. Oh, she whines, you didn't like the red one? That's what our dear Commissioner does, except he isn't nearly as whiney and pathetic as he is passive-aggressive and deliberately sabotaging. He demands what he doesn't need and isn't entitled to, then complains when he gets it, and other responsibilities are set aside to provide it for him. Or he complains when he doesn't get it. It appears most likely he doesn't much care whether he gets what he requests or not. His goal is to complain and criticize, and he is laser-like in his ability to find something to criticize or about which to complain. It's like that obnoxious game we played in elementary school, when we would enter into a conversation with another child and simply, repeatedly, mindlessly, annoyingly, frustratingly respond to anything the other person said with "why?" It gets old in a hurry, even for the brat doing it. Most of us gave it up very long ago. But not all of us.
So it seems we once bothered our Commissioner friend by having a Manager he considered incompetent. Now, we have another Manager he apparently also considers incompetent. It's hard to know what to do here. Do we conclude we are batting 0.000 in trying to find a quality Manager, because one Commissioner says so, or do we conclude that the majority of Commissioners, in two different Commissions, are probably more right than one and a half Commissioners who complain about the Managers, and in fact complain about everything? Is it hard to do this math?
Thursday, August 18, 2011
Wednesday, August 3, 2011
Whew! In a twisted sort of way.
At the Commission meeting last night, we concluded a critical phase of budget deciding. We established a maximum rate to charge for property tax against assessed property value. This is called the TRIM. We can set any rate we want, from nothing to 10 mills. A mill is worth one thousandth of the assessed value of a real property. So if we charge 5 mills of assessed value (assessed value minus homestead exemption), a net $300K property will have a bill of $1500. If we charge 10 mills, it's $3000. For the rest of this discussion, there are four numbers to keep in mind: 10, 9.2661, 8.9933, and 8.90. Three of them have some sort of identifiable rationale, and the other has no meaning whatsoever. We'll come to that.
The Village has had some tough times in recent years, as have all municipalities. There have been foreclosures, which produce no property tax, and general devaluation, which means that the assessed values have dropped, for no reality-based reason, and therefore so has the tax. In addition, the homestead exemption, which is an amount that is not subjected to taxation, was doubled. So the Village has three sources of revenue loss. There is one kind of property that has not only not produced less tax, it has produced more tax than the year before. These are properties that were purchased sufficiently long ago, at low enough price, with homestead exemption in place, so that the tax owed in a market of rising real estate values soon enough was under the standard for like-market value properties. Just to illustrate this, if someone bought a property for $100K years ago, and fixed the tax rate through homestead exemption, and through increasing real estate values, that property is now worth $350, the tax paid is based on the original purchase price, not the current market value. If the homeowner sells the house for $350K, the new owner will pay a much higher property tax, for the exact same property. The implication for the Village, and for the homeowner with the longstanding homestead exemption is that the Village collects only the tax the homeowner is required to pay, which is inadequate, and the homeowner's tax can increase every year, but only by 3%. So those homeowners will experience a tax increase even when assessments are falling and homestead exemptions are doubling, because they're so far behind real value.
This, then, is what the Commission and the Manager confronted when they had to agree to a TRIM. The question for Commissioners was what is the maximum possible property tax they should consider assessing. Obviously, this depended in part on how much they all thought the Village would need, which is a guess. Other factors included what anyone thought would happen to assessments and the rate of foreclosures, which is also a guess, and what kind of number, in terms of the sound of the number, they wanted to pick. This is not a rational factor, but it's there.
Now before we go further with this discussion, we need to keep something in mind. It's sort of critical to deciding how to approach the matter of the TRIM. The Village of Biscayne Park is an unusual, if not almost unique, place. We have fewer and more limited sources of revenue than most places do. We have no businesses, no industry, and no opportunity to assess tolls on people. We're on our own. The clearest demonstration of this fact is that we derive 5/6 of our entire revenue by charging ourselves. Half of the Village's revenue comes from the property tax, and an additional third comes from utility Franchise Fees. All of this is just our money, which we give to ourselves. Another illustration of our special character, and the fact that we know it, like it, and prefer it that way, came also from last night's Commission meeting. The matter of fences was discussed, especially the prospect of fences in front yards. Almost no one favored the idea. Almost every resident who spoke expressed a fondness for a quaint, open, charming neighborhood, different from nearby neighborhoods or even from any neighborhoods. So the bottom line is we have to fend for ourselves if we like ourselves the way we are, and we want to keep us that way.
