RAISING TAXES and Making Mud to Hide It

RAISING TAXES and Making Mud to Hide It
By Susan M. Halpern
Former Addison Councilmember (1992-1999)

 Since Todd Meier has been mayor, Addison’s taxes have increased by about 28.8%. During the past two years, Addison’s taxes have increased by more than 7%.  At the same time, this Council has overspent the budget each of the last two years by almost $2 million.

During the last fiscal year, Meier arranged a 1 cent tax rate decrease that he touted last year in his no-opponent campaign, never revealing the fact that it was funded out of Addison’s reserves. That left the misimpression that it was somehow a sign of fiscal health. It wasn’t.  I and others warned that cutting the rate for political purposes was inappropriate, and sure enough, this year they had to raise Addison’s tax rate dramatically, ultimately setting it above the “rollback rate” for the first time in Addison’s history.

This evidences an irresponsible budgeting process and a “tax and spend” philosophy. It doesn’t reflect well on the incumbents, so they and their supporters keep muddying the waters about the budget, presumably to avoid talking about the uncomfortable reality described herein.  So, let’s clear up a few “myths” that have been thrown around.

First, I’m talking about Addison’s taxes only, i.e., taxes imposed by Addison’s Council on Addison residents. I’m not talking about taxes imposed by other taxing units in Dallas County.  If you look on the back of your tax bill, you’ll see your taxes broken down by taxing unit.  You can easily see that Addison’s taxes have been on the rise.

Second, taxes have risen in Addison because Meier and his cadre have passed budgets that have raised your taxes. Period.  They’ve known exactly what they were doing.  They were 100% in control of the decision to impose higher taxes on Addison residents.

Third, the Addison taxes you pay are the product of the assessed taxable value (set by the Dallas County Appraisal District) multiplied by Addison’s tax rate (set by Addison’s Council). Now, it is true that Addison doesn’t control the DCAD values.  However, that DOES NOT mean that higher taxes in Addison were DCAD’s call.  The decision to raise taxes in Addison was made by Addison’s Council.  They are 100% in control of the taxes you pay as an Addison resident.

I participated as a councilmember in seven budget cycles in Addison. Here’s how it works.  The Council starts with the DCAD values.  Next, the Council considers the revenue it needs for the upcoming year.  That includes for employee compensation, special events, capital improvement, maintenance and all the other items that appear in the budget.  The Council works its way through proposed projects and other issues, making policy decisions along the way.  That allows the Council to approximate the revenue Addison will need for the upcoming year.

And make no mistake about it, it is the Council that makes the policy decisions and sets the priorities that ultimately form the budget, not the staff.  The staff does prepare an initial draft of the budget.  But that doesn’t happen in a vacuum; it happens with an understanding of the Council’s direction on various issues. So, when Meier tried to pawn Addison’s ongoing employee compensation issues off on then-City Manager Lea Dunn’s budget draft, it was utter nonsense.  Lea Dunn prepared her draft budget after receiving clear direction that Meier and his obedient incumbents weren’t going to address the employee compensation issue at anywhere near the magnitude that was needed.  Had Lea presented something different, Meier and his cadre would have accused her of insubordination.

In any event, the process is fluid, and the planning occurs all during the summer. Once you have the DCAD values and your approximation of what Addison needs in terms of revenue, the tax rate becomes a function of math.  It is the last variable, very much determined by the other two numbers, i.e., the DCAD values and the discussion of total revenue.  Essentially, the Council “backs into” the tax rate.  This process is repeated over and over during the summer, as the DCAD number becomes firmer and as the Council considers the projects and other issues that will define the total revenue Addison needs.  A variety of rates are considered as projects/issues are added or eliminated.

The last consideration is critical: the tax rate must be responsibly managed. Rising and falling DCAD values have an obvious impact on the tax rate that will be used.  Higher DCAD values accompanied by a lower tax rate could yield flat taxes, i.e., flat revenue.  Lower DCAD values and a higher rate could mean flat taxes or increased taxes, depending on the change in the rate.  You get the idea: you have to look at both components of total revenue.

The tax rate must be managed so as to avoid setting it above the “rollback rate,” a rate set by statute that protects taxpayers from precipitous increases in the tax rate. If Addison’s tax rate exceeds the rollback rate, taxpayers can force a rollback election which, if successful, would force the tax rate down to the rollback rate.  A rollback election injects real chaos into any municipality’s operations, because it places total revenue in doubt until the issue is decided.  My Councils were always careful to manage the rate responsibly to avoid putting Addison in that situation.

Meier and his cadre are apparently unconcerned, because this year, they set Addison’s tax rate above the rollback for the first time in Addison’s history. By quite a lot, too.  That is not a sign of a healthy or responsible budget process.  The fact that you’ve heard nothing about it is just another example of how information is withheld by the current regime.

Another misdirection is reference to Addison’s “balanced” budget. It is true that Addison’s budget is balanced, it is a requirement for municipalities under Texas law.  My problem is HOW this Council has met that requirement.  Last year, they took $800,000 out of Addison’s reserves to “balance” the budget, with about half of that funding Meier’s 1 cent tax rate cut.  Then, they overspent that budget by about $915,000.  That means that more than $1.7 million was funded from sources other than current expected revenues.  Sorry, but that’s irresponsible budgeting.

Oh sure, they passed a budget amendment to account for the $915,000 (which paid for Kanter and Lea Dunn’s severance, i.e., Meier’s political agenda, to name a few). So we were still “balanced.”  But anyone can see that you can’t keep delivering tax rate cuts to your political benefactor and overspending current revenues.  Among other things, it isn’t sustainable.

This reckless budgeting and its concealment from Addison’s citizens are not taking Addison “in the right direction,” nor can Addison “stay” this course. The “tax and spend” policies of Meier and his obedient incumbents are harming Addison, and hamstringing our future.

Addison can and must do better.