Thursday, August 25, 2011

Cities Using Special Tax Accessments To Cover Budget Shortfalls

HAZMAT Response Unit and firefighters of the A...Image via Wikipedia

More and more cities are having trouble meeting revenue requirements for the city employees pension plan. City and state employees along with firefighters and police have yearly pension obligations. They are usually funded by property tax or income tax revenues. What happens when these pension plans are not funded because of a revenue shortfall?

Pension plans are usually created by the employee unions and the city leaders. These plans have to be funded or the unions become very angry. This leaves cities no other choice but to go to where the money is: the residents of the city.

In one of our neighboring cities this problems is happening. In Lake Worth, city commissioners are working toward making a plan to levy a per-building assessment on homes and commercial buildings to cover a shortfall in firefighters pensions. Commissioners voted to take the first step in levying a fire assessment for the budget year that begins Oct. 1. The city's annual fire assessment would be $60 per residential unit, 13 cents per square foot for commercial buildings, 2 cents per square foot for industrial or warehouse buildings and 9 cents per square foot for institutional buildings.

Notices showing the amount owed will be mailed to each affected property owner on Sept. 1. A public hearing on the assessment is scheduled for 6 p.m. Sept. 22 at city hall. The commission is expected to vote on the fire assessment following the public hearing.

When the assessment is O.K.'d as proposed, the city will use most of the $1.4 million to cover part of the cost of firefighter pensions, which cost the city $1.8 million this year.

The Lake Worth city commissioners have come up with a clever plan to cover the shortfall. The only problem is the publics reaction to it is not good. Many people have voiced concerns that raising taxes in this financial environment is counter productive. Other concerns are that fulfilling the never ending pension needs of the fire fighters is representative of the Social Security shortfalls we currently experiencing in Washington. Many believe that all city and state employees should fund their own pensions with their own money. 

The current pension system is broken. The unions should see this and ween the firefighters off the taxpayers to a self supporting system. We are seeing more pension and budget shortfalls every day. Don't bleed the tax payers anymore and don't let the employees of the city and state goverment trust in a pension system that will eventually collapse under it's own weight. 

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