By Sarah Curry, DBA
Most citizens expect the property taxes paid to their city to be used for road maintenance, snow removal, building maintenance, and of course, public safety. These activities are all considered core government services and functions. However, in current times we see some of our city governments spending considerable dollars on things that could be better managed by the private sector – and that’s a problem.
When local governments use taxpayer funds to subsidize highly specialized recreational activities, they are benefiting a tiny segment of the community at the expense of the whole community. The general taxpayer should not have to fund these projects, not only because they do not benefit most people, but because these city-owned services also unfairly compete with the private sector. The taxpayer cost of these subsidized activities is not just the direct tax subsidy, but also the lost tax revenue that would have been paid by private providers.
In addition, these types of activities can result in a political constituency that benefits elected politicians and local bureaucrats. By providing a free or highly subsidized activity, cities create a special-interest group out of people interested in that activity who will lobby for its continuation and expansion, transferring the costs to taxpayers who may not benefit. For example, the losses incurred by special or unique activities are paid by all taxpayers for the benefit of only a (relatively) small group.
To understand where our property taxes are going, we need to focus on the General Fund for cities.
The focus of city budgets should be on essential government services and making sure those services meet the needs of its business and citizens. Rightfully so, the majority of cities spend their operating dollars on public safety with the largest areas being police departments and crime prevention (55%) followed by fire departments (31%).
However, the second largest expenditure using our property tax dollars by cities is on culture and recreation. The items funded under this category include libraries, parks, community centers, zoos, marinas, cemeteries, museums, and others. While these things are worthwhile to a community, one can argue some of these items are not an essential government service, and they should not be a larger expense (i.e., priority) than other core government operations.
Historically, city parks and recreation departments provided the public with places for civic gatherings, parades, and other community events. However, some have drifted from this basic service and now offer uncommon services that benefit only a handful of citizens. Are we saying there should be no parks or cultural attractions in our cities? Of course not! But that doesn’t mean that city officials shouldn’t consider where they are currently spending money and identify services that create competition with a private-sector entity.
If cities start to recuse themselves of activities that the private sector can manage, maybe a few tax dollars will be returned to residents so they can spend them on the recreation or cultural experience of their choice.