By Michael Gaffney
(Song lyrics by Love & Rockets – “No new tale to tell”)
“You cannot go against nature, because when you do, go against nature, it’s a part of nature too”
It is that time of the year again when the additional tax assessments are about to divided up on the residents and remaining small businesses. As your leadership on City Council has never seen a budget increase or a tax incentive to a millionaire (or now billionaires) they couldn’t approve, they now round up the usual suspects to engage in the annual shell game instead of actually looking at the revenues and expenses and finding (as I did, year after year) potential tax savings (although, it was rather pointless as the City Council voted against returning one dime to the taxpayers every single year.)
In an article authored by Grant Welker (an allegedly distant relative to Wes Welker) in the Worcester Business Journal, November 27, 2018 reported as follows:
“Worcester city officials, looking to bring in more tax revenue, are looking to potentially add to the sales tax and push the state for more reimbursement from nonprofits that don’t pay property tax.”
Let’s look at the last point first, looking to “push the state for more reimbursements from nonprofits.” First, we should be honest, it is a simple and obvious attempt to “pass the buck” that we see again and again. The same politicians that claimed that they would get things done if elected now blame their inability to perform on the state in a classic use of a straw man. Second, they have been playing this same tune since grunge rock was a thing. The “asks” have been made, the suggestions ignored, the task force reports circular filed. She isn’t going to the prom with you, move on. Finally, it is a completely disingenuous argument. Your City Councilors aren’t going to go after their own interests. They got elected by pandering to the same nonprofits they claim to be going after!
For illustration purposes, let’s look at nonprofit growth during the tenure of the allegedly pro-business Mayor Joe Petty from when he was elected Mayor in 2011 compared to 2018. These are the numbers from the Manual & Home Rule Charter (2018-2019):
Nontaxable Property 2011 – $2,996,064,835
Nontaxable Property 2018 – $5,690,531,381
To avoid any argument about property growth factors and other excuses, let’s look at the increase in taxable property in comparison:
Taxable Property 2011 – $10,856,862,089
Taxable Property 2018 – $12,764,649,014
The growth rate isn’t even close. It is a simple fact that nonprofits are killing the tax base in Worcester and have been for over a decade without any serious action to resolve it.
Let me stop for a moment, because I anticipate the argument that there are so many other factors that go into play and various other plays on words to make everything sound far too complex for the layperson to understand. It is simple: the less people and businesses paying taxes (or getting tax-favorable treatment), means the more taxes for the remaining people unless you actually lower spending (which will never happen). Anyone telling you otherwise is selling you something.
“Our little lives get complicated. It’s a simple thing. Simple as a flower. And that’s a complicated thing.”
Now let’s explore the first part of the article quoted above “looking to bring in more tax revenue, are looking to potentially add to the sales tax.” This isn’t something new. Unfortunately, in the Mayoral debates in 2015, I called for reducing spending, reducing or holding the line on taxes, and as a result, the Mayor Petty formed a “Task Policy Committee”. It was implied that the committee would look to solutions to reduce the tax burden, so it was a surprise when the committee, produced a report in 2016, endorsed by Mayor Petty, to find new ways to add to the tax burden. (The report is available online, Google “Worcester Mayor’s Tax Policy Committee Report” and read the actual report, not the inept local journalist’s spin on it.)
Naturally, the first thing the committee came up with was to “Expand the PILOT program”. PILOT is an acronym for Payments In Lieu Of Taxes. In other words, they were going to go after the nonprofits. Same nonsense as discussed above.
The rest of the report is replete with fun and exciting new ways to remove money from your wallet so that more tax breaks for millionaires and billionaires can be handed out while more property is taken off the tax rolls for the growing nonprofits. Let me be clear, increasing your taxes has been the plan for three years.Let’s look at the creativity of the plethora of new taxes that are most certainly coming your way, focusing on the 1% sale tax revenue currently being discussed, the multi-unit housing tax increase discussed a couple months ago and the 3% real estate tax increase that was being discussed in focus groups earlier this year.
