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 May 18, 2006 | Vol 5 No. 10 |
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In This Issue: – Reforming Property Taxes in the Region: A Coming Attraction – What Jacobs Missed; What Galbraith Didn’t: The Legacies of Two Titans – Calendar
The challenge for thoughtful citizens and policy professionals is to convert this anger into a realistic debate over how property taxes could be comprehensively reformed. This means discussing the system’s larger implications for land use, equity and efficiency, rather than simply a yes/no yelling match about whether property taxes are too high. It’s the difference between providing property tax relief, and providing property tax reform. There’s no question that tinkering with any part of the property tax system is difficult, because one is dealing with the financing that underpins local government, and which comes directly out of citizens’ sensitive pocketbooks. It’s like trying to re-wire a house while having to leave all the lights on and the oven burning. That’s probably the reason why so many attempts at reform have consisted of reports from high-profile commissions, virtually all of which still sit on shelves awaiting action. Nevertheless some change seems inevitable. In Long Island, outright revolt may have been temporarily delayed as more school budgets were approved in 2006 after two years in which more than a third were rejected. But the underlying causes remain, and Suffolk County Executive Steve Levy has joined the chorus of those criticizing the unwillingness of officials to cut costs. Recently, voters in New Jersey's key suburbs -- Hunterdon, Middlesex, Morris, Somerset and Union counties -- where much of the state’s growth has occurred over the last decade, rejected a majority of school budgets, a sure sign that property taxes are too high, or at least that voters are not feeling satisfied with how they are spent. Despite the vitriol of partisan politics, this year’s gubernatorial elections in New York and Connecticut provide an opportunity to raise questions regarding the future of the property tax system, as well as the potential for improving our communities through comprehensive and coordinated fiscal and land use planning on all levels of government. In Connecticut, for example, tax reform and smart growth are among the predominant issues of the two democratic challengers for governor, while incumbent Governor M. Jodi Rell made some initial recommendations in her February budget address. The trick is for both candidates and their questioners to engage in a realistic debate about how the system could be changed, and to avoid simplistic labels or catchy slogans. New Jersey’s gubernatorial campaign last year and the election of Governor Jon Corzine have already made change in the property tax system likely there. After approving the State budget next month, New Jersey elected officials are likely to consider specific legislation or constitutional amendments for property tax reform. Governor Corzine has repeated his campaign pledge to address both relief and reform, and continues to talk about the need for a Constitutional Convention to enact fundamental reform. In addition, Senate President Codey and Assembly Speaker Roberts separately announced efforts to take a fresh look at the property tax system to find ways to reduce costs and increase efficiencies. What the debate has lacked thus far is a framework for comparing proposals and considering how to improve land use planning and our quality of life. A new study just released by Regional Plan Association in partnership with the Lincoln Institute of Land Policy attempts to fill this void by comparing the potential impact of a range of revenue-neutral school property tax reforms across a set of established criteria. Fundamental Property Tax Reform II: A Guide to Evaluating Proposals was developed to spur the New Jersey debate, but it provides a framework for serious consideration in New York and Connecticut, too. Focusing on land use and social equity as well as efficiency and fiscal health criteria, RPA is looking to inform officials and the public on ways to address runaway property taxes while improving our communities. In particular, any real property tax reform must promote consistency with state land use and development goals. While New York lacks a comprehensive development plan, and Connecticut’s plan is less advanced than New Jersey’s, it is important for all three states to work towards a fiscal system that empowers towns to encourage redevelopment and protect open space. Other land use and social equity criteria include housing affordability and educational equity. All are crucial to the economic prosperity of the state and the well-being of our communities. In addition, true property tax reform should take into account efficiency and fiscal health criteria. Would a proposal that substitutes the income tax for a portion of the property tax provide greater flexibility and local autonomy than the current system, or could it reduce the fiscal discipline and the stability of local and State revenues? Would substituting some or all of local property taxes with a statewide property tax have any advantages? Would a proposal favored by many economists, taxing buildings at a lower rate than land, get a serious hearing from citizens and elected officials? The latter technique was applied in Pittsburgh and select other places, and could be an idea to spur development in urban areas or brownfields while reducing new construction in greenfields or areas with natural resource limitations. To