Why Didn’t They Just Do 2% Every Year?

No matter which side of the equation you were on, people have wondered why the increase had to have been 9.8% — and risk creating such a blowback from sticker shock. In fact, all of us had had the same question raised to us (or raised it ourselves) about a hundred times over the last month. The following comment from Jim S pretty much nails the trending opinion:

The almost 10% tax hike represented only a 1% increase in the budget. For several years tax rates remained stable by dipping into the reserve while not increasing taxes. If taxes were raised a little at a time it would not have seemed so bad, but 10% all at one time is tough to swallow. Perhaps the people in the administration that planned so poorly should be fired.

A group of us at a BBQ wondered how compound interest might have impacted us if indeed all these suggestions had taken place.  So Clarence Dad Tom Marzano took it upon himself to look at the actual tax records over the last several years and plot the results. He called the tax assessor’s office, and received the numbers for 1997 through 2013. The accompanying chart visualizes what we would have paid over the years if we had done a simple 2% per year increase — which would likely have been acceptable to everyone.  As Tom explained in an email:

Comparison of 2% per year vs one-time 9.8% increase.

Comparison of 2% per year vs one-time 9.8% increase.

The blue bar shows the actual tax rate change (in percentage) since 1997.  You can see some years go up and some go down. The red bar shows a “what if” scenario: What if the school budget went up 2% per year since 1997?  If 1997 was taken as the base, where would be now?  The green bar shows the actual, historic tax rate per $1K (100% assessed).

Some things become clear:

  1.  Even with a 9.8% increase are tax rate would still be below 2001 levels
  2.  The tax payer is still well ahead of normal inflationary increases (assumed at 2%)
  3. Over this period a tax payer would have paid $259.60 (accumulated) per $1K of assessed value.  If the tax rate had grown at a modest 2% per year over the same period that same taxpayer would have paid $278.06 per $1K of assessed value.

It is obvious that the 9.8% ‘jump’ was inevitable as the budget for previous years were not keeping up with inflation.  There must have been some spending down of capital to make this artificially low historic tax rate possible.It seems that the Clarence schools (and administrators) are being punished for years of fiscal conservancy and even a 9.8% increase would still put the taxpayer well ahead of where inflation would have normally lead them.

So now I have to ask, is the “bad” manager the one who pads the budget every year or the one who has built trust over the years as a tight steward of our money — and only asks for more when it is truly needed? Tom wishes that the issue had been framed with the above graphic — and who knows, it might have made a huge difference.

So there shouldn’t be any quibbling now — if we were ahead at 9.8% — we should stem the bleeding by passing the 3.8%.

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