Tax Cap

Dear Islanders,

I read a letter about taxes, written by one of our elected officials, in last week’s Dispatch. It was so disappointing. To see a letter so deliberately misleading and manipulative just about made me want to give up on society, grow a beard, and go to the wilds of Alaska to live off berries and tree moss. But I won’t do that. I will instead try — maybe in vain — to set things right.

Our town is fiscally healthy

We have a great Town Accountant. She drives me nuts, yes, but she's capable. She once told me there were allegations that I wear makeup, which made me laugh. It confused me too, but I digress. Our Town accountant is a tough, talented woman.

Through her diligence, our town has achieved a phenomenal credit rating. It’s basically the equivalent of an 840 credit score. That means we can borrow money at very low rates. And that means we need less of your tax money to run this town.

And I might add, our taxes are relatively low. I often here that “I’m being taxed out of Grand Island.” But even in Tonawanda, Amherst, Cheektowaga, and other comparable towns, the property taxes are much, much higher. In fact, we have one of the lowest tax rates of any local municipality. School and State taxes are beyond my control, but I know that on the town level, we are running a pretty tight ship.

Some of our fund balances actually went up last year. We have seven different funds from which we run the town. And most of those fund balances are plump, which is a big part of the reason our credit score is so good. So, you might be thinking, “Then what’s all this noise about Nate wanting to raise taxes?”

Your taxes go up every year

Every person on the board voted to raise your taxes last year. And the year before that. And the year before that. And the year before that.

“Wait!” You might say. “Stop raising taxes!” I understand, but the amount we raise taxes is usually just enough to cover inflation. The budget changes very little from year to year. But the costs of certain items, like rock salt, for example, goes up. And so slight increases occur (and have occurred) for generations.

To actually lower taxes you need to cut services. It’s that simple. Right now, for about 100 bucks (85 bucks if you are not in a sewer district) per household per month you get police protection, fire protection, a Golden Age Center, garbage collection, a recreation program, a parks program, a highway program, and all the administrative functions of Town Hall. PLUS, you get water to your house and waste taken away (infrastructure).

The town is not perfect, but that’s a heck of a deal for about 100 bucks a month. That’s what the combined buying and bargaining power of government gets you. There is a reason we don’t all live separately as hermits. Plumbing can be nice. And sticking together and working together (sharing tax proceeds for leverage) makes some things easier. 

So, what’s all the noise about this year?

Hint: it’s politics. Our Town Accountant — the one who has gotten us this killer credit rating and saved you money — has recommended that we pass a local law to go over the 2 percent “tax cap.” That “cap” is a law created by Gov. Andrew Cuomo. I may joke about tax-and-spend liberals, but in many ways Cuomo has been an extremely fiscally conservative Governor.

Before you lambast me with “I knew it! Nate’s praising the Governor again. They are working on some grand scheme to control America.” I must cut you off. If you think that, please just stop reading. No amount of logic or factual evidence will persuade you. Instead, please close your eyes and imagine you are reading a piece titled “McMurray Exposed: Makeup, Madness, and the West River Bike Path.” You will feel much better in that fantasy.

For those of you still reading and interested in reality, however, please understand that where, on one hand the state demands we stay under the tax cap (or pass an annual override), they also demand that we spend certain amounts of money.  Specifically, we must build new sewers (or we get hefty daily penalties) that reduce the amount of wastewater in the river.

Raise taxes a bit more than usual; or gut the town

The mandatory sewer investments will cost millions and millions over the coming years. And there is nothing either myself or anyone else on the town level can do to change that. To put it simply, it’s the law. We are legally required to update those sewers. And it’s been hanging over our head long before I was Supervisor.

But I will execute the plan to do what we have to do. We will find a way. Now, to pay for those improvements we can either raise taxes slightly higher than usual, or to put it in a more explosive way, “BREAK THE TAX CAP.” I guess there is another option. We could just find tricky ways to gut our town’s fund balances.

What it means to gut the town

Legally, mind you, we can’t gut our fund balances to pay for sewers. The reason being is, you can’t take one from one fund to pay for another fund. But remember I said “legally.” As a lawyer, I know there are people who can use and abuse the law. And we could possibly use some tricky accounting to gut the town to pay for the sewers. This will give the public the illusion that we are fiscally wise and have preserved the tax cap. But if you are into illusions, I politely asked you stop reading about three paragraphs ago. For everyone else, keep reading.

Now that we’re back in the real world, if we start finding tricky ways to use fund balances to pay for sewers, our fund balances will erode in a very short period of time. And then so will our juicy credit rating. And then our services. Do you think we should preserve our nice parks, our Golden Age Center, and our roads? So, do I. But to do that, we need to prudently use some of our precious savings, and we need to make budgets based on the long-term interests of the town.

The alternative—be smart and raise taxes 20 bucks

Why do I say 20 bucks? Because that is the difference between what our normal tax increase will be (under the cap) and the increase we need to pay for the sewers without starting to gut the town. If you don’t believe me, ask our Town Accountant. She made a very public presentation at a board meeting about it. It's on tape if you want to see it.

Let me say this as clearly as I can. In the past, there was no tax cap. They used to raise the taxes well beyond 2% all the time. We can follow the history back to the 70s. If we had been under Cuomo’s tax cap since the year 2000 (it started in 2012) we would not have any fund balances left. We would be in the red many, many millions of dollars.

Let’s be smart

Despite all these facts, some seem desperate to build a political career, and want to say they never voted to break the cap. You can side with them. That’s your right. And maybe we can whittle away a bit at our funds this year and survive. But over the long run, we can’t maintain our town that way.

But if I was uninformed, and one side had a bumper sticker saying, “Nate wants to BREAK THE TAX CAP,” I might listen to that. It’s a lot more dramatic than the other side — this letter and our Town Accountant’s presentation — which explains how the town finances actually work. But if I was into believing every attention-grabbing thing I heard, I might believe Nate wears makeup, has secret budgets, and attends top-secret meetings with high-ranking politicians to build yurts. See you in Alaska.