Colorado Springs and the Dark Streetlights - The Difference Between "Can't" and "Won't"

(Subtitle:  Paul Krugman is Absolutely Positively Undeniably Bi-Partisan-ly Wrong On This)

I have railed recently against bailouts of our individual states and cities, trying to explain the concept of fiscal responsibility, and that every community has choices to make about what it values.  Today, I'll entirely avoid the topic of teachers, since, like puppies and kittens, education evokes emotional responses, making it impossible for people to analyze the situation philosophically and rationally.  As usual, it comes down to the difference between "can't" and "won't."  Towns claim that they can't afford certain services, but in most cases, the answer is really that the citizens CHOOSE not to pay for them - that they won't fund them via higher property taxes.  This is nothing new - it's been going on as long as towns have been collecting property taxes.

If you've read a major paper lately, you've hear about the city of Colorado Springs, where citizens have elected to make major cutbacks in spending and thus, in services received.

From the WSJ in April:

"Like many American cities, this one is strapped for cash. Tax collections here have fallen so far that the city has turned off one-third of its 24,512 street lights.

But unlike many cities, this one is full of people who are eager for more government cutbacks.

The town council has been bombarded with emails telling it to close community centers. Letters to the local newspaper call for shrinking the police department and putting the city-owned utility up for sale. A commission is studying whether to sell the municipal hospital. Another, made up of local businessmen, will opine on whether to slash the salaries and benefits of city employees.

"Let's start cutting stupid programs that cost taxpayers a pot of money," says Tim Austin, a 48-year-old former home builder now looking for a new line of work. "It's so bullying and disrespectful to take money from one man's pocket and put it in another's."

Such sentiments, which might draw cheers at a tea-party rally, are pretty much a mainstream view here in the state's second-largest city, the birthplace of Colorado's small-government movement.

Almost a decade ago, voters imposed strict limits on how much the city government can spend. Last November they turned thumbs down on a property-tax increase, despite warnings from city officials about a projected $28 million shortfall requiring at least a 10% cut in an already shrunken budget.

And so, faced with dwindling revenues, intransigent voters and widespread distrust of government, this city of 400,000 has embarked on a grand experiment: It is trying to get volunteers and the private sector to provide services the city can no longer afford.

Now, I applaud the citizens of Colorado Springs - that's their prerogative.  If they don't want to pay for these services, they don't have to - this was EXACTLY my point.  If you don't want to pay, THEN you have to make cuts.  Similarly, if you can't pay, then you have to make cuts - or those offering the services need to make compromises.

The New York Times took a slightly different approach:

"It was when the street lights went out, Diane Cunningham said, that the trouble started.

Her tires were slashed, she said. Her car was broken into. Strange men showed up on her porch. Her neighborhood had grown deserted at night, ever since four streetlights in a row were put out on Airport Road, the street outside her mobile home park.

That is why Ms. Cunningham, 41, and her son Jonathan, 22, were carrying a flat-screen television out of their mobile home on a recent afternoon. “I’m going to pawn this,” Ms. Cunningham said, “to get a shotgun.”"

I don't really like the victim spin here, after all, if the citizens of Colorado Springs want streetlights, all they have to do is pay for them (and yes, they are absolutely positively non-debate-ably affordable, which I'll get to below), but let's move on.

It was today's Op-Ed from none other than Paul Krugman which set me off.  Now, again, I don't have a PhD in economics, or a Nobel Prize, but hopefully Krugman and Kartik Athreya will not write me off because of that.  Now, since Krugman's piece is titled "America Goes Dark," I'm going to focus on the implications for Colorado Springs, which he is clearly referring to.

Krugman writes:

"The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.

Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead"

Ok - so far nothing is really crazy - a little bit of a drama-bomb perhaps, but basically standard rhetoric.  I think he's wrong about roads "they can no longer afford to maintain" - it's really "they are no longer willing to pay to maintain," but let's continue:

"We’re told that we have no choice, that basic government functions — essential services that have been provided for generations — are no longer affordable. And it’s true that state and local governments, hit hard by the recession, are cash-strapped. But they wouldn’t be quite as cash-strapped if their politicians were willing to consider at least some tax increases."

