Friday, September 16, 2011

Why Penny Pinchers Are Driving Us Into Debt


You won't have to walk more than a few blocks in Evansville to find them. They are loud, they are abundant, and most importantly, they are powerful. They will fight you tooth and nail until they have defeated you on every project.

Yes, I'm talking about Evansville's most infamous residents: the penny pinchers. Some will tell you that if you raise taxes, you are for big government. Some will tell you that Evansville is too small to take on any capital improvement projects. Others will simply oppose projects just because they can. One thing we do know about the classic penny pincher is that they all are hypocrites.

While their ideas may seem great and they may mean well with their intentions, their beliefs and practices are both hypocritical and counter intuitive, and I will tell you why.

Obviously, the penny pinchers, who like to associate best with Evansville's naysayers, have never been consistent. They claim they are against entitlements, yet they support the EVSC taking on a $149 million bond to build a school in one of the last places you would find a needy student.

They claim they are against rebuilding downtown with a ballpark and an arena because we don't have any money, yet they say nothing when roads like Green River, Oak Hill, and Millersburg are expanded for no reason at identical costs.

They claim they are for Evansville fixing its sewer problems, yet refuse to consider city-county consolidation which would prevent urban sprawl that requires more sewers.

But worst of all, Evansville's penny pinchers are fighting against their own cause with their tax policy. When they point the finger at someone, they have 3 fingers coming back at them...


Here in Evansville, the average penny pincher will tell you that they want no new taxes and would prefer that government work with the funding it has already been given. Commissioner Winnecke appears to believe in this notion as well...

On the surface, this seems to be both practical and reasonable. I, myself, can agree with the overall goal of this statement. I feel like our city and state governments have wasted way too much money on frivolous, inefficient, and pointless projects such as the EVSC bond, I-69, the downtown street reversal project, and moving the LST to a location that is believed to be in Kentucky.

All of these projects have a counter project that can/could do more for our city while costing less. In this sense, government does need to work with their funds in a better way. The last thing we need to do is raise taxes to finance any of the above 4 projects that will just make matters worse. In that regard, I agree with the penny pinchers. I also don't believe that now is a good time to raise property taxes on homeowners when we are watching the very sad events of home foreclosures. Nothing is worse than losing your home, therefore, it is extremely unwise for government to increase foreclosures.

But with that being said, there is one tax that our local penny pinchers need to embrace. I don't like taxes anymore than anyone else, but it is important to understand that there is actually a tax out there that has the power to lower taxes. Basically, we need to fight fire with fire.

So what tax has the magical power to fight other taxes? I believe that tax to be none other than our local sales tax. I know this makes no sense right now but keep following me through this description.

In a previous post, I talked about Oklahoma City and their MAPS program...

Basically it worked like this...

1. The citizens come up with their own ideas and plans. They then can go around town lobbying for other citizens to support their ideas.

2. The citizens then go to their local government's website and submit the ideas.

3. The ideas with the most votes get implemented (OKC took as many ideas as they could afford).

4. The final ideas are lumped into a program (MAPS).

5. The program is put on the ballot where voters vote to temporarily increase the local sales tax by 1% for 7 years. After 7 years, the tax expires and can only be extended with another referendum.

6. If approved, the 7 year 1% sales tax goes into effect and a committee to oversee the projects is assembled.

7. After 7 years, if there is enough revenue collected, the projects can begin breaking ground. If there is not enough revenue, a temporary 2 year 1% sales tax increase can be voted on, some projects can be scaled down, or some projects can be eliminated completely.

8. Repeat cycle

Oklahoma City did what I am proposing, they temporarily raised the sales tax rate by 1% for 7 years. Yes, raising the sales tax isn't fun either, but it worked big time for Oklahoma City. In 2009, OKC ranked...

#3 on BusinessWeek's Forty Strongest U.S. Metro Economies
#1 on Fortune Magazine's list of best places to start a business
Top 20% of all metro's in GDP growth, U.S. Dept of Commerce28 of the nation's 500 fastest-growing companies
Top Ten in BusinessWeek's Strongest Housing Markets in the U.S.
#1 on fastest-growing per capita income for a large MSA, U.S. Dept of Commerce
#2 for volunteer hours, #7 for overall volunteerism among major U.S. metros.
#4 Best Undervalued Place to Live, U.S. News & World Report
#8 for Indeed's Best Cities to Look for a Job
#2 on the Brooking's Institution's list of best-performing cities during the recession
#4 in ArtBistro's Top 25 Cities for Artists and Designers
#4 for's Best Cities for Your Career
#1 on FDI's (Foreign Direct Investment) on list of most cost-effective large cities
#1 on BusinessWeek's most affordable major metros
Top Ten, Mat Hoffman Action Sports Park on National Geographic's Ten Best Things for Families
#37 on The Sporting News' Best Sports Cities (Toronto is #36, Austin is #38)
#28 on the Today Show's Best Places to Raise a Family
#7 on Forbes' Top Ten Cleanest Cities
#4 on Forbes' Best Cities for Commuters
#1 on Forbes' Most Recession-Proof Cities
#4 on BizJournal's 10 Least Stressful Metros

(stats courtesy of

Now, there are many cities who have begun replicating what OKC did. One of those cities is Jacksonville, Florida...

