(WJBC file photo)
By David Stanczak
A situation similar to the fiscal cul de sac the State of Illinois has kicked the can into is developing among units of local government. There was a time when the financial picture for the City of Bloomington was fairly unchallenging. The city’s ability to absorb increased costs was great. The pension mess hadn’t come to fruition yet, the economy was stable, and the tax base, through increasing economic activity, annexation, or both, continued to grow. That was then, this is now.
Growth of the tax base can no longer be taken for granted. A bursting real estate market bubble, decreased economic activity, slowed development, and dramatically rising pension costs, coupled with a couple unwise major investments now strain the city’s budgets.
Tightening the city’s belt can take several forms, in addition to cutting internal costs. Whereas, at one time, the city picked up any and all refuse without charging for it, there is now a monthly charge which the city is now talking about increasing, even though the system is much more automated and less labor intensive than it used to be. There is also a move to make development pay for itself. Building permit fees are exponentially more than they were years ago; the idea behind it is to make the inspections function pay for itself. In addition, there is sentiment that developers haven’t been paying their fair share of infrastructure costs. The result would be to externalize more of the city’s costs and make developers pay for more of the improvements. All of that makes sense, in an economic vacuum, just like tax increases make sense as a means of increasing revenue. But the economy, at all levels, is dynamic. The city’s increased costs can be pushed off on other parties in the form of increased fees. But doing so makes development more expensive, which in turn makes construction more expensive, which in turn means you get less of both.
The City of Bloomington faces the same conundrum as the State of Illinois: it needs money, but taking it from people in taxes and fees stifles the economic activity that grows the tax base. It’s a Gordian Knot just waiting for an Alexander.
David Stanczak, a Forum commentator since 1995, came to Bloomington in 1971. He served as the City of Bloomington’s first full-time legal counsel for over 18 years, before entering private practice. He is currently employed by the Snyder Companies and continues to reside in Bloomington with his family.
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