Repealing the dumb revenue cap charter amendment from 2004 won’t solve the impending fiscal problems by itself. It’s still a good idea to repeal it.
With an estimated $144 million budget shortfall looming next summer, the city’s finance director delivered a harsh message Tuesday: even lifting a voter-imposed revenue cap will not save the day.
Instead, city officials will have to cobble together a package of contentious reforms, including possible service cuts, layoffs and new revenue sources, to close a budget gap that could swell to more than $200 million by fiscal year 2018 if nothing is done. Though the city’s revenue cap is among the problems facing the budget, removing or reducing that cap would not solve the city’s spiking pension costs and debt obligations.
Surging property tax appraisals are expected to run the city into the voter-imposed revenue cap next summer, forcing a cut in the property tax rate. But projections put the revenue lost to the cap at just 12 percent, or $17 million, of the deficit next fiscal year, which begins July 1, 2015.
Changing or modifying the cap, which would require going to the voters, may be part of the city’s solution. But budget chief Kelly Dowe warned the budget and fiscal affairs committee that it can’t be the whole solution.
“There’s no silver bullet for bridging these gaps going into the future,” Dowe said.
So city officials are left with a long list of possible fixes, from service cuts to a garbage collection fee to a shift in health care costs to ambitious pension reforms.
See here, here, and here for the background. I never expected eliminating the revenue cap to eliminate the short-term fiscal problems the city faces, but the point is that having the cap in place makes the hole deeper than it needs to be. The last thing in the world anyone would suggest at a time like this would be to cut the property tax rate and thus reduce the funds available to the city to meet its obligations, but that’s exactly what the revenue cap would do. It forces a priority on the city at a time when there are many other things that should come before it. It’s stupid and short-sighted, and that’s why I have always opposed it.