My View: Mo' Money! Mo' control!

 

My View: Mo' Money! Mo' control!

 

Date: May 14, 2009
by: Rod Thomson | Gulf Coast Business Review

 
 

Some habits die hard, even destructive habits. Just ask an alcoholic or a smoker.

The Sarasota County Commission has been in the habit of trying to block, direct and generally micromanage development in the county while raking in ever more tax dollars.

And despite the bad economic conditions, deplorable state of the construction industry and the need for relief, the commissioners just could not get themselves to reduce impact fees on new houses. What new houses, you ask? Exactly. Nothing much is happening for a cluster of reasons, which has prompted other communities and school districts in our area to cut or eliminate their impact fees, at least temporarily.

But Sarasota County commissioners could not do it. They talked about it. But, in the end, they voted against it 4-1, with the one “no” vote coming from Joe Barbetta — only because he wants the taxes actually increased.

They just couldn’t give up the addiction, even for a short time. In fact, they could not even reduce the addiction.

The idea behind impact fees is that each new house causes some “impact” on the community that requires additional roads, schools, libraries, utilities and fire departments. Road impact fees, by far the biggest of the fees, are also levied on every new building, from offices to hotels to shopping centers to manufacturing space. Nothing escapes the tax machine.

At times it seems that government policy can be summed up into two categories: mo’ money and mo’ control.

Impact fees are a great example, even in their naming — which is wrong on two accounts.

First, they are clearly taxes on new houses. The word “fee” is used to obfuscate that reality, because people don’t like taxes. But if you build a new house to live in, you must pay this to the government. That is a tax.
Once you live in that house, you do not pay property fees, you pay property taxes.

Second, remember these taxes are designed to pay for the financial impact of newcomers on roads, schools and so on. But that is erroneous. People pay the taxes, buildings don’t. And, so, if a third-generation Sarasotan builds a new house, he pays an “impact” tax when he clearly has no new impact. But if a family moves down from Illinois into his old house, it pays no impact tax, even though it is self-evidently causing one.

And don’t buy the argument that developers pay the fee. They write the check to the county. The homeowner foots the bill as he does for all the other costs associated with the house.

In March, the commission talked like it would reduce the fees 26% for about 18 months to help spur some activity and maybe provide some needed monetary relief. But during a meeting last week, at the urging of Barbetta, commissioners decided against any decrease and may increase the taxes next year.

That, even though it was acknowledged that the cost to building roads has fallen about 25% since the peak.
Instead, commissioners told staff to come back with new data for a fee schedule by Oct. 1.

The devil indeed is always in the details there; the assumptions that go into the formulas determine the outcome. Determining impact levels is what Commissioner Nora Patterson rightly calls “hocus-pocus.”

Last week’s impact-fee debate was telling.

Barbetta belittled Manatee County, the Sarasota County School Board and other jurisdictions that are temporarily eliminating impact fees for pursuing “feel-good proposals” — not the serious policy that he is obviously pursuing.

“There is no proof that a reduction in impact fees is going to help the economy,” Barbetta said during the meeting.

Well, no evidence except the laws of economics. Reducing the cost of a product will increase demand, and supply will rise to meet demand. It may not help much, but it is bound to help some.

Then, Chairman Jon Thaxton, who generally forms a bloc on growth issues with Barbetta, asked why we would want to reduce impact fees when overbuilding residential is “what got us into this mess.” Apparently that means if we reduce the taxes, there will be more building — which actually makes sense and is contra to Barbetta’s dismissals.

But during the boom times Thaxton was saying that raising impact fees would have no negative impact on building. Well, if reducing them would have a positive impact, ipso facto increasing them would have a negative impact.

This goes to the root. Governments have a hard time giving up any tax, and that can require intellectual gymnastics. But there is something mysteriously alluring about impact fees, particularly in Sarasota County.
Perhaps it is the mis-impression that those being taxed are not here and thus not voters yet.

The bottom line driving this and so many other decisions is that government leaders look at the county capital budget and say, “We need mo’ money!” to feed that insatiable need for ever more and bigger government roles.

Rod Thomson is executive editor of the Gulf Coast Business Review and can be reached at rthomson@review.net.

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