The
OTHER Charlestown deserves a break
By
Will Collette
Over
the next several weeks, Charlestown
will need to take action on a new budget for the new fiscal year that
starts on July 1.
Under the budget proposed by the town Budget Commission, property owners face a tax increase of 24 cents per thousand dollars in assessed property value, even though Charlestown currently has around $4 million in excess surplus funds.
Under the budget proposed by the town Budget Commission, property owners face a tax increase of 24 cents per thousand dollars in assessed property value, even though Charlestown currently has around $4 million in excess surplus funds.
The
Budget Commission has decided to burn off the extra money the town has
accumulated above and beyond the amount of surplus funds recommended by the town's financial advisers by paying
cash for two capital projects.
It proposes spending $900,000 in cash to repave
Klondike Road and another $2,807,728 to pay off what we still owe on the US
Department of Agriculture loan that built the Police Station. There is some concern that USDA may ask
the town to do that anyway, but probably not for another year, perhaps more.
If
the town used bond funding instead of cash for the Klondike Road project, there would be no need for the 24-cent tax
increase.
If
the town also postponed paying off the USDA loan, it could give Charlestown
residents a homestead tax rebate averaging around $1200 per household for the
extra taxes they paid this year and it
would STILL not have to raise next year’s taxes.
Alternatively,
they could hold on to all or most of the excess surplus and use it to bargain with Larry LeBlanc for the purchase of LeBlanc’s 81 acres, currently slated for
his unpopular industrial wind turbine project.
They
could do that, but they won’t.
The disconnect is, I think, a direct by-product of the Two Charlestown Effect.
If
you only looked at Charlestown Town Government – at its Town Council, Budget
Commission, Planning Commission and various other bodies – you would think that
town residents are overwhelming elderly, retired and well-to-do.
If
you were to only look at the actions of that Town Government, you would think
that the only priorities in Charlestown are those that benefit those same
people, plus our waterfront nonresident property owners. Witness Council Boss
Tom Gentz’s reverse Robin Hood efforts to induce town residents to provide free
labor for our nonresident waterfront property owners who have been slow to
clean up storm damage on their properties.
If
you looked at the campaign
contributions of the town’s controlling political party, the Charlestown
Citizens Alliance, you’d see it's those same non-residents and wealthy retirees who pay their bills.
But
Census data and monthly data on such matters as home values and unemployment
show that there is a much bigger Charlestown that is usually ignored and often
disdained by its own town government.
There
are two Charlestowns, divided roughly along geographic lines but more starkly
along political lines. One consists largely of the privileged enclaves mostly
South of One and especially along the water and those who carry water for them
politically.
Then
there are the working-class neighborhoods scattered all over town but
concentrated North of One. Generally, the farther you get from water, the lower
the income, the lower the property value and the higher the unemployment and
poverty.
That
other Charlestown vastly outnumbers
the elite Charlestown that controls the town government.
But money and privilege, plus the fact that civic engagement generally is much higher among older and wealthier people who have the leisure time to attend meetings, leaves Charlestown’s majority out in the cold politically and economically.
But money and privilege, plus the fact that civic engagement generally is much higher among older and wealthier people who have the leisure time to attend meetings, leaves Charlestown’s majority out in the cold politically and economically.
Census
numbers show that the real Charlestown is not elderly, retired and well-to-do. Charlestown has more children
than elderly people. 69% of Charlestown’s adult population works for a living
or at least tries to. Our median income is in the lower half of Rhode Island’s
cities and towns. We have a large number of residents whose incomes are low
enough to qualify them for federal food assistance.
While
Rhode Island’s unemployment rate has been falling lately, Charlestown’s
unemployment rate is 11.5% compared to the statewide rate of 9.4%.
Home
values in Rhode Island in general showed a one-year
increase of 12% almost across
the board. However, Charlestown saw its home values drop by 1.2% over the same period. After an encouraging few months
of increases in home values toward the end of 2012, Charlestown home values
plunged since the beginning of the year to below $300,000 again. Zillow.com puts the average Charlestown home value at
$294,100, which is almost exactly what it was ten years ago.
Charlestown
is generally in the middle of the pack statewide when it comes to home
foreclosures. As most of Rhode Island has seen foreclosed and distressed
properties get sold off (with the effect of generally lifting home values),
Charlestown still has a number of distressed properties, many in pre-foreclosure,
depressing home prices.
Zillow also estimates that 15% of Charlestown
mortgage holders are “underwater” (because their home values have dropped,
they now owe more on their homes than those homes are worth). That’s
approximately 450 households. Zillow also estimates that 8% of them (around 240
households) are delinquent.
Zillow map showing Charlestown foreclosures, auctions and pre-foreclosures |
When
the real estate market crashed, it took with it many older
workers’ hopes for a comfortable retirement where they counted on rising
home equity to be there as part of their savings. Many older workers find they
simply can’t afford to retire when they planned to, but the job
market for older workers is even more abysmal for them than it is for
workers in general.
Try
being a 55-year-old looking for a new job, or a person of any age who’s been
out of work for a year or more. And if you’re a 55-year-old
who has been laid off, fahgedaboudit!
I
can appreciate the Budget Commission’s efforts. They’ve managed the town’s
money carefully with the result being one of Rhode Island’s lowest property tax
rates – although offering almost no municipal services is the major cause for
that.
I
understand their arithmetic about the long-term savings accrued through lower
interest costs. I also understand that the bond rating services might reward us
for our lower debt with a higher bond rating. But I also wonder what value a
lower bond rating has when we don’t borrow. It’s similar to the Catch-22
individuals face – you can get a great credit rating provided you don’t use
your credit very much.
Their
reasoning reflects that of the “deficit hawks” who insist that the government should
be run like a household. However, they neglect to make the distinction between
borrowing and paying interest on “durable goods” (e.g. a house or car) versus borrowing and paying interest on “consumables” (e.g. credit card
debt).
Borrowing
to acquire things of lasting value – land, buildings, a college education – is something
responsible people do. Our Budget Commission, like their counterparts in the US
House of Representatives, need to be more honest and acknowledge that not all
spending or all borrowing is the same.
I
look at the almost $4 million the Budget Commission wants to bleed off our
excess surplus and see $4 million in potential tax relief for Charlestown’s
working families or major headache relief in the form of buying LarryLand for
open space.
With our high unemployment rate and depressed home values, Charlestown could use a tax rebate now and no tax increase in the upcoming year.
With our high unemployment rate and depressed home values, Charlestown could use a tax rebate now and no tax increase in the upcoming year.
Alternatively,
one less migraine headache cured by buying LarryLand would be worth the price.
On
May 6, the town will hold a special Budget Hearing at Town Hall and then after
whatever adjustments the Town Council makes after the May 6 hearing, the budget
goes to the voters for their approval in June.
It’s
up to town residents to speak up on May 6 and to let the members of the Town
Council know how they feel, especially about the issue of spending the surplus
to reduce future interest payments or use it to help Charlestown residents now.
Then
it will be up to town residents to vote. There has already been a tax
revolt over the Chariho budget when Hopkinton and Richmond residents voted
down the budget for a lot less significant reason than Charlestown faces with
its own budget.
I
think the Town Council needs to re-think the Budget Commission’s proposal, the
town’s priorities, the needs of the majority of the people and the merits of a
tax increase in our fragile economy.