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« Upon Further Review... | Main | The Rockies Win The Pennant! The Rockies Win The Pennant! »

A Few Questions Before Buying

I've written here before about the proposed property tax hikes. Here's a list of 9 questions - plus follow-ups - that those proposing this increase should have to answer before we vote for any of these bonds, and certainly before we vote for the mill levy increase:

1) This set of packages will exceed the city's bonding authority. How is the limit of the bonding authority determined? How often is it re-assessed? At what point will it be raised again?

The city may need more money for more pressing projects, or may discover the need for additional revenue after the current bonding limit has been reached. It's important to understand how that limit is arrived at, and what effect raising our debt multiple times would have on the city's bond rating and our ability to pay.

2) What is the city's current bond rating? What is the interest rate expected to be, and when do the bonds mature?

Speaking of which, what is the current bond rating. I assume it's pretty good, but it'd be nice to know. And what are the terms on these general obligation bonds that are being issued?

3) How do the amounts raised compare to the amounts required by the individual projects? In effect, what's the allowance for possible overruns?

For instance, there's a $40 million proposal for a new concert hall. How was that number arrived at, and how did the budgeting process for these individual projects differ, if at all, from the normal city budgeting process? We've a had a boatload of cost over-runs and questionable expenditures over the last few years, so perhaps a little oversight in the matter might be in order.

More important, since we're now hitting the limit of our bonding authority, how likely is it that these same agencies are going to come back, hat in hand, for more money to finish the projects we've voted to start? If there are cost over-runs, what is the City's obligation to finish what it starts?

4) Who were the panel members, and how were they chosen?

The mayor has some pretty effective ads talking about a citizens' committee that helped set these priorities. Which citizens, and how did he choose them? What common assumptions did they have going in that need to be challenged?

5) During the process, what effort was made to assess where the additional spending could be offset by savings in other parts of the city budget? How was the list of projects to be funded arrived at? Was there any attempt to prioritize these within the overall city budget?

For instance, this one. Look, if rehabbing the Greek Ampitheater is so important as to require a tax increase, maybe it's more important than something that's already in the budget. Something that could be cut. What efforts were made to figure this out, or was there just a limit assumed and then projects were cut or kept on the basis of fitting under that cap?

6) The city has pointed out the expected effect on the average homeowner. Is the average price the median home price or the mean?

It's a simple math question. Because if this is the median, 50% of homeowners will pay more than the oft-quoted $63 a year. And if it's the mean, then we're adding another more-progressive-than-it-seems tax to the tax burden.

7) Will the property tax increase apply to residential rental property? If so, what will be the effect on the average renter? What is the average income, and average rent, of a renter in Denver?

I assume it would apply to apartment buildings and certainly to single-family rentals. We've heard much about that $63-per numbers. But Denver has a large and growing renter population. Growing because of foreclosures. Right now, a lot of people may not be in a position to move farther out, and landlords will try to pass at least some of this tax increase along to renters. It's important - and so far completely unaddressed - to know how the increase will affect renters.

8) Will the tax increase apply to commercial rental property?

Again, postentially increasing the cost of goods and services sold, or alternately making it harder for businesses to get by. Don't think Starbucks here. Think your local, funky, protest-flyer-on-the-wall coffee shop with the free-range beans and the free wifi.

9) What guarantees are there that the money will not be shuffled around, a la Referendum C revenues, so that existing non-mill-levy revenues will continue to go to infrastructure?

The Independence Institute has shown that non-Ref-C priority areas have grown faster than the supposed Ref C areas of the Colorado budget, indicating that all that Ref C money isn't going where it's been promised. Money is fungible. What guarantees do we have that the government won't take current maintenance money out of the budget, and then come begging for more in a couple of years?

So far, I have seen the local papers address exactly none of these questions. Government officials are particularly good at putting forward tax proposals, on the grounds that they're all for good causes. They rarely get asked questions about how these particular causes are arrived at, or how they set priorities within budgets. So they're used to being able to tell us, unchallenged, that we "need" this or that amount of money for some project or other, or for ongoing operations.

They're also quite good at minimizing the effect of their new piggy banks on ours. Here, for instance, they give the numbers for the average homeowner, who may not at all be the average resident.

They're particularly good at gaming the process to limit the amount of time, discussion, and questioning before a vote, then claiming emergencies and lack of time for discussion.

Housing prices are dropping a little here. The government wants to raise taxes on your most valuable asset. For those of you who rent, it wants to make it harder for you to save for that down payment.

Don't you want to know how they came to this conclusion, before writing out a bigger check each year?

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