demonstrate the usefulness of this approach, RPA evaluated five ideas for reform. While these by no means exhaust the range of potential reforms, they include several proposals for fundamental change and are sufficiently varied to demonstrate that the criteria can be used to compare very different concepts. For example, varying property tax rates by areas in the State Plan scored high in flexibility and consistency with the Plan, but low regarding local autonomy. A statewide or countywide property tax rate scored lower than proposals to substitute a portion of the property tax with an increase in the state income tax, but it also focused attention on how consolidating school districts at the county level could be combined with other ideas to achieve financial savings and promote a sustainable system. And a split rate taxation system, where buildings and improvements are taxed at a lower rate than land, was found to score high in many categories, including State Plan consistency, housing affordability, flexibility and local autonomy, but implementation may be problematic. Of course, with any of these ideas, the devil is in the details, and the best reform may require a combination of these concepts. At a public forum last Tuesday sponsored by the New Jersey Coalition for the Public Good at the College of New Jersey, panelists explored different options for property tax reform and the broader impact those options will have on our communities and the region. While it was fascinating to hear from panelists as diverse as Former Governor Florio and Senate Republican Leader Leonard Lance, it was evident from the program that there is no common definition of “reform” and even further divergence on how to measure success. Housing advocate Alan Mallach pointed to the need for land use reform, while former AARP President Marilyn Askin spoke to the need for greater efficiencies at the local level. RPA’s report provides elected officials and the public with an understandable and usable framework for measuring property tax reform proposals against different agendas. It has often been said that wherever the nation is headed, New Jersey will get there first. Be it brownfields remediation, ultimate build-out of the State or urban school reform, it seems that New Jersey by virtue of its size, location and composition, is forced to address critical issues before other states. Wouldn’t it be refreshing if this time we see a long-term solution that can benefit the tri-state region and the rest of the country? What Jacobs Missed; What Galbraith Didn’t. I was a fan of both of these people, having read some of their extensive bodies of work, having had the good luck to meet both of them, and in the case of Jacobs, corresponded with her for a time. In terms of our region, it’s important to look at both of their legacies: Jacobs for framing the debate in urban planning, and Galbraith on the role of government in general. Let’s look at Jacobs first, and why I believe the merits of her work are seen in too bright a light, and her deficiencies not seen enough, if at all. Like a clear and nourishing fountain, the stream of wisdom and good sense emanating from the small house near downtown Toronto was a wonderful thing. Jacobs lead an unusually productive life. She not only managed to change the way we thought about urban planning– her revolutionary rhetoric became the new status quo – but she actually accomplished concrete things, like stopping a freeway from being built through the middle of Manhattan. She was an effective thinker and an effective activist. She will be remembered for championing the traditional city form of gridded streets, mixed use, high density but small scale. Those who have read her work more closely will remember her approach to things, which started with looking at things as they actually are, and trying to figure out how they worked, and only then how they should work. She toppled the misguided notions of 60s-era planners, whose overly theoretical models were like some alien beings, descending on more nuanced places. I was and am a great fan of Jacobs. But despite her admitted perceptiveness, she also had blind spots. In her celebration of the Small, she missed the importance of the Big. By “Big,” I mean many things, but one of them certainly is infrastructure. When it came to cities, Jacobs revered the small scale, be it the narrow street with the small shop, to the lone inventor working above the shop who was part of the great, big metropolis she also loved. Jacobs did love big cities. But what Jacobs didn’t see as clearly was the big subway running beneath the small quaint city street, or the even larger water tunnel nearby, both of which created a context in which both the classic urban neighborhood and the big-city economy could prosper. Her former home of Greenwich Village, which Jacobs surely loved until her passing, despite its evolution into mostly a home for the rich, had its basic form set in the mid 19th century as growth moved up the island of Manhattan based on a booming economy spurred by the construction of the Erie Canal in 1825. This was the type of mega-project that Jacobs probably would have opposed, if she had been around. Yet it sealed New York’s position as the premier commercial city in The New World. Greenwich Village would never have developed without it. In the 20th century, it was the construction of the subway system and commuter rail system, as well as the big water tunnels, which in turn were made possible or at least more likely by the merger of Brooklyn and New York into one big city, that kept these inner city