Sunday, December 10, 2006

Is Oak Forest serious?

Politicians continue to bewilder me. Today's Daily Southtown has an article about the Oak Forest City Council wanting to start levying new utility taxes.

"The city aims to reduce property taxes by 10 percent, while adding taxes on natural gas and electricity based on usage, Oak Forest controller Colleen Julian said."

Well, the 10% property tax cut is a good thing but they are trying to claim the new utility taxes on natural gas and electricity is a "tax swap". Then the numbers come out.

"Oak Forest would lose $747,000 in property tax revenue but would generate about $1.2 million from utility taxes, Julian said.

That means $453,000 more money for the city's emergency reserves, which is where the money would go."

Aha. And just how long would that 10% reduction in property taxes last? 2 years if they are lucky?

But the most telling information comes at the end of the article.

"However, city officials hope the change will spread the tax burden more equally among homeowners and renters."

At least they are smart enough to know what this plan would do. It shifts the tax burden from homeowners to renters. From the richest (who will get a tax decrease) to the poorest (who will get a tax increase), in other words. And precisely when electricity rates are going to increase, Oak Forest is going to pile on that electricity rate increase with a new electricity tax. They are hoping the new electricity tax isn't noticed as much when the rates also increase I bet. They are probably right.

Are they trying to drive up the cost of living for renters in Oak Forest and drive the poor out of town? Are they trying to make it even harder for single moms to put food on the table and spend quality time with the kids? That's exactly what this tax shift from the rich to the poor will do and they should be ashamed of even considering it. They should cut the fat from their budget, especially at the schools, and cut the property tax 10% so more poor can afford to own a home.

Bremen High School District, that includes Oak Forest, has 80 teachers and administrators making more than $100,000 a year. 19.8% of their staff. The average salary is $78,588.

And the Oak Forest City Council wants to sock it to the poor people with a new electricity tax when electricity rates are about to increase? That's just sick.


Anonymous,  4:15 PM  

When you publish those teacher and administrator salaries, be sure to add on a percentage of those salaries to
reflect pension and health benefits, whose value has increased greatly in recent years. A conservative approach is to add 30 percent, meaning that your 100k+ administrators' compensation packages are worth more like $130,000 to $200,00k depending on how high in the 100's the salary goes. And your average teacher salary plus compensation is close to or exceeds $100,000.

When we talk about our expensive civil servants including teachers and bureaucrats, we need to look at and publish the the entire compensation package.

And likely most residents who are paying for these exorbitant salary packages pay much more for health care and get no pensions at all, only defined-contribution benefits.

We need to end this myth that teachers and state and local employees are underpaid. They are overpaid, especially since it is impossible to get rid of them if they don't perform.

Anonymous,  6:50 PM  

Mr. Trigg,
Your post is most interesting.

"Sock it to the poor" by a usage tax and
"drive renters out"

So I can have a better understanding, can you please explain the benefit and economics of using property tax increases over use tax fees?
And please, do not use the Schedule A tax break scenario. The tax break is nominal when comparing real out-of-pocket costs.

Doesn't it really have the same effect....If your not sure ask a landlord.

Interesting thought though. If you have to pay, isn't it better to charge all residents a share than just a property owner. After all, All residents do rely on services...It's a a use tax....."the more you use, the more you pay....the less you use, the less you pay....Big Houses and frivilous people will pay alot...small rentals and conservative people pay less.....Hmmm....That just seems to simple and responsible, doesn't it.....
Let's all go out and yell "chicken little the sky is falling"

Anonymous,  7:11 PM  

Mr. Trigg,
Your right on!! So right on with that article that I went to your NTUI web site to find out more about your organization. After reviewing your annual membership fee, I've determined it's cheaper to pay the annual use tax. Plus the benefits outweigh what your your organization can provide to me.
I didn't see anything where you can offer health, safety and welfare for $50.00 per year.
I knew when I first saw your blog, you were too good to be true!

Anonymous,  8:04 PM  

The purpose is to stimulate an unbias.
When one knows ones identity, that is lost!
The point is can you counter with anything that makes sense or do we shoot from hips and ask later.

One needs to have facts and then do a comparative analysis of alternatives to
judge economic value. Obviously Mr. Trigg chose not to do that.
Judge not on who the person is, but what on the person says.....

