Wow. When did the whole topic of taxes turn into wild scary voodoo? Please. Taxes are numbers. Numbers are not snakes.
A majority of the Dallas City Council has already voted once in favor of raising the current property tax rate by 4.9 cents per $100 in the value of a property. Unless something weird happens, they will make it law this week.
That's not a tax increase.
Wait. Wait. This is only arithmetic. We can do this thing, if we don't panic.
The tax you pay is not a product of the rate, only. It's a product of the rate times the value of your property. The rates and the values can go up and down and still produce the same tax.
Maybe you've heard: Property values in Dallas have gone down. If the tax rate stayed the same, the taxes we paid would go down. The same rate would give us a tax cut, not the same taxes.
Every year by law, the city must publish what is called the "effective tax rate," which you and I might also call the "real tax rate." The effective rate is the rate that would keep taxes exactly the same citywide. The rate the majority on the council wants to impose is slightly less than the effective rate. That's a cut.
Maybe we should agree on what we mean by "taxes." I mean what you pay. The amount of the check. Sometimes it's called "city tax revenues," which is the amount that everybody pays—all our checks together. Whatever. It's the money.
This gets so weird. At one point during council debate on all this, council-member Jerry Allen called fellow council-members snake-oil salespersons for telling people that the rate they favor—the higher rate—is a tax cut by a little bit. I think Allen probably was sincere. He just couldn't feature how the rate could go up and the outcome could be slightly lower taxes.
Let's make it easy. If your house is worth $100,000 and the tax rate is 10 cents per hundred dollars in value, your tax bill is $100. Imagine that the value of your house falls to $50,000. But the tax rate gets jacked up to 15 cents. Now the tax bill is $75. The tax rate went up 50 percent, but you get to write a smaller check. I call that a tax cut.
What the minority on this council should do is spend some time in Montessori school. Then they would know that three-quarters of a small wooden block can fill up the same amount of space in a box as half of a bigger wooden block. And nobody's a communist or a satanist or anything. It's just blocks.
Mayor Tom Leppert sent a slick but strange mailer to my 101-year-old mother-in-law two weeks ago (but not to me at the same address). He urged her to send him a card telling him to "stand up for what is right and protect the best interest of taxpayers and our city's future by voting 'no' against a tax increase."
I didn't quite get the business about him telling her to tell him to vote against whatever. Maybe it's like, "Be sure to remind me so I won't forget." We have a lot of that around our house.
The fact is—and I speak from personal experience—if Tom Leppert and Jerry Allen were in Montessori school instead of City Hall, their argument against raising the tax rate would wind up with a parent-teacher conference. And I'm afraid we would be the parents.
We would all wind up squeezed into little-kid desks in the evening with Peruvian flute music in the background and the teacher telling us that "Little Tommy and little Jerry are having a lot of trouble with their volume works."
It's an important thing to get right, and please allow me to give you an example why. Tom Leppert, I am sure, will tell you that as mayor of Dallas he has kept the property tax flat. But as council member Angela Hunt has pointed out several times during this debate, Mr. Leppert actually was the cheerleader for a period of hefty tax hikes in Dallas, helped along by Allen, in his first two years in office.
The first budget process he presided over after his election in June of 2007 produced a tax increase of 7.61 percent for property owners in Dallas, according to the city's own budget data.
It happened because he encouraged the council to keep the rate the same in a year when the value of the tax base increased. Was that a simple mistake? Oh, no, it can't be a mistake, because by law the council is required to look at the effective rate—the rate that would have kept revenues flat. That would have been a lower rate.
The mayor and the council knew all of that. They had to. They knew that in order to keep total tax revenues flat they needed to lower the rate. But they didn't. They kept the rate flat, but because the block of wood was bigger, the same rate carved off a bigger volume of money for them.
Why would they do that? I don't want to accuse anybody of perfidy here. I've gotten myself into this big Montessori mood. Let's just say it's probably developmental.
But I do need to point out that they did it again the next year. The adopted budget for 2008-2009 assumed a 2.1 percent tax increase, produced by keeping the rate flat again in a year when the base went up. At the parent-teacher conference, they would have called that, "a persistent developmental problem."
But when we look at the very next year, 2009-10, we begin to see some evidence that this isn't about cheating so much as learning differences. In that year, the base went down, but the mayor led the way for keeping the rate flat again, which produced a drop in revenue for the city of 6.18 percent.
I suspect the problem here is the whole voodoo of the rate itself—the belief of some politicians if they don't touch the rate, no matter what, they will be immune to bad political magic. And to hell with the practical outcome.
This year in the 2010-11 budget cycle, the additional drop in tax revenues for the city—if the rate is kept flat again—will be in the neighborhood of $40 million. In a year of already draconian budget cuts made necessary by other revenue losses, the $40 million makes a big difference. By going to slightly less than the effective rate—which is what they want to do—the majority on the council will allow the city to collect that $40 million, which they want to spend on parks and streets.
There are other important measures of how we're doing financially that never rise to the level of public debate. For example, how much money are we borrowing to make up for not raising money through direct taxes?
It's not really financially conservative, after all, or prudent, if we agree to forgo X amount of revenue in taxes but then rush right around the corner to the pay-day lenders and borrow the same money back in a bond issue. Why doesn't Mayor Leppert talk about that?
The city is required by its own policies and by state law to keep track of the amount of its debt as a percentage of the per capita annual income of the citizens. In the last six years that ratio has more than doubled, from 1.6 percent to 3.6 percent, and it's threatening to go over 4 percent.
Here's a way to look at that in Montessori terms. Think of our per capita income as a box. City debt now takes up two and a half times more space inside that box than it did six years ago.
But you never hear a word about the debt from our mayor, the former CEO of an international construction company that gets a lot of bond program work around this city. In fact, the pattern at City Hall is the same we see in the school district. The large corporate entities dominating our public discourse never saw a tax they liked or a bond program they didn't love.
Is that really the conservative position? Is it truly the responsible one? The person on the council who has been looking critically at debt in the last year has been Hunt, not Leppert.
And then there is a Montessori issue here that is even bigger than the wooden blocks. It's the question of what kind of students our leaders are. What kind of little people? What is their character? We can get called to parent-teacher conferences on that one, too.
During last week's debate, South Dallas council member Dwaine Caraway presented a slide show depicting the deplorable condition of streets and bridges in the city's southern sector. When he and I spoke by phone later in the week, he framed the city's public infrastructure challenges as a matter of fundamental justice and the kind of city we are: our collective character.
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"If you would envision the scales of justice," he said, "the north outweighs the south. The south is way down and the north is way up.
"If we are really trying to be about one city, one Dallas, not north, not south, east or west, if we are trying to be about D-A-L-L-A-S, Dallas, then we must balance those scales of justice."
When you put Caraway's perspective on it together with Hunt's, it seems to me you come out with a pragmatic, centered, responsible approach to real-world challenges. We have to mind our pennies in tough times. But we can't let the house fall down around our ears. And, as Caraway says, we should aspire to a certain character as a city.
The scary thing about the T-word voodoo, both here in Dallas and nationally, is that the people practicing it do not care. They're utterly cynical about our character as a community. It's as if they think community is a dirty word. That's not conservatism. It's anarchy.