Fifteen or 16 months ago, we made a decision. We signed a Franchise Agreement with FPL. This was a major bullet we dodged. Had we not signed, FPL would not have collected the Franchise Fee, which it returns to us, accounting for part of that third of our revenue. To make matters worse, the County would have collected the Fee from us anyway, and there is a reasonable likelihood it would not have returned the money to us. This would have cost us about $120K per year in Village revenue. Those who agitated not to sign the Agreement (amazingly, there were such people) suggested we could capture the revenue in some other way, leaving us to pay the amount twice, instead of once, but no other legitimate and reliable method was offered. So more rational heads prevailed, and a bullet was dodged.
Last night, we were not quite so lucky. We caught a bullet. The wound was not fatal, but it will be damaging. Recall those four numbers. Our currect millage is 8.9933 mills. This has produced a certain level of revenue for the past year, but at the same millage rate, the revenue goes down, because more devaluation has occurred in the past year. An alternate proposal was to charge ourselves at the rate of 9.2661 mills, which takes a higher percentage of a lower valuation and results in the same tax bill for homeowners and the same revenue we had this past year. Yet another proposal was based on the understanding that the TRIM is a maximum possible tax, which can be lowered after further exploration if necessary, and is respecful of the fact that the budget is only a guess anyway. So the suggestion was to declare the highest TRIM allowable, at 10 mills, and this could be lowered if we found on closer inspection of the budget that we could get along on less. And the TRIM, for statutory reasons, can be lowered after it's set, but it can't be raised.
So these three suggestions had an at least loose rationale. One represents the rate we've been living with, even though the tax decreases because assessed values have decreased. Another represents an adjustment that allows the Village to receive the same revenue it lived on last year. This doesn't take into account that things tend to get more expensive over time, but there's an at least loose theory to attach to. The last proposal was in many ways the most sensible. Since we can always lower the final agreed tax rate from whatever the TRIM guess was, since we haven't scrutinized the budget, and since we've already had to take money from the reserve, why not set the TRIM as high as we can? Each of these, then, has a kind of meaning and logic.
The one proposal that had no meaning, no logic, and disrespected the rising costs of things, the Manager's efforts to date to economize, the fact that we have frozen many wages in the Village, and the fact that we have already invaded the reserve, was the proposal to set the TRIM, the highest possible tax rate, at 8.90. This is below what it is now, which itself pinches us further than we have been pinched already. And the number was completely arbitrary and was intended to apply irrevocable pressure on the Manager, all Village employees, and the Village as a collection of residents. Had that TRIM been accepted, the injury would have affected vital organs. The Commission had enough wisdom not to shoot itself, and the rest of us, quite that directly. It did not, however, have enough wisdom to do the patently sensible thing, and adopt the 10 mill TRIM, or even the revenue-neutral thing, and adopt 9.2661. So we're left with 8.9933, which is less this year than it was last year, which prevents us from giving appropriate raises to all of our employees, which does not allow us to keep our facilities in top condition, which does not allow us to make improvements most of us agree need to be made, and which causes us to relieve fiscal pressure at the expense of the reserve.
So not a great night for our Commission. Why the "whew?" It could have been worse. We could have made a suicide attempt last year, and foregone the FPL Franchise Fee, and we could have finished the job by adopting a completely irrational TRIM last night. So "whew!" Sad, huh?
The Village has had some tough times in recent years, as have all municipalities. There have been foreclosures, which produce no property tax, and general devaluation, which means that the assessed values have dropped, for no reality-based reason, and therefore so has the tax. In addition, the homestead exemption, which is an amount that is not subjected to taxation, was doubled. So the Village has three sources of revenue loss. There is one kind of property that has not only not produced less tax, it has produced more tax than the year before. These are properties that were purchased sufficiently long ago, at low enough price, with homestead exemption in place, so that the tax owed in a market of rising real estate values soon enough was under the standard for like-market value properties. Just to illustrate this, if someone bought a property for $100K years ago, and fixed the tax rate through homestead exemption, and through increasing real estate values, that property is now worth $350, the tax paid is based on the original purchase price, not the current market value. If the homeowner sells the house for $350K, the new owner will pay a much higher property tax, for the exact same property. The implication for the Village, and for the homeowner with the longstanding homestead exemption is that the Village collects only the tax the homeowner is required to pay, which is inadequate, and the homeowner's tax can increase every year, but only by 3%. So those homeowners will experience a tax increase even when assessments are falling and homestead exemptions are doubling, because they're so far behind real value.