Jeff Trigg 8:13 PM  

To the first anonymous, this isn't a use tax by any stretch. Taxing the electricity and natural gas has absolutely nothing to do with the delivery of electricity and gas. A gasoline tax could be considered a road use tax, because the more you drive on the roads, the more gasoline you have to purchase. They even admit it isn't a use tax in the article, if you read it, by stating the $400,000 tax increase would be used for emergency reserves.

Property taxes are built into rent. Duh. Renters are paying property taxes. Now, how many Oak Forest landlords do you believe will decrease their rent instead of pocketing the difference? So what that means is renters will now be paying these utility taxes without getting a dime of property tax relief.

Meanwhile someone that was paying $10,000 in property taxes saves $1,000. Will they make that up in additional utility taxes? Absolutely not.

My point stands, the rich will get a tax break and the poor will get a tax increase. If you are in favor of that anonymous, then just say so.

As for your economic argument, I didn't say a thing about a property tax increase. In fact, I said the 10% cut was good and would make purchasing a home more affordable for the poor, unlike this tax policy that makes it harder. If you can't understand the economics of the poor being able to keep more of their own money I'm afraid you need more help than my explanation.

The second anonymous doesn't read very well if you think our membership fee is $50. The word "suggested" does have meaning. And again with the use tax falacy. Nice try. Seems like my letters to the Mayor and Council are making the rounds. Apparently, someone needs to show up at the meeting to explain what a real use tax is and point out this is a consumption tax that has nothing to do with use. The 2nd also needs to read the article. Not a penny of this tax increase on the poor will go toward health, safety, or welfare. Not a penny. Why not just send the city a check for $50 right now this minute, 2nd anonymous? Go ahead, no one is stopping you from paying more.

Isn't it funny to hear the responses of liberals when you catch them raising taxes on the poor and giving tax breaks to the rich. They suddenly get all Republican with their arguments and refuse to address the real impact of their policies. This will increase taxes on the poor and decrease it for the rich. It's that simple. I'd love to hear the argument to refute that fact.

At half a cent per kilowatt hour, the $10,000 property tax payer would have to use 200,000 kilowatt hours to make up for the $1,000 tax decrease they are getting. I'm all for cutting bloated staff and salaries and benefits and pensions and giving them that $1,000 tax decrease. But I'm not as willing to do that as the Oak Forest liberals are at the expense of the poor.

Thanks Steve.

Jeff Trigg 8:18 PM  

Right, I didn't do a comparative analysis. Sure. Then you explain how a $10,000 property tax payer makes up the $1,000 tax break they will get with this policy, versus the poor renter that will no property tax relief but will now be paying taxes on their utilities. The comparative analysis should be obvious to anyone that isn't clouded by politics. They admit what effect this will have right in the article.

"However, city officials hope the change will spread the tax burden more equally among homeowners and renters."

I'll agree it might be more equal, but it still has the effect of raising taxes on the poor and reducing taxes for the rich. Again, if you are in favor of such policies, just admit it.

Jerry 8:27 PM  

Reading your post would lead me to believe you are a liberal, as does your response from 8:13. Except for the part where you get into republican/liberal biases.

Your entire post sounded like it could have been written by a David Sirota type.

And, as a liberal, I would strongly oppose this policy. Being someone who knows nothing about the demographics of Oak Forest, I figured it was a lily-white rich (republican) suburb that wanted to keep the riff-raff out.

You are clearly correct, this is an attempt to push the poor out of Oak Forest.

Anonymous,  8:31 PM  

So if I'm hearing you right....the proposal is a good deal for the average rich property owner in oak forest, but a bad deal to the poor renter.

Is that it.

Anonymous,  8:53 PM  

Sales tax,use tax,regulatory tax, property tax,federal tax,sate tax,Social security tax,Gas tax,Smoking tax,retail tax,license tax, luxury tax,medicare tax
death tax.

"TAX THE RICH, FEED THE POOR, TIll THERE ARE NO RICH NO MORE.....I'd love to change the world, but I don't know what to do"

Wow, now that's heavy. Do you remember those days!

Jeff Trigg 8:55 PM  

Thank you Jerry. I'm an odd political beast. I feel like a liberal but think like a conservative. The classic liberal perhaps. I always say the very least government can do for the poor is to not tax them. So policies like this catch my attention as my priority for reforming government always starts with how the poor and unable to care for themselves are impacted. In that regard, I identify with most liberals such as yourself that put politics aside when considering the impact of a policy. Oak Forest is a lily-white (86%) rich (Democrat) suburb that apparently wants to keep the riff-raff out. So much for stereotypes I guess. Power does strange things.

