Wednesday, March 31, 2004

GR Taxes Just Went Up Again

-4/1/04 CORRECTION: The City Commission voted to have a hearing on this issue before voting on it. Is there any doubt they'll vote in favor of it?

Yesterday the Grand Rapids City Commission voted to tack on an "administrative" fee to our property tax bills. There doesn't seem to have been much media coverage on this issue. This tax increase will raise an additional $1.35 million in general operating revenues.

Some of the wording in the resolution that the Commission passed is pretty funny. Here's an excerpt:

"WHEREAS, in view of the City's severely depressed financial condition, the City Commission has a fiduciary responsibility to look to all lawful means for raising revenues to offset the impending huge budget shortfall so that service cuts to the citizens can be minimized."

Perhaps they should refer to it as the City Government's depressed financial condition, not the city's. But then again, with the incessant tax increases and layoffs around the city, perhaps they were inadvertently accurate with the above wording. Cuts seem to be the last resort to our tax and spend city fathers. Of course, the first thing they go after are police and fire rather than the load of social programs the city government involves itself in.

And in another contradictory move, the Mayor and Commissioner Tormala are lamenting job growth in Grand Rapids. They created a New Economy Task Force to attract jobs, particularly manufacturing jobs. Maybe they should look at their own policies of high taxation and regulation that create the business-unfriendly environment in Grand Rapids, West Michigan, and Michigan. But they won't. They will propose more subsidies and special favors for some companies... and no relief for the rest of us.

Monday, March 29, 2004


It's the irony of the year that the AFL-CIO stopped in Greenville to hold a "Show us the Jobs" rally this weekend. It is organizations like the AFL-CIO that advocate such job-killing measures as forced unionization and living wage laws that end up increasing unemployment.

It is a pretty well-established fact in the world of economics that unionization, especially forced unionization, increases unemployment. Why? A brief explanation: unions limit the size of the workforce because they require higher wages to do jobs that could be done at lower wage levels. The result is that the supply curve of labor is skewed by higher-than-market wage levels. Employers, in order to remain profitable, are able to hire fewer people with the same amount of money. Therefore, some workers get more money per hour, but fewer workers are employed, increasing unemployment.

There has been an extensive amount of research on "right to work" states where forced unionization is outlawed (you can't be required to join a union in order to work in a union show in a right to work state). Right to work states have seen faster rates of growth in employment, wages, and decreases in poverty rates that non-right to work states do not show.

In addition, organizations like the AFL-CIO advocate in favor of so-called living wage laws, requiring companies and government units to pay higher wages. Again, economists understand that the minimum wage increases unemployment (due the same principle as unionization), but the living wage magnifies the problem. Increasing wage levels artificially through regulation distorts the labor market and, once again, forces employers to hire fewer people, once again increasing unemployment.

And the real sticker is that those hardest hit are minorities, unskilled laborers, and the disabled, since they are the first to go when these types of laws go into effect. Why hire someone who doesn't have the skills at a high wage when you can find someone who does and pay the same?

So, go ahead AFL-CIO and drive the big bus around getting people whipped up into a frenzy over job creation, but know that you're a big part of the problem.

Saturday, March 20, 2004

GRPS Asks for $165 Million

On Monday the Grand Rapids Board of Education voted to place a bond question on the ballot on June 14th. They split things up into two questions, one for $150 million for buildings and one for $15 million for computers.

The combined millage rates of the two issues will be 2.3 mills, according to the information we could find on the GRPS web site (for some reason none of media outlets with web sites published the actual millage rates, even the print edition of the Grand Rapids Press).

The tax-raising politicians always like to point to the cost per month or per day to the average taxpayer to make it sound like a small increase. However, in the interest of full disclosure, we would like to point out the total cost to the average taxpayer. Assuming a 25 year payoff schedule (again, the media didn't report what the rate is), the owner of a $100,000 home would pay about $115 per year in additional taxes. Assuming a modest taxable value increase of 2% per year over 25 years, the total tax per $100k home would be approximately $3,795.

Those of us who are city residents need to pay a little closer attention to our tax-raising politicians. It seems as though we've got tax increases coming at us from every direction. The economy isn't so hot and layoffs continue. Why can't government trim costs like the rest of us? If you're a bureaucrat, when the going gets tough, demand more money!

Saturday, March 13, 2004

Death Penalty in Michigan?

A committe in the State House voted yesterday to send a bill to the full house for a vote to put the issue on the ballot in November of whether or not the state should have the death penalty. This would amend the state's constitution and remove the current prohibition on the penalty of death.

Michigan has, in my opinion, a proud history of abolishing the death penalty. In 1846 this state was the first English-speaking territory in the world to abolish the death penalty, under the newly-approved 1835 constitution. Since then this state has had no executions.

There are a whole host of arguments in favor of the death penalty, and most are dealt with pretty satisfactorily well here, but there is one issue that I believe overrides all practical and utilitarian arguments, and that's this: no one has the right to take someone else's life. What is government? It is simply an extension of the people. Government derives its power from the people. How could government then do what the people themselves are not allowed to do?

Does this argument then prohibit any punishment for crime? No, it doesn't. People have the right to defend themselves and jailing an individual who has committed a crime allows a level of collective protection from further crime. However, killing someone is a different story.

Besides, what is the worse punishment for the criminal? Sitting in jail for the rest of their life or getting the early ticket out by being executed?

Just some philosophical musing from your friendly GR Pundit.

Wednesday, March 10, 2004

To GR City Residents: More taxes!

Attention Grand Rapids city residents: does your wallet seem to be getting thinner? Well, it's going to get thinner again. Yesterday the City Commission voted to decrease your income tax exemption from $1000 to $750, resulting in a tax increase of about $13 per resident. The vote was unanimous.

The exemption was originally increased so that your taxes would decrease when the transit millage increased. Remember them telling us "this transit millage isn't going to increase your taxes because we're decreasing your income tax." Well, not only has the transit tax increased additionally since then, now the income tax is increasing, wiping out the promised compensation of the difference.

Let's look at the changes to Grand Rapids' residents' balance sheet in the last several months.

1. Increased property tax from the transit millage in Nov of 2003
2. Increased income tax for GR residents and non-residents who work in GR.
3. Increased property tax from the special education millage of Feb of 2004.
4. Proposed increase in property tax for the Grand Rapids Public Schools to build new buildings in June of this year.
5. Proposed increase in property tax for the new zoo, probably in August of 2004.

The powers that be don't seem to grasp that all these increased taxes harm the economy and decrease growth. Michigan's unemployment is already far above the national average and increased taxes are a proven way to stop or dramatically slow any recovery.

And Commissioner Jendrasiak, in commenting on increasing your income tax, is complaining about needing more revenue. How about cutting some city government? The rest of us have had to trim back, both in our personal lives and in business. But the City's appetite continues to grow.


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