Yes!  Holy Cow!  I practically jumped out of my chair when I read this - how could I actually be agreeing with Paul Krugman?   Of COURSE that's the solution - if you want the services, you need to raise taxes to pay for them!  I am, in general, fiscally conservative, but I'm also a realist and I know that services cost money.  I'd never be a "we can't raise taxes under any circumstances" pigeon-holed partisan.  I was feeling good, and imagining that if Krugman understood this, then perhaps there was hope for society.... Until I read the next paragraph:

"And the federal government, which can sell inflation-protected long-term bonds at an interest rate of only 1.04 percent, isn’t cash-strapped at all. It could and should be offering aid to local governments, to protect the future of our infrastructure and our children."

NOOOOOOOOOOOOOOOOOO!!!  Of course, he had to throw the children in there (note: Paul - you forgot the puppies and kittens!!!), but Krugman squashed my warm-fuzzy-feeling and returned me to the depths of despair over the Entitled American Attitude.

See, in case it's not clear from reading the WSJ article, the citizens of Colorado Springs made the CHOICE to cut back on these services.  It's not that they CAN'T pay for them, it's that they WON'T pay for them.   Again - I applaud the citizens of Colorado Springs - they can do whatever they want with their town, their money, their budget and their services, but it needs to be clearly recognized and LOUDLY shouted that, contrary to Krugman's solution, they deserve not a single dime of federal government funding to subsidize their desires. 

Colorado Springs, like many towns, has a bunch of budget documents online.   Perusing them, and combining information from the other articles, it's clear that this isn't a matter of "can't" afford it, but rather "won't pay for it."  Really - it's not Kid Dynamite's evil-capitalist-Ayn-Rand-worshiping-lost-in-a-philosophically-idealized-world interpretation.  Even though the WSJ article above already quoted members of Co. Springs' small government movement, I'll still give you some numbers. 

It would cost the average Colorado Springs homeowner $116 in increased property taxes to close the ENTIRE $28mm budget gap - not just the streetlight shortfall! (see footnote for calculations).  The increase for an average home would be from the current $83 they pay to the city budget, to the $199 that would be required.

The budget link above boasts about how Colorado Springs has decreased the property tax rate by 41% since 1990!  That is truly remarkable, and again, I applaud them for that - that is the financial benefit that they reap for the CHOICES they have made - the sacrifices that they have decided to make, and it is essential that the rest of the country not subsidize those choices. 

Some of my critics say I'm using the philosophical ideal of "fiscal responsibility" to punish people who make poor decisions.  On the contrary - I'm pointing out that these decisions are indeed choices, and that there is a huge huge difference between can't and won't.  When pundits like Paul Krugman use these choices to promote his own fiscal agendas, they must be exposed and soundly thrashed as intellectually dishonest.  Colorado Springs is not a victim who needs a Federal rescue, despite what Krugman would have you believe.

-KD

calculations: The city has a budget shortfall of roughly $28MM.  The city expects to receive roughly $20MM in property taxes in 2010 (page 13) (aside: their property tax rate is 1/6th of Denver's property tax rate).  The average household paid property taxes which included $83 toward the city budget.  That's eighty three dollars total - not $83 per $100k of assessed value.  Now, since the shortfall is $28mm,  in order to close the gap they need to raise $48mm instead of $20mm, so the average city portion of the property tax bill needs to go from $83 to $199.    That's an average increase of $116 - to close the ENTIRE budget gap - not just the streetlights (which would cost a mere $3 per person, on average: $1.2MM divided by roughly 400,000 citizens - and yes, that's a per capita average I calculated for the streetlights)

In case you want more numbers, the average sale price of an existing Colorado Springs home in 2008 was 243,000 (page 4), and the property taxes on that assessed value are $1130.  Just comparing it to my current situation:  citizens of Colorado Springs pay an average of less than 1/2 of 1% of their home's assessed value in property taxes.  I currently pay 2.7% of my home's value in property taxes.