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The Twenty Percent Blues

Reflections on the New London budget proposal

“Taxes are going to go up,” a city councilor told me last month, a few weeks before Mayor Daryl Finizio made his budget proposal. “We’re just not sure how much.”

If the proposal passes as is, the answer in my case is looking to be one restaurant visit a month. Maybe two.

Finizio’s includes a 20 percent increase in the mill rate, or $4.97 more for every $1,000 of assessed value. Now I’ve never been that great at math, so correct me if I’m making a grievous error here, but I’ve always been able to balance my checkbook.  And thought I’d calculate what five extra mills would have on my own financial situation.

I live in an apartment building assessed at about $753,000, which means my landlord would pay an additional $3,765 a year. If he decides to make up that amount by dividing it among the tenants over the year, that’s about $28.50 more a month. More likely than not, he’d either increase the rent $25 and take a little bit of a loss or do some fuzzy math and round up to $50. Hopefully the former. He’s a good guy, after all.

Last weekend, in part of my attempt to slowly but surely check out every restaurant in New London, I made my first visit to . One cheeseburger, two beers, and a tip later and the bill came to $25.

With New London housing dominated by renters, the risk comes down to what effect a major tax increase would have on discretionary spending. As opposed to homeowners, who have biannual due dates for property taxes, renters will see this increase on a monthly basis. One minor rent increase and I’m that much more likely to have dinner at home rather than go out. Multiply that by the rest of the rental market and you get quite an effect on local business.

It’s not to downplay the concerns of homeowners, of course. I took a look at the calculated tax increases for two friends who bought homes in New London fairly recently, and one would see an extra $505 a year while another would be hit for $600. And the three of us are all young, employed, and have no dependents. Plenty of people would deal with a tax increase by cutting down on those restaurant visits, or paying a little less off the principal of a loan, or otherwise making manageable sacrifices. But there’s always the sobering thought that there are people just scraping by who might have to make more dire decisions about food, medicine, or other essentials.  

Of course, I have another view of taxes influenced by, of all things, a video game. I grew up playing the original Sim City, which lets you serve as the perpetual mayor of a city you build and expand yourself. I would always hit a point where the residents seemed to be demanding more and more things while also steadfastly complaining about the taxes necessary to fund their demands. A few populace-pleasing tax cuts later and growth was at a standstill.

Real life is more complicated, but there’s still that whole sticking point about how taxes pay for things. It’s something you tend to forget when you visit the library, or get a drink of water, or scream at the cop who pulled you over that your taxes pay—wait, scratch that last one. There seems to be a general agreement that taxes are necessary for public services. But coming to a universally acceptable agreement on what should get funding and to what degree, especially if there's a contention that more funds are needed to maintain services? We should be so lucky.

Tomorrow, the starts meeting with department heads to go over Finizio’s budget proposal and start making changes. Whether the process is going to involve massive cuts to the proposal or mayoral vetoes or popular referendums is anyone’s guess.

I trust everyone involved in this process will do a thorough job. I can only hope that any tax increase will be worthwhile, that any criticisms volleyed during the process will be coherent and spelled correctly, and that the end result will be the best one for the city.

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Donna Pearlman April 09, 2012 at 01:53 PM
It's an astoundingly large tax increase, I assume not only for homeowners and passed along charges to renters but also business personal property tax and property tax on cars and boats. Knowing that and that a huge deficit was apparently just discovered but not confirmed, I think the change in the city's financial standing to a deficit in the millions must be confirmed and addressed in conjunction with considering a new budget with such huge increases. It is my understanding the documentation on the discovered surplus has not been released to the Finance Committee nor the public, I would like to see it in Excel spreadsheet format like all businesses are required to transparently provide if asked.
Donna Pearlman April 09, 2012 at 01:55 PM
I meant deficit above, sorry. A confusing situation, but a great article and editorial, thanks.

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