Tuesday, September 25, 2007

Infrastructure planning and Maintenance

When any type of new infrastructure is being evaluated, its maintenance cost must also be calculated over the structures useful life. When this is not done, then at some future date, a bill will come due to fix or replace something. Any new infrastructure must accrual its costs each year so that there is no need to borrow, float a bond or raise taxes. Our problem has been that we build something now and that is all the cost there will be.

Anyone who owns a home knows that as the home ages, things need replacing such as windows, paint, furnace, AC, cabinets, carpet and more. These are large expenses that occure years apart. Generally speaking you need to set aside 1.5% to 2.5% of the value a year. Otherwise, these expenses will have to come out of current income or cut expenses.

Saturday, September 22, 2007

Northwest Quadrant of Neighborhood Associations

I went to the Northwest Neighborhood Association Meet the Candidates forum on Thursday night. I like these forums. It gives candidates a chance to speak to residents and to hear what the other candidates have to say.

I must admit I was getting tired of hearing many candidates talk about attracting business and individuals to Fort Wayne using a number of incentives; grants, abatements, TIF’s, etc. These candidates then turn around and say something has to be done about property taxes and support increasing the sales tax and lower the property tax. Are they just going to shift the burden from property taxes to sales tax and income tax? Do you really believe that shifting property tax to sales tax will reduce your overall taxes?

The cost of government will not change, which means the amount of taxes we pay will not change. In essence it is nothing more than rearranging the chairs on the Titanic as it sinks.

Last night I asked how many in the audience knew how much in sales tax they paid last year? Even though I keep track of what I spend, I have only a rough guess as too what I pay each year. I like the property tax bill over the sales tax because it is a one time bill, which shocks you into taking action. If we did not have a property tax, but a sales tax, how many would be complaining about the sales tax? Who would you complain too? I believe an increase in the sales tax will remove our last means of accountability.

One incumbent had a chart showing School costs, inflation and property tax increases. Property tax increases since 1990 have outpaced inflation by a good amount. He was attempting to show that something has to be done to bring this under control.

This chart is likely correct. Another candidate stated that wages in Fort Wayne used to be 101% of the national average and now was down to 80%. The chart and this information gave the reason behind why property taxes have outstripped inflation these past 17 years, yet none of the incumbents presented the simple reason.

Inflation is the change in cost of a basket of goods over a period of time, normally a year. Inflation has both labor and raw material components. If the raw material components increase faster than the labor components, then inflation will be greater than the growth in wages. If raw material costs grow slower than wages, then inflation will be less than wage growth. The majority of our tax dollars go to pay police, fire, teachers and government workers wages. As these wages increase, the Fort Wayne budget also increases. Since the majority of the increase is due to wages, our property taxes will increase faster than inflation. Combine a drop in wages and of course you will have property taxes exceeding income and inflation. The problem I have is they still don’t realize the relationship and the problem even after looking at the chart.

The only way for our property taxes to grow at the rate of inflation is to some how do more with fewer governmental workers. Teachers would have to teach more students (productivity increase); governmental workers would have to serve more people with the same or fewer employees (productivity increase). The hard cold truth is that as government grows, so does the rate of increase in our property taxes. This is why it is imperative that we accrual costs for pensions, and maintenance of our infrastructure so that we minimize tax increases.

Our current city council along with the previous eight councils has failed to accrual costs. We now have a $214 million unfunded liability in police and fire pensions. We have a water, sewer and storm water problem to fix that could cost up to $500 million. We need to clean house and take back our city.

Straw Poll

A straw poll has been setup at the News Sentinel. Have fun!


Monday, September 17, 2007

Did you know?

Did you know?

How many knew that the Indiana Police Death insurance fund is funded by a fee on bond money? If you are accused of a crime and post bail, you will be charged $5 regardless if you are later acquitted or the prosecutor drops the charges because of lack of a chargeable offense or later determined to be a false arrest.

