Commission Impossible

The Challenge looks like a building burning in Sim City 3000. I'm gonna guess the Fire Dept.

and no, don't raise my taxes anymore. =(

Lon--

It's interesting to me that the only two options most people can imagine when confronting a budget crisis are (a) reduce services or (b) raise taxes. Somehow or another, some connective tissue in their brains immediately converts "increase revenue" into "raise taxes", as though that were the only way to increase revenues. And the thought that you can reduce expenditure without reducing quality of service would never occur to someone who's never had to compete in the open market for customers.

Taxes are necessary, of course, but it's not as though they're some sort of flow you can adjust with a turn of the tap.

How did we get into this mess in the first place? For one thing, it's not just a city mess; it's county-, state-, and nation-wide. We were doing so good, then not so good. What happened?

What happened is that a bubble burst. But while the bubble was expanding, revenues increased (without turning the tap at all!), and programs were funded, services were added, assets were acquired, etc.

So an important part of the solution to budgetary woes will indeed involve divestment. And yes, of course I'm talking about Bidwell Ranch, although tangentially.

What I'm really getting at is that we need to increase revenues. When my budget falls short, sure, I should sell that third car I couldn't really afford and don't need anyway. But mostly, I need to get a second job, or a better job, or open a business on the side. More revenue; that's the ticket.

But for so many people, especially people who work for the government, whether elected, appointed, or simply civil servants, "increase revenues" means "increase the proportion of citizens' income confiscated by the state".

But wait just a minute sezzi (and u); why is it we had plenty of revenue not that long ago, without raising taxes? Was it all just a wonderful dream?

Of course not. It was about 12 years of unprecedented economic expansion, which did indeed come crashing down (sort of; my telecoms stocks are still largely worthless), but the Dow is still over 10,000. The economy, while not booming, is still quite healthy. Maybe there's a third path.

Sales taxes are an important part of our general fund revenues. So naturally the dull-normals who are most comfortable in government work conclude that the solution must be to increase the rate of tax on sales. It never occurs to them that the best way to increase sales taxes is to increase sales. As an old-school sales manager, though, it occurs to me all the time.

Chico is fortunate to have a public servant who doesn't think like the rest of her colleagues. Martha Westcoat-Andes is the city's Economic Development Director. She has spent the last year patiently gathering information from sundry sources, and has laid out a very impressive comprehensive analysis of our current situation, with cautiously encouraging projections into our future. Unlike most bureaucrats in the blue sky business, she is candidly conceding there are no silver bullets, no quick fixes. But she is also the only senior official around who is offering a practical solution to our financial disequilibrium: grow the economy.

We need more and better jobs, stronger and more competitive employers, strategic market development, and a risk-indulgent commercial culture. We need, in short, private investment.

The global economy is a knowledge-based dynamic. Strategic advantage comes from applied knowledge, symbolic analysis, and innovative initiative. We have a knowledge factory right here in Chico, and every year we watch as the product of that factory is exported to markets around the world when graduates depart for good jobs elsewhere. I've been saying this for years, but I'll say it again; export the knowledge, keep the knowledge worker.

The only way -- and I'm not being hyperbolic here, I mean the only way -- Chico is going to solve its fiscal challenges is through growing its economy by exploiting (in the best sense of that term) its natural competitive advantage, the educated workforce it has been giving away for decades. That isn't going to happen by imposing burdens on the retail sector or installing yet another vampire tap on the artery of real estate development.

We need more Improvement Directs, uVacides, Travidias, and Auctivas; startup companies that grow rapidly, employ hundreds of knowledge workers at above-market wages, create wealth that chases goods and services, and oh yeah, generate tax revenues. Our current policy elite doesn't even know how to start up an interesting discussion, much less a profit-making enterprise. There's the whole problem in a nutshell.

--Ax

Alan,

I would agree that the only long term solution for Chico is to enhance the job market. I would love to see a discussion of money spent to-date in that arena and its results.

And, for the record, I don't believe employee cuts or benefit cuts are really a viable solution. That's based on political realities. Still, I think real discussions in those areas need to occur, with a goal being more efficient delivery of services creating reduced future needs in human resources.

I would disagree with the characterization of government employees as "dull-normals", at least from my experience with local government employees. I think most of them are brighter than me, and certainly have a better knowledge base on budget topics than I do. I think they are operating in a political environment where it makes little sense to them to stick their necks out.

Since I'm likely dull-sub-normal I'm willing to take a few chances and speak openly on these topics. I hope other taxpayers do the same.

Lon

IMHO: Bidwell Ranch should be off the table. This Council has come to that conclusion. I disagree with that decision from a financial perspective, but the decision has been made. We should honor it and move forward.

It's a long walk from "accept" to "honor", and I'm not prepared to take that hike. Like the parking structure, I understand it's a settled issue. But that doesn't mean it isn't fair game for criticism.

I've met some brilliant people in government work, but I still believe that the public trough is the last refuge of the indolent, incompetent, and ineffective. Some very capable people are motivated to serve their fellow citizens, but public employment is irresistible to those with limited imagination, initiative, and ambition. Bureaucracy is a petri dish for unions. Smart people get real jobs. Those who can, do. Those who can't, teach. Those who won't, civil service.

Generally speaking, though, I think we've got some pretty good people in place, even those with "Interim" in front of their titles. But let's be fair; they'd never succeed in private enterprise.

I've seen Martha give her pitch to policy makers and department managers, and they all look at her like she's speaking Urdu. They don't understand it, because it doesn't fit into their very limited understanding of where money comes from. The typical liberal arts education inculcates the notion that wealth is "distributed". It may well be, but first it must be "created", and this is something the typical AFSCME and SEIU members simply cannot grasp; their minds do not have an opposed thumb with which to seize it.

