Sunday, October 11, 2009

Joel Miller Responds to Criticism of His Fire Tax Proposals

It is gratifying to learn that New York State Assemblyman Joel Miller agrees with much of my recent blog post, Joel Miller's Flawed Proposals for Funding Fire Districts. In a lengthy phone conversation on October 7, Miller agreed that his three proposals do not reduce the costs of providing fire protection and emergency services, but only shift these costs around. He also agreed that consolidation is the right approach for reducing the cost of these services — in the long run.

However, Miller's position is that consolidation is not politically feasible in the short run so long as there are great disparities in fire tax rates among consolidating fire districts. Districts with low fire tax rates will simply not be willing to consolidate with high tax rate districts, thereby increasing their own taxes for no apparent gain. Miller claims his proposals would tend to reduce the disparities in tax rates among fire districts. Once the disparities have been reduced, fire districts will be more willing to consolidate, thereby achieving cost savings.

Miller's Response Prompts More Questions

As I see it, Miller's viewpoint is worth further discussion. His proposals would tend to reduce the disparities in tax rates among fire districts. But would more equal fire tax rates make consolidation — and the resultant savings to taxpayers — easier to achieve, or more difficult? On the one hand, low-tax fire districts would be less likely to object to consolidation, since their tax rates would not increase as much. But on the other hand, the political pressure to consolidate would be decreased as well, since this pressure comes mainly from the high tax fire districts. If the symptom — high fire taxes — is alleviated, how willing will stakeholders be to attack the sickness — waste and inefficiency in fire protection and emergency services?

Also, to what extent would Miller's proposals add complexity and therefore further cost to a tax system that is already overly complex? Miller downplayed this effect, but in my view, the cost of complex systems is under-appreciated. Do we really want to move our tax system in the direction of the health care industry, where administrative costs are already a major problem? (Hmmm, we're already there, but that's not a reason to make it worse.)

Your Views Wanted

These questions don't have easy answers. I'd like to hear from readers who can add to the discussion. You are invited to post your comments.

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