Wednesday, June 10, 2015

Junk Fees and Debt: The Funding Template for American Cities

Look for a variation of this in your mailbox next year, and every year after 2016.


As many of us have observed over the past few years, local governments in America are caught in the pincers of rapidly rising pension and healthcare costs and stagnant tax revenues. The only "fixes" that don't alienate vested interests or tax-burdened voters are dramatic increases in junk fees, i.e. "fees for use," and borrowing money by selling bonds.

I've prepared a template that will fit virtually any American city and county in the decade ahead. Larger cities will need to add a zero or two, smaller towns may need to remove a zero. But the template is truly one size fits all as the funding problems of local government are systemic: unsustainable promises of hefty pensions and healthcare benefits have been issued to municipal, county and state employees that cannot possibly be paid in a stagnant zero-yield economy that has stripmined the middle class and small business.

Here's the template:

Dear Resident:

As you may have read, the costs of fulfilling our pension and healthcare promises to our retired and current employees have soared. As a result, pensions, healthcare and the annual interest due on city bonds (money we borrowed in the past) now consume all tax revenues.

Without additional funding, we will have to lay off all current employees and close City Hall, the libraries, the fire and police departments, parks and recreation, and the rest of the city departments.

To avoid this, we are asking you to approve increases in fees for use and the sale of new bonds to raise desperately needed funding.

The proposed fees for use:

1. A 50% annual increase in city garbage collection fees for the next decade, after which we anticipate an annual increase of 45% until 2096.

2. Building permits for any project under $5,000 will cost a minimum of $5,000. Fees for larger projects will start at $10,000 and rise on a sliding scale based on the value of the project.

3. Homeowners and contractors caught attempting to evade the building permit process will be fined a minimum of $5,000 or 200% of the estimated cost of their project, whichever is higher.

4. All street parking in the city will require an annual parking permit of $1,200 per vehicle per year.

5. Day use of all city parks will now cost $10 per family per day. Reserving BBQ grills and tables will cost $100.

6. Internet and wifi service in the city will be taxed $1,000 annually per household.

7. Residents will be taxed $100 each annually, payable on the first of January, for consuming the city's air.

8. Parking violations will be increased from $35 per violation to $500 per violation.

9. Asking city staff for information about city regulations will cost $10, payable before the question is asked.

10. All residents will pay a sidewalk usage fee of $100 annually.

11. A hotel tax of 100% of the cost the room will be imposed from January 1, 2016, including private AirBnB rentals of rooms and apartments.

12. Every home-based business must obtain a city business license annually for a sliding-scale fee that starts at $1,000. Anyone caught evading this tax will be jailed as a financial terrorist bent on depriving city employees of their livelihoods.

Residents who cannot afford the new fees can deed their homes to the city, and pay rent to live in the home they once owned.

Unfortunately, the new fees for use will only pay a fraction of the salaries of our employees and managers, and so we also need your approval of new bonds:

BOND A: $30 million to keep the libraries open for two years.

BOND B: $30 million to keep City Hall open for two years.

BOND C: $30 million to fill the gargantuan potholes in city streets for two years.

BOND D: $30 million to keep the city parks open for two years.

BOND E: $30 million to keep the city Public Affairs department funded for two years, so they can continue explaining why the city is broke and why it's such a great place to live.

BOND F: $30 million to hire retired employees pulling down $8,000 a month in pensions and benefits for $100,000 per year salaries as "consultants."

BOND G: $30 million to fund a public-relations campaign for two years extolling the city's "green initiatives" and selling the city's potential to global corporations.

BOND H: $30 million to fund tax breaks for global corporations that open an office in the city.

BOND I: $30 million to fund studies on how to raise more revenues from fees for use.

BOND J: $30 million to fund more appeals like this for increased fees for use and the issuance of more bonds to fund everyday city functions.

BOND K: $30 million to purchase a surplus M1 Abrams tank for crowd control and to root out financial terrorists depriving the city of the revenue it deserves.

With your support, the city managers expect revenues to cover expenses by 2096, assuming the city's functions have been fully automated and there are only 12 employees left managing the servers. Until then, please support our efforts to grow the city out of its budgetary hole.

Look for a variation of this in your mailbox next year, and every year after 2016 until the whole corrupt contraption collapses into a rank rubble of insolvency, bankruptcy and write-offs. 



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