As you can see from the above link, both OKC and Jacksonville have grown by double-digits since 2000. Jacksonville proved that these types of programs don't have to be entertainment venues only, rather, they can include infrastructure improvements as well. That is key to what we need to do here in Evansville.

Although the main point of MAPS is that it works, it also shows us why our local penny pinchers are fighting against their own cause by opposing a temporary sales tax increase...

"The tax expired on July 1, 1999. During the 66 months it was in effect, over $309 million was collected. In addition, the deposited tax revenue earned about $54 million in interest. That was used for MAPS construction, too."

This is the most important part of MAPS. While Evansville will be paying millions in debt service for our new arena that needed a 30 year bond, OKC got $54 million in interest money from their temporary sales tax. Basically, they got a AAA size ballpark and a one mile canal FOR FREE.

Yet here in Evansville, we cannot afford projects unless we space them out over a 30 + year bond. Our arena, our school project, our sewers, and many, many other projects have cost Evansville more because of the interest on our bonds we took out. Wouldn't it make more sense to make our taxes draw interest not cost us interest revenue?

Of course, the most popular criticisms of this approach are...

1. We aren't as big as OKC or Jacksonville
2. We have more basic problems than OKC or Jacksonville that need to be addressed first.

Once again, these beliefs are the byproduct of our local penny pinchers and naysayers. These two beliefs fail for the following reasons...

1. Of course we are smaller than OKC and Jacksonville but that is no reason not to implement a MAPS strategy. Yes we will take in less sales tax revenue than OKC but that just means that we build our projects to scale. While OKC built a 586,000 square foot Ford Center, we built a 278,000 square foot Ford Center. With or without MAPS, Evansville still needs to build infrastructure and quality of life structures that are built to Evansville's scale. MAPS is just a different formula for financing these projects.

2. Yes we do have more problems with our basic infrastructure than OKC and Jacksonville. Sewers, water port jobs, US 41, our parks, and passenger rail all come to mind. These problems are reasons why we need MAPS, not reasons why we don't. All of our basic problems (especially sewers) must be addressed first in a MAPS program although it is our local citizens who will be making that decision. If you look at Jacksonville's BETTER JACKSONVILLE PLAN, you will see that they spent some of their funds on basic infrastructure as well.

What kind of MAPS plan would I envision for Evansville? Well, I would personally vote for the following...


50% Sewers
20% Slack Water Port
10% Tech Park/ Revitalization of old US 41
10% Greenway
10% Parks Revitalization


20% Recruit a large employer to team up with UE, USI, and Ivy Tech to implement an Earn & Learn program
20% Ballpark on Mulzer lot (who would be in the slack water port)
20% Redig the Wabash & Erie Canal from First Avenue, down 5th street, and then wrap around to the Convention Centre.
20% High Speed Rail and Light Rail
10% Ball fields at Kleymeyer Park
10% Lloyd Expressway Upgrades

Under the plan above, which is just a rough idea of the direction that I would like to see Evansville go in, it would take approximately 14-15 years to complete but would turn our city around 180 degrees for the following reasons...

1. It would not disturb other government revenues like Casino Aztar which would continue to be used to run our already existing city services.

2. In 15 years, Evansville would be building all of these projects while taking on ZERO extra debt and having earned interest revenue invested in our city.

3. Evansville would now be ready to move into the upper echelon of mid-sized cities.

4. Evansville would not need to raise any additional taxes to fix any of the above problems or fund any of the above capital improvement projects.

5. These funds would draw federal and state matching funds which would mean more investment in Evansville.

6. More jobs would be created by the 1,000s, the quality of life would be improved, tax revenue would be increased (resulting in lower taxes abroad), and Evansville would be on the same page.

The truth is, our city needs to grow while fixing major problems at the same time. We cannot afford to wait another day to solve these problems. We need a solution NOW! We can build and fix our city in one of two ways...

1. Raise a temporary 1% sales tax that would be monitored and improved by local residents. This temporary tax would draw interest revenue for the city.

2. Don't raise the sales tax and instead take out 30 year bonds on our sewers, slack water port, and whatever else we need to do to create jobs and fix our infrastructure. Over time, this plan will cost Evansville millions from interest rates on the bonds.

I'll agree that a temporary sales tax is no fun. I don't want the extra one percent either. But if you look at our two choices, you will see that it is clearly the direction we need to go in. One tax now will save us an abundance of tax increases down the road, and it will bring more funds into our city instead of a bank's bottom line.

While taxes are very unpopular in Evansville, our local penny pinchers need to realize that we can fight our tax problem, our infrastructure problem, and our quality of life problem with just one tax. We need to invest in Evansville today, WE NEED MAPS!


No comments:

Post a Comment