Yes, anonymous 3 (or 1 or 2) that is correct. It's bad for the poor and good for the rich and I would hope more self-identified liberals like Jerry would join me in seeing that. And conservatives that don't like tax -increases also. Protect the poor from tax increases at the very least.

Anonymous,  9:17 PM  

Jeff and Jerry,

Please help,

Every time I go to the store or even go buy a stamp it seems there is an increase in price of what we purchase.
I have a business, healthcare costs keep rising, my vendors charge me more, my employees want more pay, my rent goes up, I reduce my budget in some area's and struggle to make ends meet...And of course, the final straw is I have to raise the price of my own services to balance a budget and enough for future provisions.
There must be a better way than increasing my prices every year.
What's the solution?

Anonymous,  9:53 PM  

Mr Trigg

I really have to point something out to your over simplified approach and answer in doing a true analysis of what's being proposed here:
"Then you explain how a $10,000 property tax payer makes up the $1,000 tax break they will get with this policy, versus the poor renter that will no property tax relief but will now be paying taxes on their utilities. The comparative analysis should be obvious to anyone that isn't clouded by politics"

First someone who has a property tax bill of 10,000 on a home in Oak Forest is someone I'd truely like to meet (and to be fair there may be a couple).
However let's use your example for argument sake:
The portion of a $10,000 property tax bill that pertains to the city is approximately $1,600. Someone like you should know property tax bills are made up of many governmental bodies (schools being one of them. The city's portion is what gets reduced by 10%, not the whole boat.

That being said, your $1,000 savings, just turned into $160.00(for that real lilly-white rich person). Now, how does that compare to the utility tax?

And I really gave you too much credit when I thought you'd understand the landlord one.....Da....Your right a tax break to landlord won't help the renters pocket....But if the alternative to a utility tax is look at increasing property tax...Da ....Landlord gets hit and Rent goes up! Wow, the poor renter's going to feel the share either way. So let's find a way that's fair to all (for the answer read anonymous 1 again,I hate to be redundant).
But something tells me you knew that.

Lastly, this is not a new concept, major metro city's have been doing this since the eighties trying to diversify their revenue resources and not be so heavy reliant on property taxes.
But something tells me, you know all that.
We just need to yell once in awhile like....."help, chicken little the sky is falling"

Anonymous,  10:31 PM  

Im sorry, I thought this blog was about the proposed utility tax in Oak Forest, but after reading Mr. Triggs's income demographics, he must be talking about OAK BROOK. Is Oak Brook considering this too?

Jeff Trigg 11:00 PM  

You assume a $453,000 tax increase is needed. I don't. 4 $100,000 teachers would have the same effect on the budget as this policy does. 3 fewer administrators. Oh my.

Aha, you are correct, this is a %10 reduction on only their city portion of their total property tax bill, not a 10% cut in their property tax cut as it is being billed. So they save $160 and need 32,000 kilowatt hours to make up for it. The average household uses about 10,000 kwh, so they'd need to use 3 times the average which still isn't easy to do.

But even that doesn't change the fact that landlords won't reduce rent AND renters will be paying a portion of that tax increase. And a penny is too much.

Yes, these types of taxes have been foisted on us from everyone for years. I don't buy that it's necessary especially in this case.

Is their sky falling to nessecitate the need to raise any taxes at all? Shouldn't they be considering ways to decrease taxes instead? If only 4 $100,000 teachers equates to a 10% decrease in the city portion of the property tax bill, I'm sure they could cut $453,000 from somewhere without it hurting the poor or unable to care for themselves. Ask them why they think the sky is falling to warrant their supposed need to increase taxes on poor renters, if that is what you want to disagree about.

Jeff Trigg 11:07 PM  

Oak Brook is already charging these taxes. I didn't mention income demographics, I mentioned Census data on race btw. Oak Forest is not as rich as Oak Brook, so that only goes further to demonstrate this tax increase will hit the working class and poor in Oak Forest more than it will the richer people in Oak Brook. Still unnecessary to increase tax on anyone.

the Other Anonymous,  7:49 AM  

Jeff is right on the tax shifting in this case. The main point here is that a renter does, in fact, pay property taxes through the portion of the rent the landlord uses to pay those taxes. Moreover, the renter cannot take a deduction for property taxes (unlike an owner) on federal or state income taxes. And Jeff gets it exactly right -- no landlord will actually reduce rent in response to a property tax decrease.