areas vital. As far as I know, Jacobs missed all that. Jacobs’ general lack of appreciation for infrastructure brings us to her lack of appreciation for the thing that builds infrastructure, which is big government. I suspect this stemmed in part because of her fight against Robert Moses, the megalomaniac master builder who wielded concrete like an avenging angel. The other part probably was fueled by her opposition to the Vietnam War, which was wielded by an even bigger federal government. In her analysis of cities, smaller was almost always better. In her analysis of nations, she was an advocate of Quebec breaking off from Canada. She described the United States as one of the “monster countries,” along with India, China and the former Soviet Union, that behaved more like uncontrollable pathologies than actor-driven democracies. While this analysis provokes thought, it is an example of her distrust of all things gigantic. Probably most importantly for the Tri-state region, she was an anti-regionalist, seeing in regionalism a misguided attempt to work well on a large level, when it was hard enough to work well on a small scale. As a fellow at the Regional Plan Association, an organization that highlights the value of regionalism, I fervently disagree with her view on this. Of course, if big government had tried to put a highway through my home, and at the same time tried to steal my sons and send them away to die in an immoral foreign war, I would be against big government too. I might even be against regionalism. But be that as it may, Jacob’s lack of respect for government and the systems government builds seems to have led her to a flawed view of how urban places emerge. Whatever the merits of Greenwich Village or her own Yorktown neighborhood in Toronto, their streets and buildings are not something that can be exactly copied, and made to work in say, the suburbs of Phoenix, like a wind-up clock. These inner city neighborhoods function only because they are part of a larger whole, which includes both transportation systems that allow people to live without cars, and an economy that gives them income. If we are to build new urban places, we must be mindful of their larger context. Jacob’s overly intense focus on narrow streets, mixed use and low-rise buildings has led her followers to focus too much on them as well. If you love roses, you should study the soil that produces them, not just the design of their stems and petals. Which brings us to Mr. Galbraith. The economist admired government, and was a consistent advocate for it taking a larger, more conscious role in the creation of our economy and society. I say he is less appreciated now because many current economists, beguiled by the wonder of complex mathematical formulas, have missed what is the proper and more fundamental role of economics, which is constructing an economic system in the first place through a set of laws and policies. I saw Galbraith speak to a small gathering at the Harvard Club in Boston in roughly late 1999. The dot.com boom was still soaring, and the lean, tall man with the angular face, then in his nineties, somewhat nervously told the audience that he persisted in his view that the tech boom was going to end with a crash, as so many other booms had. Galbraith, the author of books on the 1929 crash and the phenomena of crashes in general, said that he had advised the president of Harvard to begin pulling some of the university’s endowments out of the stock market, in order to safeguard it. He was right. A few months later, even sooner than Galbraith had cautiously predicted, investors pulled their money out of hundreds of flimsy high-tech companies, bringing their stock prices down, down, down. With it came the economy as a whole. This kind of prescience shown through all of Galbraith’s writing I have had the chance to read. Besides being a good writer, the tall gentleman was simply likable. As was Jacobs of course. They must have been aware of each other. I wonder what they thought of each other. I’m sure each had read much of the other’s work, given that Jacobs actually wrote more about economics than cities, and Galbraith wrote so much about society in general. Whatever their differences, they both bubbled forth a kind of basic good sense, that seemed simple, but was anything but. Now with both absent, we should take their words in the probing spirit of inquiry that both were accustomed to use, and not let either’s work become sanctified into orthodoxy. Questions Or Comments On What’s In This Issue? Send Them To The Editor Of Spotlight On The Region, Alex Marshall At alex@rpa.org |
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June 4th, 8 a.m. June 15, 5:00 p.m. - 7:30 p.m. |
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Spotlight on The Region A publication of Regional Plan Association, Robert Yaro, President, Alex Marshall, Senior Editor 212-253-2727, x360 alex@rpa.org www.rpa.org |
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On Wednesday May 24, join Governors Island Alliance for an Evening Fundraising Reception honoring NYC & Company on Governors Island. The evening will include tours of the island, delicious refreshments provided by celebrity chef Jonathan Waxman, and music. Please join us as we celebrate Governors Island, New York's Next Great Place, and honor NYC & Company, the organization responsible for the revitalization and nurturing of the city's dynamic tourist industry. Download the invitation from the website below, or contact Amanda Jones at 212/253-2727 ext. 317 for more information, visit www.governorsislandalliance.org