This Opinion appeared in the Daily Herald newspaper May 30, 2012. This is not the entire piece. Please refer to the link to see the entire article.
Herald Extra.com
MAY 30, 2012 12:05 AM
"Orem may have a citizen
rebellion on its hands over a plan to raise property taxes by nearly 50 percent
to cover projected shortfalls in city operations as well as payments on the
lethargic (read failed) UTOPIA fiber-optic network.
Officials are asking for a
$3.3 million tax increase -- $2.8 million to make the year's UTOPIA payments
combined with $477,000 for pay raises for city employees. They don't like
looking at it that way, but it fits.
Those two items alone
account for the total tax increase. What is less easy to see is the $600,000 of
new revenues, which can be used for maintaining Orem's current level of
services to residents. Some new police cars are needed, along with increases
for gasoline, maintaining the swimming pool, fertilizing the parks, etc.
City leaders meeting with
the Herald editorial board last week said they prefer to view the budget as a
whole, rather than singling out certain line items for blame. So, while $3.3
million does represent the total shortfall, they'd rather stir operations,
compensation and UTOPIA into a larger budget soup.
We don't blame them. But
it is quite natural for taxpayers to note the total increase of $3.3 million
and ask what it's paying for.
The boat anchor, or
course, is UTOPIA, which was supposed to be Orem's grand entry into the
high-speed digital age. Unfortunately, like the iProvo network next door, it
can now be labeled a boondoggle.
UTOPIA is the gift that
keeps on taking. Not only are residents of the city obligated to pay $2.8
million in the coming year but they must make higher payments each year for the
next 28 years. Payments are scheduled to rise by 2 percent annually so that in
the final years of the contract payments will be about $5 million per year.
This means it's very
likely that Orem will be coming back for yet another bite at the tax apple not
far down the road.
As tax revenues have
declined in the recession, the city has eaten through its healthy reserve (call
it a rainy-day fund) to maintain the lifestyle to which Orem has become
accustomed -- including making UTOPIA payments. Not long ago, the reserve was
flush at the legal maximum of 18 percent of revenues; today it's nearing the
legal minimum of 5 percent. If it bleeds below that, the Utah Legislature will
force the city to raise taxes.
How could this happen?
Basically by gambling on a sputtering economy and not confessing to residents
immediately when there wasn't enough money to sustain current levels of
service.
The economy didn't rebound
and bring in fresh dollars. But rather than acknowledging annual shortfalls
forthrightly to the taxpayers -- and seeking more money when it might have been
a bit less painful -- Orem officials simply tapped reserves.
Billy Joel touched a
certain political truth when he sang that honesty is a lonely word. Yet, there
was never going to be an easy way to explain to taxpayers that they were stuck
paying for a major boat anchor called UTOPIA. It was an unwise venture from the
start, undertaken by starry-eyed elected officials who saw in it a chance to be
on the cutting edge.
With only about a third of
Orem able to choose fiber-optics after a decade, this cutting edge wouldn't cut
Jell-O. But somebody still has to pay the bill. Sorry, Orem.
Councilman Hans Andersen,
a CPA, has proposed dumping the wage increase for city employees, and he's got
a point. In an economy in which many workers in the private sector can't
remember their last raise, it's asking a lot to take money out of their pockets
to fund public sector pay increases.
Public employees,
moreover, typically enjoy unusually good fringe benefits, which leads Andersen
to his second recommendation: decrease the city's 401(k) retirement match. A 50
percent match would not be out of line with private businesses that offer such
programs.
Finally, Andersen wants to
see all this on the November ballot for a non-binding advisory vote. That
wouldn't hurt. But making decisions is what city officials were elected to do.
If residents disagree with the direction of the city, they need to speak up
strongly and in a timely manner.
Maintaining the status quo
is always the default position of government. It shouldn't be. Orem faces a
financial dilemma. Whatever course it chooses will involve some pain to
somebody. The city would benefit from some private-sector thinking in place of
its rigid "current level of services" analysis.