Alan, I work for Improvement Direct. =) We are around 150 people and still growing. As well as running out of room very quickly.

Trev--

Improvement Direct is the poster child for what I'm talking about. Two guys with a relatively small seed investment ($75K, iirc) start up an eCommerce play "selling toilets on the internet" (in Christian's deathless phrase). A little over three years later, they're pulling $60 Million at the top line, employing, as you say, 150+ people, and outgrowing a huge brand new building.

The city provides, as Lon points out in an earlier blog, excellent salaries and benefits to its employees, on the grounds that it must remain "competitive" with other communities. The PD/FD leadership claims we need to hire more cops and firefighters.

Meanwhile, Auctiva needs to add another 60 or so programmers and analysts, and is frankly concerned that they will not be able to stay in Chico because of the talent issue.

Chico cannot continue draining the public trust to hire service workers when its most promising growth enterprises are unable to attract and retain knowledge workers. The city can and must tighten its belt, while continuing to deliver quality public safety services. What it cannot do, no matter how it tries, is create wealth through innovation and entrepreneurship; only the private sector can do that. What the city can do is create the conditions that make it possible for private investment to fund promising opportunity and generate new wealth.

I remember a few years ago, I was talking with a bigwig at the Kauffmann foundation about a talk he was going to deliver on "Government's Role In Economic Development", which he summarized thus; "Get the hell out of the way, and stay the hell out of the way."

Threatening to reduce the quality of public safety services in order to strong-arm the population into swallowing a tax increase is blackmail. Public safety is a factor of production, no less than raw materials, energy, labor, or transportation. And industry should be willing to pay for it, just like any other good. But the City of Chico needs to understand that good government is but one of a number of competitive advantages that entice talented people to settle here. The city needs to find a way to maintain standards while reducing costs.

Raising taxes in order to maintain current levels of inefficiency, outmoded processes, and blatant featherbedding is a surefire strategy for discouraging private investment, and for driving our most talented graduates to other markets.

--Ax

Considering that the city will not sell off assets and just gave the firefighters a raise when we're already running a deficit tells me that fee increases are on the way. If any council member thinks that the citizens will approve a sales tax increase they are sadly mistaken. My 2 cents.

Trevor,

Yes, that is a fire department response in SIM City. I'm not sure which version of the game it is. In some versions you can have a volcanoe grow and erupt in your city. I hope that doesn't happen in Chico.

Lon

I seem to remember taking a course from Jim Gregg a couple decades ago that dealt with building legitimate surveys. So, Mr Gregg, if you're out there in cyberland today, could you please give us your opinion of the city's little survey?
Sincerely, Sean Baber

BTW: here is the survey,

http://www.chico.ca.us/Community_Feedback_Survey.pdf

It is laughable in its obvious attempt to lead the person taking the survey.

Lon

Wow, that is pretty funny.

A good survey is a great idea and would help provide some direction. I just went through all this with our public art survey. We should support that it be done professionally.

I would guess this one was put together by a committee where everyone contributed a statement to represent their pet priority. I'm sure they had good intentions, but it does reveal the existing sentiments of the people that wrote it, which is kind of a survey in itself.

Here's my suggestions:

Make it interactive so it can be typed on, checked off and returned via email.

Distribute it through the City e-mail list.

Get some help from qualified survey experts to write the questions so the information gathered is usable.

Use an inexpensive survey program such as Survey Monkey that does all the analysis work.

Use scales that show degree of preferences.

Include a priority statement that reads:
“Getting better performance and results from the existing funding of our services and programs.”

Ex: We already paid someone to write this one.

Hi Sean

I am out here in cyberland living in retirement in Chico.

The "survey" is much too limited to be meaningful other than to provide the respondent the opportunity to express support for city services.

I would rank it with Wally Herger's famous surveys which were designed to elicit desired responses.

You may remember one of my bits of advice to students was to remember that: "There is no free lunch, "You don't get something for nothing," and "You get what you pay for!"

That probably applies to many surveys put together by folks with no background in survey research.

It also applies to the no new taxes crowd's attitude about government services and employees.

I prefer the notion that "I enjoy paying taxes because with them I buy civilization.' That does not imply, however, that there should be no accountability by the public sector. It presumes that most of us do not appreciate what our taxes buy!

Given Alan Chamberlain's rant about public employees one most hope that Alan's house never catches fire and is not burglarized. Hopefully he does not die because of a lack of building inspections or because he eats in restaurants lacking in health inspections.

Can it be that he jests, or is he putting us on?

In either case his words smack of elitism not worthy of the time it took him to write it.

Jim Gregg

If all of you people could just move along to the rhyming urban beaver post it would be much appreciated.

Or you could take this survey (check the statement that most applies to you)...

1. I love the urban beaver rhyming idea
2. Ensuring urban beaver rhyming is part of public deliberation is important to me
3. We need to protect and hire more urban beaver rhymers.

Lon

Mr. Gregg,
Thank you for replying. What you taught about surveys is one of the few academic things that has stuck with me all these years. I agree that Herger's newsletters/ surveys are rubbish as well. In fact, I'm thinking about starting a club called "Republicans Against Wally" or RAW for short. But first I need to start my Veterans helping Veterans club and see what all this beaver talk is about.

As I've stated in previous posts, I don't mind paying more in taxes, but in return I want more parks, more aquatic facilities, more sidewalks, more streets without potholes. I'm not convinced, that I need firefighters with more pay.