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The Cincinnati Beacon
John Eby on Fiscal Responsibility
Thursday, September 06, 2007
Posted by The Dean of Cincinnati
In John Eby’s platform for City Council, he talks about the importance of “fiscal responsibility.” It occurred to me that I’ve never seen anyone run on the platform of “fiscal irresponsibility,” so I thought I’d ask some questions to clarify his thoughts on the concept. Here are his detailed replies.
The Dean: John, what do you mean when you say you support a “fiscally responsible” budget?
John Eby: A fiscally responsible budget means that we achieve a balance between revenue and expenditures. We don’t overspend ourselves into crushing debt. We must provide the necessary services that all of our citizens need. Fiscal responsibility flows out of my four foundational issues of Economic Development, Education, Safety and Security, and Housing Development. This is the “larger context” that you asked for in your final sentence. As I said in my responses to the AFL-CIO questionnaire, “These are quality of life issues, not Democratic or Republican issues.” City Council can follow the advice of the basic tenants of the Catholic Bishops Economic Pastoral by asking what does the economy do for and with people, especially those in greatest need? How does the economy support and promote the general good? You cannot have world-class services without a world-class economy to support them. You need all four of my foundational issues to have a world-class economy.
The Dean: Is corporate welfare fiscally responsible?
John Eby: Any discussion of corporate welfare comes down to definitions, promised revenue as opposed to realized revenue, and the local economy as opposed to the global economy. Since “politics is local”, this is usually an explosive issue that divides along social, economic, and racial lines. Time magazine defined corporate welfare as “any action taken by local, state, or federal government that gives a benefit not offered to others. It can be a tax break, credit, exemplary deferral, or deduction. It could be a lower tax rate than the others pay.” Is this what you mean when you use the term corporate tax break? If so then I have a question. Do you believe that we need a consistent argument for both personal and corporate welfare recipients? My guess is that your answer is, Yes! Otherwise, one could argue that you are inconsistent in that “what is good for the goose is not good for the gander.” The rationale to end corporate welfare boils down to this - IT DOESN’T WORK. It doesn’t give cities, states what it promises. It hurts the national economy. It perpetuates a Darwinian survival of the fittest between local municipalities, cities and states. Isn’t this the same rationale some critics spoke when they called “to end welfare as we know it?” Didn’t critics claim then (as some do now) that welfare fosters dependency, it destroys personal ambition, and it invites massive fraud? Above all don’t many just bellow out something like this, “It’s unfair.”
Thus, we need to back away from the extremes and discuss the issue with patience, clarity, and an openness that admits not all subsidies are bad; not all welfare is bad. Indeed, we need to focus on the WELL FARE of both the CITY and its CITIZENS. We need to admit that corporations can and do make a positive difference in our city. We need to admit that these corporations have a civic and moral duty to provide for the neediest of our citizens. We can’t be jawing out blanket condemnations. We must civilly and skillfully invite the necessary parties to the discussions of economic development, better jobs, better wages, safe working conditions, health benefits, and retirement plan options for all who wish to do business with the city. It is very clear that we must rebuild the middle class through better job training and better wages. I believe in a level playing field so that all Cincinnatians feel included in building a Greater Cincinnati. Of all the candidates running for city council, I am the one who stresses the most important development- human development.
The Dean: Is using TIF money to create housing with a 15-year tax abatement fiscally responsible?
John Eby: The city gives the home owner the 15 year tax abatement not the TIF district. For your information Tax Increment Financing (TIF) districts provide the city with a vehicle to fund public infrastructure improvements that are associated with new development. To use TIF money, improvements to public infrastructure necessary for proposed new investment must first be declared to have a “public purpose”. The Ohio Revised Code states that “public infrastructure” is considered:
*Public roads and highways.
*Water and sewer lines.
*Environmental remediation.
*Land acquisition.
*Demolition (including demolition on private property deemed necessary for economic development).
*Storm water and flood remediation (including storm water and flood remediation on private property deemed necessary for public health, safety, and welfare).
*Gas, electric, and telecommunication services.
*Public waterway development.
TIF districts are set up to do more than just provide infrastructure for new housing developments (market rate and affordable housing). TIF funds can be used with residential and industrial development. The Tax Increment Financing program (TIF) is designed to encourage new investment. The TIF program enables our city to exempt from real property taxation the new value added to a group of parcels because of new property investment. A TIF does not change the taxpayer’s tax liability or the valuation of the taxpayer’s property. Instead, TIF districts enable the taxpayer to make payments to a special fund in an amount equal to the property tax liability. These payments in lieu of taxes are used by the city to retire debt incurred for the infrastructure improvements needed to support the new property investment.
For example, two major developments in Columbus, Easton Town Center and Polaris Fashion Place, used tax increment financing to fund the necessary infrastructure improvements to allow the development to move forward. The Fox Run Industrial Park in Defiance, Ohio, provides a look into another important function of a TIF. When public infrastructure is needed to support economic development or private investment, TIF’s can ensure those benefitting from the improvements pay the tab. The Fox Run development used a TIF to finance the expansion of public utilities and roads that made the industrial park possible. That is fiscal responsibility.
The Dean: Would you agree or disagree that we should cut that kind of wasteful spending so we can provide for those in need?
John Eby: Let’s take out the phrase “that kind,” and ask if we should cut “wasteful spending.”
Do I believe that wasteful spending should be cut out of the budget? Yes. In my responses to questionnaires from different groups, I believe that citizens have a right to expect their elected leaders to be fiscally observant. Elected leaders have a fiduciary responsibility to protect the citizens coffers (the city budget). They must provide revenue so that the basic services that allow for clean safe streets, quality health care, and job opportunity for all, are available. I will support efforts that will wisely provide better services for the neediest of all. Thanks for the opportunity to share some thoughts with you and your readers. Have you put my sign (the one you requested) in your front yard yet? As Frank James and Ed Bartles used to say, “Thanks for your support!”
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