This, then, is what the Commission and the Manager confronted when they had to agree to a TRIM. The question for Commissioners was what is the maximum possible property tax they should consider assessing. Obviously, this depended in part on how much they all thought the Village would need, which is a guess. Other factors included what anyone thought would happen to assessments and the rate of foreclosures, which is also a guess, and what kind of number, in terms of the sound of the number, they wanted to pick. This is not a rational factor, but it's there.
Now before we go further with this discussion, we need to keep something in mind. It's sort of critical to deciding how to approach the matter of the TRIM. The Village of Biscayne Park is an unusual, if not almost unique, place. We have fewer and more limited sources of revenue than most places do. We have no businesses, no industry, and no opportunity to assess tolls on people. We're on our own. The clearest demonstration of this fact is that we derive 5/6 of our entire revenue by charging ourselves. Half of the Village's revenue comes from the property tax, and an additional third comes from utility Franchise Fees. All of this is just our money, which we give to ourselves. Another illustration of our special character, and the fact that we know it, like it, and prefer it that way, came also from last night's Commission meeting. The matter of fences was discussed, especially the prospect of fences in front yards. Almost no one favored the idea. Almost every resident who spoke expressed a fondness for a quaint, open, charming neighborhood, different from nearby neighborhoods or even from any neighborhoods. So the bottom line is we have to fend for ourselves if we like ourselves the way we are, and we want to keep us that way.
Fifteen or 16 months ago, we made a decision. We signed a Franchise Agreement with FPL. This was a major bullet we dodged. Had we not signed, FPL would not have collected the Franchise Fee, which it returns to us, accounting for part of that third of our revenue. To make matters worse, the County would have collected the Fee from us anyway, and there is a reasonable likelihood it would not have returned the money to us. This would have cost us about $120K per year in Village revenue. Those who agitated not to sign the Agreement (amazingly, there were such people) suggested we could capture the revenue in some other way, leaving us to pay the amount twice, instead of once, but no other legitimate and reliable method was offered. So more rational heads prevailed, and a bullet was dodged.
Last night, we were not quite so lucky. We caught a bullet. The wound was not fatal, but it will be damaging. Recall those four numbers. Our currect millage is 8.9933 mills. This has produced a certain level of revenue for the past year, but at the same millage rate, the revenue goes down, because more devaluation has occurred in the past year. An alternate proposal was to charge ourselves at the rate of 9.2661 mills, which takes a higher percentage of a lower valuation and results in the same tax bill for homeowners and the same revenue we had this past year. Yet another proposal was based on the understanding that the TRIM is a maximum possible tax, which can be lowered after further exploration if necessary, and is respecful of the fact that the budget is only a guess anyway. So the suggestion was to declare the highest TRIM allowable, at 10 mills, and this could be lowered if we found on closer inspection of the budget that we could get along on less. And the TRIM, for statutory reasons, can be lowered after it's set, but it can't be raised.
So these three suggestions had an at least loose rationale. One represents the rate we've been living with, even though the tax decreases because assessed values have decreased. Another represents an adjustment that allows the Village to receive the same revenue it lived on last year. This doesn't take into account that things tend to get more expensive over time, but there's an at least loose theory to attach to. The last proposal was in many ways the most sensible. Since we can always lower the final agreed tax rate from whatever the TRIM guess was, since we haven't scrutinized the budget, and since we've already had to take money from the reserve, why not set the TRIM as high as we can? Each of these, then, has a kind of meaning and logic.
The one proposal that had no meaning, no logic, and disrespected the rising costs of things, the Manager's efforts to date to economize, the fact that we have frozen many wages in the Village, and the fact that we have already invaded the reserve, was the proposal to set the TRIM, the highest possible tax rate, at 8.90. This is below what it is now, which itself pinches us further than we have been pinched already. And the number was completely arbitrary and was intended to apply irrevocable pressure on the Manager, all Village employees, and the Village as a collection of residents. Had that TRIM been accepted, the injury would have affected vital organs. The Commission had enough wisdom not to shoot itself, and the rest of us, quite that directly. It did not, however, have enough wisdom to do the patently sensible thing, and adopt the 10 mill TRIM, or even the revenue-neutral thing, and adopt 9.2661. So we're left with 8.9933, which is less this year than it was last year, which prevents us from giving appropriate raises to all of our employees, which does not allow us to keep our facilities in top condition, which does not allow us to make improvements most of us agree need to be made, and which causes us to relieve fiscal pressure at the expense of the reserve.
So not a great night for our Commission. Why the "whew?" It could have been worse. We could have made a suicide attempt last year, and foregone the FPL Franchise Fee, and we could have finished the job by adopting a completely irrational TRIM last night. So "whew!" Sad, huh?