Archive: Opinions

Is it human nature or just governments that make wrong assumptions and bet the farm on them?  Lansing has had one giant egg in its basket for many years.  That is AES Cayuga, the coal-fueled power plant that is the Town's largest taxpayer, funneling millions of dollars into the school district, town and county coffers over the years.

Good years.  But when bad years hit it seemed like a shock, especially to the school district.  All of a sudden it was the power plant's fault that budget cuts would have to be made.  And that homeowners' taxes would have to go up.  It was everyone's fault but the school district's.

Just about any stock broker will tell you that you should diversify your investments to protect your portfolio.  If stocks go up, bonds may go down.  If bonds go up, real estate investments might go down.  Over the long haul you will make money, but your investments won't tank if one segment has hard times.  This isn't a new idea.  It was about the first thing anyone ever told me about investments, and even though I am no genius at this stuff, it made sense.  it's a pretty easy concept.  So why didn't our taxing authorities do that a long time ago?

Brokers tell you to be proactive in diversifying your portfolio, but governments seem to only be able to handle being reactive.  If there are three fatal accidents in an intersection, maybe, just maybe there should be a traffic light or a stop sign there.  If a woman is killed in a park, maybe police should patrol it more often.

If you are counting on one taxpayer for a significant percentage of your budget what do you expect as technologies and markets evolve?  Everyone thought records and CDs would be here forever until downloads came along.  Look what happened to Borders, with the rest of the book industry slowly but surely getting sucked into the black hole electronic reader devices has opened up.  Does anyone remember Ma bell?

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Lansing's Economic Development Committee is now reacting to the AES disaster.  I think the committee is doing a fantastic job of fast-tracking programs and incentives that will bring business to the town to make up the huge tax gap that was caused by simply not having a lot of small eggs instead of one.  A Lansing Town Center Incentive Zone will bring business and residential development to the part of the town where most residents want the development to center.  The committee just got the go-ahead to put together a proposal and some numbers to build a new business and industrial park as part of the new town center initiative.

It's a lot, but it's not enough.  And that's not the committee's fault -- they weren't even formed until a couple of years ago, and they certainly hit the ground running.  Until the Town took the lead on that all the taxing authorities were happy to just sit back and collect the cash for years.  It wasn't until the first renegotiation of the AES Payment In Lieu Of taxes (PILOT) agreement that a few heads were raised on municipal boards.  That version of the agreement significantly lowered projected revenues from the power plant, and a second renegotiation lowered them even further.  Now the plant is for sale, and many local people fear it will close altogether.

Meanwhile, the way incentives work is that you don't get a whole heck of a lot more tax money right away.  Developers want to build where they can get a break, and with the high cost of building these days, it's almost a given that developers want that break and will go where they can get that break.  PILOTs typically increase the amount of revenue to the full amount over a ten year period.  So you take less to eventually get much more.  It is forward thinking, but better as an ongoing process than during the time it is starting up.  We're in the beginning of that 'starting up' phase.  It's a better place to be than the 'whining about lost revenue and doing nothing about it' phase, but it is still a tough phase to be in.

I think the Economic Development Committee is doing all the right things, and eventually it's going to make this tax mess settle into a much healthier situation.  But what happens over the next ten or fifteen years as the things they initiate today work their way toward completion?

God knows I am not suggesting that we only vote stock brokers into office!  But in these precarious times it behooves governments to take a look at what they are doing and cogitate on the notion that the conventional wisdom about a lot of things got to be conventional wisdom because it works.  Wash your hands more often and you get sick less frequently.  Don't track mud on the carpet and you don't have to clean the carpet as often.  Diversify revenue streams.

Not new ideas, any of them.  And a lot less pain when you pay attention to them.

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