DOWN ON THE LEVY

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When it comes to offering an opinion on how to manage and apportion local tax dollars to improve community services and infrastructure, Americans are not a bit shy. But they sure don't want their local tax bill going up to pay for them.

To drill further into the chronic divide between what services people say their communities should make better, and their intractability about paying higher local taxes to foot the bill, American Demographics partnered with eNation, an omnibus research solution of Arlington Heights, Ill.-based market research firm Synovate, to ask citizens questions about local levies and local government's handling of those tax dollars.

According to our exclusive survey of 1,227 adults conducted online between January 14 and 20, 2004, an overwhelming majority (84 percent) express an unwillingness to concede to higher taxes to fund more government services.

Americans contend that their local taxes are too high. Our survey found that 2 in 3 (67 percent) believe this to be so. And the older one is, the greater the tendency to find them too high. In general, as income increases with age, the local tax bite looks larger.

“What's surprising,� says David Luberoff, associate director of the Taubman Center for State and Local Government at Harvard's Kennedy School of Government, “is how little appetite there is to raise taxes and deal with the fiscal crisis facing states and local governments.�

Yet, Americans clamor with no end of ideas about how they would better manage available tax dollars to improve local community services. When asked which three areas of local government should get added funds to deliver more services to the community, more than 3 in 4 (76 percent) chose education, 65 percent selected health-care and 56 percent chose roads and transportation. Although responsibility for schools has been shifting over to the state for the past several years, the school budget line item is still by far the single largest local government expenditure, says Luberoff. About half of local revenues from levies such as property or sales taxes is earmarked for school costs, he says. It's possible that the highest share of people chose education as a priority because it is directly linked to the perceived property values in a town or county. Higher local taxes for schools usually pay off in higher local property values.

As state budgets shrink and state officials contend with a cumulative $200 billion in budget shortfalls, spending cuts are starting to affect local governments. California Governor Arnold Schwarzenneger balanced the state budget by taking a significant amount of money away from local governments. And other states are making serious cutbacks, forcing most local communities to cut spending. The situation forces people to confront more directly whether they want to spend more money or suffer a decrease in services provided. Which hurts more: coughing up more tax dollars or reductions in the number of teachers, library hours or roadwork repairs?

If proposed tax cuts go into effect, local governments may have to try to get the revenue from local citizens or cut services offered. But which three areas of local government should be the first to see a reduction in the funding they receive? More than 3 in 4 of our survey respondents (76 percent) thought financing for parks and recreation should be cut, 66 percent selected libraries and 58 percent named sanitation. But cuts in those line items wouldn't have much impact because these departments tend to make up only a small portion of communities' local budgets.

Luberoff cautions that when interpreting the data, one should bear in mind the tremendous variation in how people view local and state government. Historically, citizens are more willing to approve tax increases when they are reasonably sure that they will see the benefits of those tax increases in their communities.

Where their own budgets are concerned, Americans express widespread opposition to tax increases. At least they aren't sticklers for holding the line on government spending or insisting on a balanced budget. When asked which abilities they value most in their local elected officials, only 16 percent chose budget management.


For more information, send an e-mail to syin@primediabusiness.com.

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