1. Create a Penny Sales Tax – Here is a direct quote from the report: “Under a local option, even a 1% local sales tax could generate substantial new revenue without creating significant additional burden on consumers.” Who decided that an increase of 1% in local sales taxes would not create a “significant additional burden” on our seniors with a fixed income, our working poor, or those on public assistance (particularly when real estate taxes, water and sewer fees, etc keep going up)? Consumers with means will simply shop out of town. Those that will be most affected are the poor without the means or other ability (due to age, disability, or transportation challenges). Of course, the party that will be hit the hardest is the small businesses. Not only are they competing on an unfair playing field against the big businesses that are repeatedly receiving tax-favorable treatment and don’t have the buying power to compete on price, but now they are going to have to absorb the additional tax burden in their prices to keep consumers from driving 10 minutes out of town. Make no mistake about it, they have and will continue to lose customers even if they absorb the cost as more and more attractive shopping venues are opened in neighboring cities.
2. Move Multi-Unit Housing from Residential to Commercial Tax Rate – The report makes the argument against it, here is a direct quote “It is important to note that this proposal would have substantial financial impact on multi-family residential properties, nearly tripling their tax obligations. If the cost of these tax obligations were passed through to tenants . . . it would disproportionately impact poorer residents and people of color.” Tripling taxes that would be passed onto poorer residents and people of color. Yes, this is an actual proposal being explored. You know whose taxes will not be increased by this proposal? The developers of the properties that the city handed out tax-favorable status to – the millionaires. Who will be hit? By their own admission, the small property owners, the poor, and the people of color.
3. Three Penny Gas Tax. (I’ll discuss when they propose it)
4. Vehicle Rental Fee. (I’ll discuss when they propose it)
5. Community Preservation Act – Sounds innocent enough and like a worthy cause. But, it is not what it seems, it is a 3% real estate tax increase. Here’s a direct quote from the report “The CPA allows communities to establish a Community Preservation Fund supported by a surcharge on local property taxes of up to 3% . . . While passage of the CPA would place an additional burden on Worcester property owners. . . .” In sum, more money from you so they can give more tax breaks to the wealthy out of towners.
“When you’re down, it’s a long way up. When you’re up it’s a long way down”
During my years of public service, I always found it rather ironic that the local “Progressive/Socialist/Democrats” always supported the candidates that never saw a tax break, incentive, or finance deal that favored the 1% while calling on the rest to make up the difference. I was always willing to review any proposal, but I certainly was not in favor of an unfair tax system. Why should a developer pay a lower tax rate than a senior citizen? How is that progressive? And the most humorous part of it is that my so-call “conservative” supporters agreed with me. Maybe we should acknowledge that Worcester has its parties positions reversed.
In anticipation of revisionist history, I did agree to hear the Red Sox proposal. However, there is nothing in my history that would indicate I would have agreed to a $101 million dollar bond issuance and to engage in another enterprise that would drain funds from needed public services for indulgences. I’ve been railing about the Enterprise Accounts (the golf course, the DCU Center, and Union Station – see prior articles) that drain millions of funds that could be used for schools or even to give residents a tax break. Further, I specifically opposed any efforts to take property by eminent domain, which is going to happen with the Rex Sox deal. And, let’s be very clear, the purchase estimates by eminent domain and the actual purchase costs aren’t even close. The Red Sox deal puts money in the pockets of billionaires while taking it out of Worcester residents.
So, the City Council with do the tax allocation dance and the end result with be that you will pay more, millionaires and billionaires with pay less, and more businesses will be forced out while more nonprofits come in, increasing the burden on you next year and thereafter. The arguments will be the same old “it is like this everywhere.” Truth is, I’ve spent the last year traveling and exploring other economies. It’s not like this everywhere. It’s booming where taxes, regulations, and business friendly policies are enjoyed by all, not by the select few that City Council doles out tax breaks to. In Worcester, it can take a year to get approval for a sign, to build a building, and thousands of dollars in attorney fees and design fees to accomplish it. I could go on to discuss the lack of streets littered with trash, the lack of beggars on the corners, and the lack of needles and addicts in public spaces, but it would be intentionally misconstrued as an attack on Worcester by those in leadership that have caused the problem or the media that pushes their propaganda.
Worcester’s politicians and their friends in the media push an idea of a renaissance as a result of minor development. Feel free to travel to any one of many high growth states such as Texas or Florida and see what actual development is. Google maps can’t keep up with the development! It is construction everywhere, jobs, etc. and they don’t call it a renaissance, they call it Wednesday.
Worcester is a beautiful city and shall forever be first and foremost in my heart (hence I keep an eye on it and have written this ridiculously long article) and I hope that its residents start demanding more from the city leaders instead of the city leaders demanding more from them.
“It’s all the same thing. No new tale to tell. No new tale to tell.”