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Sneaking Another Fee Increase Through the Backdoor

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By Lowell L. Kalapa

A pair of bills making their way through the legislature will have the effect of allowing future tax increases to occur without the blessing of lawmakers.

These measures were introduced by the department of land and natural resources as a way to secure funding to modernize the bureau of conveyances. The measures specify that the current amount from fees imposed by the bureau of conveyances continue to go into the general fund; however, anything over and above that amount would now go into a special fund of the bureau to be used to develop a new recording system and to pay for the administrative expenses of the bureau.

The second punch is that the bills would allow the board of land and natural resources to set the fees at will without approval by the legislature. This is the most dangerous provision as the board would now have its own “cash cow” to raise as much money as it would like without having the legislature holding them accountable. Given that potential, is there any doubt that bureaucrats will latch onto this power to build their own slush fund, especially in these tight times?

This proposal perpetuates back door financing of a specific program albeit a more rationale link than some of the other programs which benefit from the conveyance tax. It is indeed unfortunate that the bureau has to resort to this strategy in order to update and maintain its operation. As general fund resources continue to shrink and such critical needs as the recording of documents go begging for funding, lawmakers need to reassess their priorities. The bureau is a critical function of government, recording documents of title to real property. If this system cannot be maintained, the state’s entire real estate base could be thrown into chaos, causing commerce and industry to come to a halt.

If this measure is approved, the lawmakers will be giving their stamp of approval for the “automatic funding” of this particular special fund and if this practice becomes pervasive, it is doubtful that there will be any funds left for the legislature to appropriate. If the legislature wants to modernize and upgrade the bureau of conveyances, a direct appropriation of public funds would be more appropriate if not more accountable.

This is where the direct appropriation process not only assures that there will be sufficient funds for the program but it will also hold the bureau, as well as lawmakers, accountable for the amount spent on the program.

If the concern is the availability of general funds for this program, lawmakers need to assess the propriety of earmarking the conveyance tax for totally irrelevant programs such as the natural area reserve fund and the affordable rental housing trust fund. These programs have no direct benefit to those recording property, yet a part of the tax paid by those recording property is misdirected to these programs while the bureau of conveyance system deteriorates. Even in this very session another proposal is making its way through the legislative labyrinth that earmarks another fourth of the conveyance tax revenues for homeless programs, monies that used to go to the general fund. Is there any wonder that there is a lack of confidence in the legislative process?

Lawmakers should consider repealing the earmarking of the conveyance tax for the natural area reserve fund and the affordable rental housing fund and appropriate those funds toward upgrading the bureau of conveyance’s recording system. There is something seriously wrong with this picture if lawmakers cannot see the priorities that must be set.

Giving the department of land and natural resources total authority over setting the level of fees without any caveats that the amount of the fee be only sufficient to cover the costs of the service being provided creates nothing more than another potential source of new revenues. Allowed to go unchecked, as this measure proposes, lawmakers will lose whatever oversight and control that they now exert through the appropriations process. This sets bad public finance policy and merely allows a department to wreak havoc over an operation that was never meant to be a revenue or income source.

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