Dear Neighbors:
Here’s a link to the May 15, 2019 City Council meeting agenda: https://takomaparkmd.gov/meeting_agendas/city-council-meeting-agenda-wednesday-may-15-2019/. Before starting the regular meeting, there will be a reception for City Board, Commission and Committee Volunteers, from 6:30 - 7:30 PM in the Community Center Atrium Lobby. This will be a nice opportunity for residents to mingle informally with their neighbors who are making important contributions to civic life through membership on City committees
In the regular meeting, which starts at 7:30 PM, the key agenda items are the final votes on our budget and tax resolutions for Fiscal Year 2020. This will be followed by votes on a resolution supporting regionalism in the Washington metropolitan area, and several appointments to resident committees. We’ll close with a work session on parking management issues.
Budget and Tax Issues: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-123.pdf. Late last month as part of our Reconciliation process the Council agreed to a series of spending cuts and increases which, taken together, result in a Fiscal Year 2020 local property tax rate of $0.5397 per $100 of assessed property value. The reconciliation changes are summarized here: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/Documents/FY20-Budget-Reconciliation-Items-04.30.19.pdf. When the Council gave initial approval to that modified budget and the new tax rate last week, I voted against both. We’ll be taking a final vote on the budget and tax rate this week, and I will again vote no.
The tax rate of .5397 is down from the rate in the City Manager’s initial proposal, which was .5560. That higher proposed rate, had it been approved, would have represented an increase of about 5 percent over the current rate of .5291. However, even with the reduction down to .5397, the new rate is still about 2 percent higher than the current rate. (These figures can be contrasted with the Constant Yield rate of .5260, which is the rate at which the City would be estimated to take in the same overall amount of revenue next year from the property tax as this year.) For a home assessed at $500,000, if there’s no change in the assessment, the new rate of .5397 would mean an increase in the local property tax from $2,646 to $2,698. What individuals actually pay will depend on both the value of their homes and how their assessments have changed.
I’m glad that in my first three budget cycles on the Council we cut the property tax rate each year. So, when it became clear, as a result of the Council votes in the reconciliation process, that the new tax rate would be higher, I was uncertain at first how I’d vote on the overall budget and tax rate. On the one hand, some of the cuts I supported in reconciliation were not approved by the Council. If they had been, we could have ended up with a tax rate somewhere between the current rate and Constant Yield, without in my view undercutting key priority funding areas.
On the other hand, beyond the basic services (like police and trash/recycling collection), there are a number of positive things in the budget, including continued funding for important recreation programs; money for affordable housing initiatives; more help for apartment residents; and continuing our work on sustainability. With funding for those kinds of priorities, I think this budget helps ensure that we continue to provide the kinds of programs, services and initiatives that offer important benefits to residents, especially those of low and moderate incomes, consistent with our legacy of activist government in the service of progressive values.
But even modest tax increases may pose a significant burden on residents, especially given the recent changes in Federal tax law that limit deductibility of State and Local taxes. Furthermore, the recently announced home value reassessments seem to have been calculated in a less consistent manner than usual, leading to some striking differences in assessment changes among similarly situated homes. The impact of even relatively small local property tax changes can vary widely, depending on the extent to which residents’ assessments went up or down. I’m hopeful we’ll be able to get some more information about how the relevant State officials calculated the assessments this year, but the inconsistency seems to be producing some unfair impacts.
And the bottom line of course is that people don’t pay tax RATES; they pay taxes. If the dollar amount residents have to pay increases (perhaps because their assessments have gone up), that can be a burden, even if the budget that’s funded by those taxes includes meritorious programs. It’s becoming increasingly difficult for those of more modest means as well as seniors and others on fixed incomes to afford to live in Takoma Park. We need to increase our focus on finding ways to slow or stop that trend.
Looking at the total amount of revenue raised through the property tax over the last three years, we’ve seen an increase of about 9.8 percent, with an inflation rate (per the Consumer Price Index) of about 8 percent. It may be that it will make sense, as Mayor Stewart and some of my Council colleagues have suggested, to adopt a general policy of setting an annual tax rate that’s capped at Constant Yield plus an inflation adjustment. It looks like we may be pretty close to that this year, depending on how one calculates inflation and how close our actual revenues match the estimates.
But we haven’t yet in my view conducted a thorough enough review of the options in order to settle on Constant Yield plus inflation or some other goal of this type. That’s something we’ll be discussing in the coming months (well in advance of next year’s budget process), and I hope those discussions will give us a clearer idea about how best to establish our budget baseline for the following year’s and future years’ budgets.
After hearing from many residents, listening carefully to my colleagues’ arguments, being briefed by City staff, and thinking about all the factors discussed above, I decided on balance it would be preferable to vote against the budget and tax rate, primarily because of my concern about the affordability challenges many residents are facing. Unfortunately, as noted above, I was on the losing end of those votes, and I anticipate the same result at this week’s meeting.
PERSONNEL ISSUES
I’m hopeful that -- if we set a budget goal like, say, Constant Yield plus inflation -- it will spur some more in-depth reviews of the costs of our municipal programs. A number of residents have pointed out that personnel costs comprise the largest component of our budget. I agree we should be open to reviewing on an ongoing basis whether our staffing levels are appropriate. On the other hand, staff perform certain duties, and in my experience our staff work very hard. Reducing staff doesn’t simply mean the same functions will happen in the same way with fewer people doing them. Without cutting programs (which we may decide to do), personnel reductions on their own don’t as I see it offer a pathway to significant budget cuts.