Explanation of State Revenues: (Revised) The bill imposes a $5 fee on each bail bond and deposits the fees collected in the Special Death Benefit Fund. Revenue from the $5 bail bond fee will depend upon the number of bail bonds issued. The original bail bond fee of $5 began in 1988 (P.L. 44), the fee expired December 31, 1998. However, according to the State Auditor, money still continues to be collected in some counties and is deposited into the Special Death Benefit Fund. From FY 1995 through FY 1999, revenue from the $5 Bail Bond Fee averaged approximately $499,000, while revenue from FY 2000 through FY 2004, after expiration of the fee, averaged approximately $31,000. The net revenue in addition to what is already collected is estimated to be approximately $468,000.

Question: If the fee expired in on December 31, 1998, why is the City of Fort Wayne still collecting it? More importantly why should anyone wrongly accused or acquitted have to pay this fee?

Information on Candidates

The News Sentinel and the YLNI have surveyed area candidates and published this information. I want to thank the News Sentinel and the YLNI for taking the time to create a site for candidates to present their issues and positions.

The YLNI survey is found at two links:

Surveys as sent by candidates

Surveys edited, condensed and published in pamphlet

The News Sentinel links to candidats answers is found at:

William Larsen's Answers By the way I am not 2007 years old.

Want to ask candidates questions?

The area community is hosting several meet and greet meetings where the public can ask candidates questions. Below are a few that I am aware of:

  • Sep. 20 The Northwest Quadrant of Neighborhood Associations at Northridge Baptist Church 1300 East Cook Road 6:00 pm to ?
  • Oct. 3 YLNI Candidate Forum Downtown Library 6:00 pm to ?
  • Oct. 15 Northside Candidate Night Northside High School 6:00 pm to ?
  • Oct. 16 BCA Night at Summit Club 5:00 to 7:30

Friday, September 14, 2007

Sign, sign, no where a sign!

I am told the radio stations were having a good time with the new sign ordinance passed recently by the Fort Wayne City Council. Callers were saying their neighbor had a sign up advertising a B-day party, Concordia had signs up advertising a fish fry, all you can eat pancakes at United Convenant and more.

These very same politicians, Talarico, Crawford, Pape and others abused the right of ways in previous elections, not putting up just one sign, but rows upon rows of signs. It was ok for them to use signs, but now once they are elected, have name recognition, they say no to free speech.

Our elected representatives need to be responsive, responsible, trustworthy, thrifty and honest. They should be role models for the public. Instead they are saying to the public "do as I say, not as I have done."

Thursday, September 13, 2007

What is wrong with this statement?

Income Tax (COIT), one of three local option income taxes available to counties under State statutes in Indiana, as part of a tax reform package. Also, available to counties under Indiana law is the County Adjusted Gross Income Tax (CAGIT) and the County Economic Development Income Tax (CEDIT). The Common Council controlled enactment of the tax at that time based on the fact that the City comprised 58.5% of the population of Allen County, even though the Allen County COIT Council actually enacts the tax. The tax reform effort involved two primary strategies.

  • One, it is appropriate to tax those citizens who live outside the City but use City services such as roads and streets, fire protection, and police protection while they work in Fort Wayne. To a modest extent, COIT accomplishes that.
  • Two, adding a different tax base into the picture, income as opposed to property, broadens and distributes the total tax burden in a fairer manner. COIT accomplishes that as well.
What is wrong with this statement “it is appropriate to tax those citizens who live outside the City but use City services such as roads and streets, fire protection, and police protection while they work in Fort Wayne?

I interpret this to mean;
  • If you pass through the city of Fort Wayne, you should pay to use the roads.
  • If you go out to eat, go to a movie, spend money at the malls or spend money anywhere within the city of Fort Wayne, you should pay for the services. Is it not the purpose of Harrison Square to attract people to Downtown Fort Wayne and spend money? If they come from outside the city should the city not charge them to use the roads, water & sewer and a prorated amount to cover both Fire and Police protection? If I spend money anywhere in Fort Wayne, is it not the owners of the establishments that pay for the service they receive from Fort Wayne and I in turn pay a price for those goods and services based on the cost of doing business? What if Allen County used the same logic to charge all city residents a tax to use the roads to drive out of Allen County to some other destination?

America Needs A Leader Like This!

Prime Minister John Howard - Australia

Muslims who want to live under Islamic Sharia law were told on Wednesday to get out of Australia, as the government targeted radicals in a bid to head off potential terror attacks.