Moreover, this sort of scheme does, in fact, obscure the tax increase. Here's where Jeff and I likely part ways. I'm not automatically oppose to a tax increase, and in this case it just may be necessary. (I don't live in Oak Forest, so I really don't know.) But at a minimum good government requires honesty on the part of local officials when asking residents to pay increased taxes.

Anonymous,  12:00 PM  

Mr. Trigg,

Please, Please

Obviously you do not even know how a tax bill is split among entities.

The City has no control over cutting teachers salaries and Admins. from the school budget!

Carl Nyberg 12:37 PM  

One unintended consequence of this policy--which I assume won't pass when people think about it--will be to make it much more profitable for landlords to heat with electricity (tenant pays, but less efficient) than other heating systems where the landlord pays (but they are more efficient).

Property taxes are too high, but taxing utilities doesn't fix this.

Jeff Trigg 12:39 PM  

Obviously, I don't care how a tax bill is split amongst various politicians crying for more money, and neither does the taxpayer. And, yes, I do know how property tax bills are split amongst more government taxing authorities in Illinois than in any other state. I never said the city has control over teachers salaries, either, just used the 4 teacher example on how easy it is to find $453,000 in cuts that don't hurt anyone. That said, the city and school boards and all the other myriad taxing bodies should be working together more closely to freeze property taxes from increasing at the very, very least.

There is absolutely nothing stopping the city from going to the school and saying we need $453,000 more for our budget. How about you cut expenses that much and reduce your rate so we can increase ours and the taxpayers won't get even a penny increase. But it's easier to blame someone else and not even try or care about how all the taxes combined are stifling our families.

And I take it you still think raising taxes on the poor and renters is a good policy since you didn't mention that.

Anonymous,  1:28 PM  

... what should also be considered is that Oak Forest has recently hired several new employees at significant pay increases over what their predecessors were paid; someone has to pay the bill!

... and new positions were created; including an $80k sweetheart deal for the city clerk, who went from a PTE, and a $12,000 salary, to a FTE with a salary of over $90,000 - all because he switched sides in a mayoral race and lined up with the winner

... politics as usual in Oak Forest

Anonymous,  4:41 PM  

If that's true, you've taught them well

Anonymous,  6:16 PM  

That's it-That's the last straw. I'm moving to Oak Park

Somewhere where there's less trees.

Anonymous,  6:42 PM  

The Oak Forest City Council is clueless on finances, but I have a plan. I'm going to heat with wood and see how they tax the logs I pick up that are dumped around on the city's streets.

Anonymous,  7:17 PM  

That's a good point. Since it is Forest,
there's lots wood to heat and keep warm.

O.K.maybe moving to Oak Park is not a good idea. But if they start taxing water, I'm moving to StreamWood.
It sounds like a place that has water and trees.

Anonymous,  8:41 PM  


Anonymous,  10:06 PM  

Senator Harmon, Should speak up against the proposed unfair tax shift. But I bet he remains very quiet as usual.

Anonymous,  11:21 PM  

I'm not even bothering with Senator Harmon. This is Hard Ball, so We need to play hardball.
We need to call in Sammie Sosa and Barry Bonds. They should be able to tell us if their throwing us a curve or not.


Anonymous,  11:32 PM  

"clueless on finances" HMMM
now that's an intellgent argument

Maybe Sherlock Holmes is a better joice,
Sammie ain't very good at finding clues

As long as we're fishing, has anyone heard from Babe Winkleman?

Anonymous,  11:35 PM  

"Property taxes are too high, but taxing utilities doesn't fix this."

I think the answer is in Mr. Triggs piece. LOOK Closely

Anonymous,  1:19 PM  

Carl says -

"One unintended consequence of this policy----will be to make it much more profitable for landlords to heat with electricity (tenant pays, but less efficient) than other heating systems where the landlord pays (but they are more efficient)."

Yeah, I heard a group of landlords conspiring the very next day they heard about this. They say it's worth dumping thousands of dollars into the conversion because they can just jack up rent even more.

And it'd be good for us too! The less HOT AIR They generate, will be more us to blow right here!

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