Cities in Crisis

As of now, many of our cities and states are facing a financial crisis as unemployment increases and citizens start to migrate to other sections of the nation seeking employment.

According to the Yahoo Financial News website, seven states and Washington DC have raised the sales tax to help decrease their deficits from 2009. In fact, during 2009, North Carolina raised their sales tax twice.

For example, Arab Alabama, population of 7,500 has increased their sales tax to 12%, and one of the largest cities, Chicago, sales tax increased to 10.25%. Other tax rates of various cities can be found at:

http://finance.yahoo.com/taxes/article/109012/us-sales-tax-rates-hit-record-high

Some states and cities have even gone further in seeking means to lower deficits to balance their budgets; they have created special taxes or fees which are aimed at tourists. These fees or taxes are being applied to such things as rental of cars, hotel rooms, and ski resorts and airports; while other cities rely upon city employee layoffs, concessions, increases in various fees, and cancelations of police or fire classes.

For example, Toledo Ohio is nearly 49 million dollars in deficit, and has to balance the budget by March 31, 2010. In 2009, the unemployment rate of Toledo was12.5 percent nearly doubled from the 6.4 unemployment rate of 2007. According to the Toledo Blade, Toledo's unemployment rate fell from 14.3 percent in January to 12.8 in February' the unemployment rate for March will not be known until the figures are released later in the month.

Mayor Bell, of Toledo, has suggested several alternatives aimed at balancing the budget. Some of these include:

• Increasing the refuse fee to $15 dollars a month, whether a person recycled or not. The $15 dollar fee would be added to the water bill which is paid quarterly.

• Charge an 8% entertainment fee, which some are arguing against since some of the property holding such events are county owned. This proposal was challenged by a county commissioner who pointed out that "the county facilities are exempt and not covered by your authority under this"

• The elimination of non-essential positions in divisions of Recreation, Human Resources, Forestry, Neighborhoods, Plan Commission, and Affirmative Action.

• Declaring the existence of exigent circumstances which will allow the city to eliminate pension pickups and increases to employee health care. (Employee give backs) being fought by the union. The union stated that they have given up enough concessions. As of now, still in negotiations.

• Double taxing: Citizens that live in Toledo, but work outside the city or in nearby communities, will no longer receive tax credits. They will be paying full city tax and also will be paying taxes in the area that they work in.

• Cancelation of Police and Fire classes.

• Mention of closing city swimming pools during the summer.

• Mention of selling some of the city parks.

Mayor Bell did make it known that if the union does not allow for the concessions that he has asked for, the only option left would be to layoff. The police were notified that if concessions were not taken, that within 30 days that lay-offs of 125 policemen and 12 citizen employees will occur Mayor Bell also stated that he would also eliminate about 20 vacant positions.

One problem concerning the lay off of the police officers is the contract signed by Mayor Carty Finkbiener. Former Mayor Finkbiener received a grant from the US Dept of Justice COPS Hiring Recovery Program of 7.1 million dollars allowing him to rehire the 75 officers that he had laid off in 2009. According to the grant he was to employ 564 officers for 4 years. The question being asked is" Does Toledo have to pay back this grant since it will be laying off 125 officers falling under the 564 quota given." The city of Toledo stated that it had the capability of paying back 5.5 million dollars, (not used), but however would have to repay the 1.6 million dollars.

What actually has happened is that the majority of cities have always relied on various tax revenues to run the city government and services. For some reason, no one worried about a decrease in these revenues due to an increase in unemployment or the migration of citizens either looking for employment in other states, or "greener pastures" leaving because of higher taxes being sought.

The best interest for any city is to stop relying on tax revenues and tax increases to run the city. Other methods such be sought. For example, encourage new businesses and industries to move into the area. However do not promise too much. Quite often a city will promise tax roll backs, or no tax at all for so many years. Sad to say, some companies take advantage of this proposal, and when the time is near expiration, simply move to another city or state.

The Federal Government has to take part also. They should find ways of enticing those businesses and industries that either sent work across seas or moved across seas to return to the states. If these companies do not comply then it is time to treat them as foreign enterprises and place a tax or tariff on the merchandise that is shipped to the United States. Certainly there should be a better way of increasing city revenues besides increasing taxes or creating new taxes