A day after a group of mainstream Muslim leaders pledged loyalty to Australia and her Queen at a special meeting with Prime Minister John Howard, he and his Ministers made it clear that extremists would face a crackdown. Treasurer Peter Costello, seen as heir apparent to Howard, hinted that some radical clerics could be asked to leave the country if they did not accept that Australia was a secular state, and its laws were made by parliament. "If those are not your values, if you want a country which has Sharia law or a theocratic state, then Australia is not for you", he said on National Television

"I'd be saying to clerics who are teaching that there are two laws governing people in Australia: one the Australian law and another Islamic law that is false. If you can't agree with parliamentary law, independent courts, democracy, and would prefer Sharia law and have the opportunity to go to another country, which practices it, perhaps, then, that's a better option", Costello said.

Asked whether he meant radical clerics would be forced to leave, he said those with dual citizenship could possibly be asked to move to the other country. Education Minister Brendan Nelson later told reporters that Muslims who did not want to accept local values should "clear off. Basically people who don't want to be Australians, and who don't want, to live by Australian values and understand them, well then, they can basically clear off", he said.

Separately, Howard angered some Australian Muslims on Wednesday by saying he supported spy agencies monitoring the nation's mosques. Quote: "IMMIGRANTS, NOT AUSTRALIANS, MUST ADAPT. Take It Or Leave It. I am tired of this nation worrying about whether we are offending some individual or their culture. Since the terrorist attacks on Bali, we have experienced a surge in patriotism by the majority of Australians."

"However, the dust from the attacks had barely settled when the 'politically correct' crowd began complaining about the possibility that our patriotism was offending others. I am not against immigration, nor do I hold a grudge against anyone who is seeking a better life by coming to Australia " "However, there are a few things that those who have recently come to our country, and apparently some born here, need to understand." "This idea of Australia being a multi-cultural community has served only to dilute our sovereignty and our national identity. And as Australians, we have our own culture, our own society, our own language and our own lifestyle."

"This culture has been developed over two centuries of struggles, trials and victories by millions of men and women who have sought freedom"

"We speak mainly ENGLISH, not Spanish, Lebanese, Arabic, Chinese, Japanese, Russian, or any other language. Therefore, if you wish to become part of our society. Learn the language!"

"Most Australians believe in God. This is not some Christian, right wing, political push, but a fact, because Christian men and women, on Christian principles, founded this nation, and this is clearly documented. It is certainly appropriate to display it on the walls of our schools. If God offends you, then I suggest you consider another part of the world as your new home, because God is part of our culture."

"We will accept your beliefs, and will not question why. All we ask is that you accept ours, and live in harmony and peaceful enjoyment with us."

Wednesday, September 12, 2007

Property, Sales and Income Tax Overhaul

Property taxes are high, people are complaining. What should be done? There are proposals out there to reduce property taxes and increase the sales and/or state income tax and/or local tax. Are these proposals nothing more than rearranging the deck chairs on the Titanic?

A family of four with an income of $45,000 has a zero Federal Income tax liability. They will pay $4,095 in Social Security and Medicare taxes. Assuming they save 1.5% of income ($675), spend $3,500 on groceries, $1,200 on healthcare, $9,805 on mortgage, $350 on book fees and $400 on home owners insurance they have $15,255, excluded from sales tax. This means they spend $23,475 that could be subjected to sales tax. Increasing the sales tax by 1% increases their tax by $235. Increasing the sales tax as suggested to 9% would see this family pay $705 more in sales tax. Would their property tax bill drop by $705? Adding a 1%, state income tax would see their state income tax bill rise by 1% would see their tax bills increase by $1,015 a year. The question is would their property tax bill drop by $1,015?

It is very difficult for most people to calculate or even estimate how much they pay in sales taxes a year. The one major difference with the property tax bill is we see this large number at one time and it makes us think about what we are actually getting for our money. Paying 9 cents on the dollar in the form of a sales tax adds up to only a few dollars at a time, but the mere fact we make thousands of purchases a year that the tax gets rounded up makes the proverb of “a few pennies here and a few pennies there and when combined can add up to some serious change.”