Over the last three budget years, staff levels have increased by about 4 percent (technically a little under 7 positions, though in some cases this involved part-time staff taking on more hours). I’ve supported some of the new positions and opposed others. Regardless of whether I supported the specific position, the employees deserve a reasonable level of compensation. And Takoma Park competes with the entire region, as shown for example by our Human Resources Director’s pending move to a position in Howard County, and our former City Manager switching a few years ago to a job in Washington, DC.
I appreciate the suggestions by some residents about requiring improved time-keeping by City staff. That approach could help us gain a better understanding of the costs of projects and initiatives, though I’d want to make sure we weren’t, for example, burdening police officers with record-keeping requirements that would unduly complicate their work. And there may be aspects of this that would have to be worked out with our two labor unions. So my inclination would be to test it out initially on a pilot basis.
In addition, while I think it can be helpful to have a more detailed understanding of the costs of our programs, and we may find it makes sense to cut staff, I’d be uneasy if we used staff time data to pursue a business model focused on “return on investment.” Plenty of the things we take on as a municipal government aren’t and shouldn’t be money making enterprises. We do them because we want to provide services that we think are valuable to residents, and that in many cases the private sector or another level of government won’t do as well. Indeed, I think that’s been a hallmark of Takoma Park.
LIBRARY
One of the topics that’s emerged in the course of our budget deliberations as a key question for some residents is the Library renovation. When I was elected in 2015, the renovation plan had gotten to the point where it would have cost about $3 million for design, construction and related expenses. But to me, with less space for books and what I saw as inadequate room for the Library’s programs, the patrons who use its resources, and the staff who work there, I favored a more expansive renovation.
In the end we went with a design that calls for about a 50 percent increase in square footage, at an estimated cost of about $7 million for design, construction and other expenses. A couple of years ago the Council approved borrowing this money through the State bond system, and we’re paying about $387,000 a year for the bond. This means the bigger renovation costs about $220,000 more per year than the smaller one would have. We are legally obligated to pay this money. The estimates have gone up to about $7.5 million now, though we’ve also secured $300,000 in State funding to help defray the costs. Some of our cable television funds may also be able to be used for the project, potentially to help cover potential increased costs due to factors like higher steel costs (owing to the new administration tariffs that are currently in effect).
More recently, the City asked the County whether previous flood plain data at the site were sufficient. The County asked for a new study, which the City paid for. Based on that study, the County is requiring the project to have more stringent flood protection. The two more cost effective options to address these issues were raising the floor of the existing building by a foot (making the ceiling height rather low) or tearing down the old building and giving the entire new structure a floor that’s a foot higher (which would also leave more room for HVAC equipment).
The Council gave tentative approval to the second option, but nothing is locked in yet. We’ll have a deeper dive into the design work and the flood plain issues fairly soon and we’ll be able to make any necessary adjustments and vote on whether to proceed before the design work starts up in a major way. Prior to that, we’ll have to vote on a new contract for the architect, without which the design work won’t proceed. And of course if we move ahead, the Council would also have to approve any construction plans. I continue to support the project, but if it ends up costing substantially more than the current estimates, we’ll have to consider scaling it back.
LOOKING AHEAD
We face challenges that governments at all levels face. There’s a desire for services and programs and a concern about affordability. In Takoma Park finding the balance can be difficult because we have an activist approach to government and an economically diverse population. We don’t want to take on so many obligations (even if many of them are aimed at helping lower income residents) if the costs of doing so contribute unduly to further affordability challenges. Much of that affordability pressure comes from broad economic forces in our region, but we have to do our part here in the City to respond to those forces.
We’ve taken some helpful steps on housing affordability, and I hope we’ll be moving more vigorously on that front. I’m glad we maintain our rent stabilization law, so that the roughly half of our population who rent can have some stability, even with their incomes tending to be much lower than the City average. For homeowners, rising assessments are typically a benefit only when they decide to sell their homes. As a way of helping to address that concern, the Council is looking at expanding the tax credits that would be available for those who are less well off (though my current thinking is that we shouldn’t do this unless we use our affordable housing funds to cover the “cost” of the credits).
Finding other sources of revenue isn’t easy. Takoma Park has a smaller commercial district than many surrounding communities, and unlike Washington, DC, we only get a portion of income taxes generated from businesses that are based here. It’s still valuable for us to have a more vibrant commercial base, and we are doing more to support our small businesses. We’re also making some progress on potential relief from County tax duplication, but that’s not a cure-all even if we have some success. So, I’ll continue to place a high priority on seeking the appropriate balance between providing key services and preserving affordability.
Regionalism Resolution: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-4.pdf. I’ll be voting in favor of the resolution.
CONSENT AGENDA. The following group of appointments will be considered via a single vote. I’ll be voting yes.
Noise Control Board Appointments: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-5a.pdf
Recreation Committee Appointments: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-5b.pdf
Nuclear-Free Committee Appointments: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-5c.pdf
Parking Management: https://documents.takomaparkmd.gov/government/city-council/agendas/2019/council-20190515-6.pdf
Please feel free to contact me if you have questions or comments about any of the issues covered in this statement.
Peter Kovar, Takoma Park City Council, Ward One
240-319-6281; www.councilmemberkovar.com