How the Supercity will ratchet down spending on public services
by Gordon Campbell
Understandably, a lot of time and energy has been spent on how the Supercity structure has been imposed on Auckland, without much consideration yet of what it might do, once in place. In mid April however, Business Roundtable CEO Roger Kerr wrote a newspaper column about cutting back the size of government, and he signaled in the same column that one of the pet projects of Local Government Minister Rodney Hide is still very much alive. Kerr wrote:
I would argue that any spending cap proposed by the government should be judged against three criteria: it should be binding (subject to referenda and with limited exceptions for valid reasons such as emergencies); it should be capable of being monitored on a year by year basis; and it should reduce the share of government spending in the economy over time unless voters choose otherwise. A Colorado-type TEL [Tax and Expenditure Limit] would meet these criteria and was commended for consideration by the 2025 Taskforce. It would not be an unreasonable constraint.
In Colorado they call that idea the TABOR, or the Taxpayer Bill Of Rights. This TABOR plan, as a I pointed out in an article on Scoop in 2008, was the central plank in Hide’s first private member’s bill on local government reform in 2006. Once such a plan was in place, the only increases in local government revenues that would be tolerated would be those due to inflation or population increases. All other revenue would have to be returned to ratepayers as rebates, unless increases were explicitly approved by a referendum that the council is required to conduct whenever it wants to save anything beyond a mere adjustment for inflation and population growth, or if it should want to spend anything further on public services or on infrastructure. Welcome to the future of Auckland.
What the TABOR mechanism does is create a permanent shortfall in the revenues of central or – in Supercity Auckland’s case – local body revenues. As the Denver Post once put it : “It pits programs and services against each other for survival every year and virtually rules out any new initiatives to address unmet or emerging needs.” The mechanism not only prevents local councils from saving for a rainy day –ie, during good economic times, or from periods when it has been financially prudent – in order to pay for major infrastructural projects or the expansion of social services. Even worse, it also has the effect, as my Scoop article explained, of racheting down the resources of local government, since the rate revenues collected at the depth of a recession become the new benchmark.
The TABOR measure was adopted in Colorado in 1992. By 2005, Coloradans had voted to suspend the most stringent aspects of TABOR for five years, to give the state finances some room to recover. So what does life look like in a society that has a TABOR in place? On almost the same day that Roger Kerr was writing in praise of Colorado’s big idea, the Independent newspaper in Britain carried this story about life in Colorado Springs , including an interview with TABOR’s creator Douglas Bruce ( pictured left) The article begins:
“Fantastic,” says Sean Paige, of the financial crunch that is slowly throttling public services in Colorado Springs. “I welcome it.” Never mind that a third of the street lights have been dark since February and the citizenry may soon be asked to take their own lawn mowers to city parks to trim the grass…
Mr Paige….contends that it is the perfect time for the city to get out of running things like parks, pools and community centres – he believes the private sector, charities and churches will do it better for less money.
This is what some are already calling the “Grand Experiment” of Colorado Springs, which is expected to face a revenue shortfall this year of about $28m (£18m) or 10 per cent of its whole budget, brought about in part by the recession and also by the strangulating effects of the Tabor laws. But if this experiment is to be embraced and pursued, then the question arises: how far should it be taken?
It is not just about lights and lawns. Buses no longer run at weekends or at night; services at community centres have been drastically reduced; at least two of the city’s six pools will be closed. The police department’s two helicopters have been pawned off on eBay. In the new spirit of volunteerism, taxi drivers must double up as amateur cops watching for crooks while traditional police patrols are trimmed.
In this sort of society, people don’t a damn about the fate of anyone else. In fact, society barely exists at all. Those outside the locked and gated compounds are seen as the enemy, until proven otherwise :
Mr Bruce, who whips from his shirt pocket a copy of the US Constitution signed by Clarence Thomas, the conservative Supreme Court Justice, is unconcerned about service cuts. The city’s four community centres, which faced closure until the Council at the 11th hour scraped together a lifeline subsidy to last them the rest of this year, are, he says, “a bunch of parasites”. They inflate the numbers of residents – the poor, the old and the young – who rely on them, he says. “It’s the same with the buses. They are used by 1 per cent of the people. It would be cheaper to buy them all cars.” Not that he would, of course.