Repackaging the three taxes will make it more likely a tax increase will take place. In addition, an increase in sales tax will most likely be in increments of 1%. This means each one percentage point increase will be about a 16% increase in taxes. I doubt they will go in fractional increments. There is no free lunch here. If we the taxpayer want services, then we the taxpayer must be willing to pay the tax to support these services. If not, then we the taxpayer must inform our representatives what services we do want and which ones we do not.

Tuesday, September 11, 2007

Sign Ordinance

The Fort Wayne City Council proposes banning signs in public right of ways. They are the ones who put not just one sign up per corner, but dozens of signs in a row. These same politicians abused our right of ways for years to get elected. The under funded challenger, on the other hand, who relies on the inexpensive yard sign to get their message before the public is at a disadvantage. Incumbents like this. The constitutional protection afforded political speech has its fullest and most urgent application precisely to the conduct of campaigns for political office.

A candidate has a choice as to how to deliver their message; direct mail, newspaper, phone call, door-to-door, flyers, radio and television, but not always the funds. Every election I hear people complain about how much candidates spend to get their name out and their issues heard. They complain about phone calls at dinner, junk mail and the lack of good candidates.

This country is based on free speech and political free speech is the most basic right we have. Don’t let City Council take our free speech away.

Fair Tax or Flat Tax

The fair tax or flat tax proposals look good as stated, but when you look at the data, you may change your mind. The fair tax as proposed is a sales tax of 23% with a rebate to Americans based on the number of dependents. Both proposals are to be revenue neutral. Both proposals say large savings could be achieved by eliminating the IRS and companies saving on compliance costs. However, are these the same things as being revenue neutral to the individual taxpayer?

Current standard deduction for a family is $10,700; personal exemptions are worth $3,400.
A family of four under current law has $24,300 in income offsets. If you make less than this, your current tax bill is zero. Now add in two $1,000 child tax credits and your income offset is $42,850.

The first $15,650 of taxable income is taxed at just 10%. The next bracket is at $63,700 and is just 15%. Both are less than the 23% sales tax rate. The fact of the matter is a family making $100,000 under the current tax law would pay $7,790 in taxes. Under the fair tax law using a 23% sales tax, the taxes would be $23,000. They then would get some credit back. Would the credit be equal to $15,210?

How about a family making $40,000 a year? Their sales tax if they spent their $40,000 would be $9,200 while under current law their tax bill is zero. Would they get $9,200 back and when would it be sent? Is this mailed monthly or yearly? If yearly what do people on low incomes to do while they wait for a check worth 23% of their income?

Here is the problem in a nutshell. According to the IRS total income before exemptions (Social Security, interest, capital gains, S-corporations, wages, pensions, farm income, etc) is less than $7 trillion. Current IRS federal income tax collected is over $1.2 Trillion. This is 17.1% of all income before exemptions are included.

Wage income in the US totals about $5.5 Trillion of which 85% is subjected to Social Security’s 10.6% OASI and DI’s 1.8% tax. Medicare applies a 2.9% tax on all wages. The flat tax does not cover Medicare or Social Security Taxes. These would be in addition to the 23% sales tax.

Another major problem is what to do with those who have saved diligently and now are in retirement. The money saved was taxed. The income earned on savings was taxed. Now when they go to spend that money they will be taxed again at 23%. Roth IRA’s are to be free of Federal Income Taxes. This was done to promote savings. Sounds like a bait and switch tactic.

The tax code is a mess. However, replacing the current tax on income to a tax on spending will be double taxation for many. The ability to pay may be dependent on not just income, but spending. I propose doing away with all special exemptions. How you spend, your money is up to you. If you want to buy a home, great, do not make others subsidize your loan. If you want to send your kids to college, great. What exemptions do is transfer you tax to someone else and theirs to you, which in the end does little for either of you in terms of taxes being paid. Indiana has a tax system that allows a certain standard deduction and one for exemptions. It applies a flat tax to the taxable portion. It is easy to understand. We could easily convert the federal income tax to this method and have just one page to fill out. Everyone would be able to figure their taxes with a lot less compliance costs.

NBC-33 Debate poll results from 2002