Property Taxes Rise as Cities Suffer From Mission Creep

A city’s job is to protect its citizens while maintaining peace and providing basic services. Local officials must remember what their true mission is and what their taxpayers actually expect from them.

It turns out that defining the proper role of local government, deciphering between wants and needs, and frustrated property taxpayers are not dynamics that are unique to Iowa. Our friends at The Cardinal Institute in West Virginia are working through those same issues in their state. In a recent article, Cardinal’s Executive Director, Garrett Ballengee, joined with Mark Moses, a former city finance administrator and local budget expert, to examine municipal finance and discuss the concept of mission creep.

Cities once again must define their scope and purpose in order to avoid what plagues so many private businesses, nonprofits, and, yes, governments — mission creep. If cities neglect to do this, then they risk impending budget crises, declining city services, frustrated taxpayers, and population loss which further compounds the problem. Many of America’s largest cities are facing existential budget problems in the coming years and it is not difficult to see that mission creep is a major reason why – if a city tries to be all things to all people then it’s nothing to no one, and it risks serious long-term implications.

This raises the all-important question: what is the appropriate scope of a city?

Is it to protect property rights of its citizens? Certainly. Is it to protect its citizens and maintain peace and a sense of order? Of course. Is it to redistribute taxes to subsidize economic development? Hmmm. Is it to run municipal pools, build sports stadiums, and as Mark put it, “maximize services?” Double hmmmm.

Each move away from a proper role of municipal government comes with costs. This includes direct costs and opportunity costs. Direct costs are obvious. Things like salaries, pensions, benefits, liability insurance, etc. Opportunity costs are legion yet more discreet – the redistribution of money from taxpayers to city government and thus from private investment to inefficient government coffers as well as the internal redistribution of tax dollars from police, courts, and fire services to things like the municipal golf courses, counterproductive zoning, public art projects, and “economic development.” (Economic development is in quotation marks because the evidence behind beneficial government-subsidized economic development projects is, at best, weak.)

When mission creep is compounded year after year, decade after decade, the city builds up a level of fixed costs. These cannot be easily adjusted. For example, good luck changing a public union contract in the face of an impending fiscal crisis.

As Iowa cities and counties build their budgets while property assessments are skyrocketing, local officials need to remember what their true mission is, and what their taxpayers actually expect from them.  Garrett and Mark have defined that very clearly.

At the end of the day, citizens want safe, clean streets; smooth legal proceedings; speedy, competent fire departments; and responsive city workers. Every digression from mission threatens that reality and makes it more difficult to focus on the city’s proper role. Taxpayers and taxpayer dollars are not only finite, but more importantly, they can relocate.

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