The ideological rationale is the one that tends to be produced whenever the opportunists in the Act Party feel inclined paint themselves as libertarians : namely, that taxation is theft, and government does best when it leaves the public exposed to market forces. Douglas Bruce, the author of the TABOR instrument so admired by Kerr and Hide, certainly sees it that way :
While Mr Bruce is not advocating shuttering government entirely – “I am not an anarchist” – he equates taxation to oppression. And like many radical conservatives here he indulges in hyper-ventilated comparisons with Communism, Marxism and what he takes to calling the S-word to protect the sensibilities of a visiting reporter – socialism. “I have a book at home where it says, ‘Thou shalt not steal.’ The government is stealing from us to redistribute the wealth and that is a key component of the Communist manifesto. Taking money from one group and giving it to another – I call that stealing.”
Paige, who faces re-election next April, cannot afford to be as ideological or as cold when it comes to the cuts. He claims to believe in the capacity of do-gooders and the private sector to “step up” to replace the safety net. “No doubt the cuts will fall far harder on lower income people,” he admits. “That doesn’t mean we can’t find partnerships to fill the gaps. There are a lot of affluent people in this town.”
There are a few affluent people in Auckland, too. Perhaps some will drive down to south Auckland occasionally and donate funds to soup kitchens for the needy, in the best 19th century tradition of Victorian charity. That seems seem to be the direction in which Kerr and Hide are intent on leading Auckland. The Independent sums up the toll of this policy to date, in Colorado Springs :
One third of the Colorado Springs’ 24,512 street lights were turned off earlier this year to save around $1.245m. Residents can adopt a streetlight if they pay $100 a year.
*To relieve the overstretched police force, the aptly named Cabs on Patrol programme asks 150 taxi drivers to report any crime or suspicious activity seen while driving around the city.
*Park budgets have been slashed by 75 per cent. Grass is mown monthly instead of weekly, bins have been removed so authorities do not need to pay for rubbish to be collected and public toilets have been closed.
*Nine city buses were sold and services no longer operate on evenings or weekends.
*Police and fire service budgets lost around $5.5m this year and police helicopters were auctioned on eBay
Of course, it should be said that Colorado has not been the only American state where social services are now in disarray because of ratepayer/taxpayer experiments in small government. California’s budgetary woes – where the funds for everything from firefighting to education has been cut back drastically – can be traced directly to the notorious Proposition 13 initiative in 1978, which slashed property taxes and rendered the state government permanently incapable of meeting basic social needs.
In Colorado, it may take a similar state-wide collapse to discredit TABOR enough to induce voters to remove it. As mentioned, voters managed in 2005 to temporarily lessen some of TABOR’s worst impacts. Yet even within the private sector, many now see TABOR as being bad for business, as this evaluation last year in the Colorado Springs Gazette indicated :
“Our crime is above the national average. We have buildings we can’t repair,” said Mike Kazmierski, president of Colorado Springs Regional Economic Development Corporation. Leaders worry about a future of continued tax limitations. “[Bruce’s] TABOR is going to restrict the recovery,” City Councilman Jerry Heimlicher said. “TABOR never anticipated two or three or four years in a row of reduced revenues. The city has the inability to restore services. “Kazmierski agrees: “It will eventually drive us into a hole that will be nearly impossible to get out of.”
He sees TABOR as a good idea gone bad. “TABOR in its purist form is very attractive – it’s citizens having a voice in the increase of taxes,” he said. “The way it is written and implemented is destructive.”
“What he has essentially done is make budget officers of every voter in Colorado,” [Colorado College political science professor Bob] Loevy said. “We now see Colorado as a giant laboratory. We are seeing whether you can give all this power to make financial decisions to the average voter and have it work. This is going on nowhere else in the country.”
Welcome to Rodney Hide’s vision for the Supercity. He will call it giving ratepayers a “choice.”
K-12 is the American term for Primary and Secondary school education