For what and when should general fund revenues be used and when should fees be imposed to pay for a public service?
This dilemma is one that has blossomed over the past few years as both state and county governments search for new sources of revenues while traditional resources such as taxes limp along. The impetus for this search lies in the political reality that elected officials do not like to raise taxes, especially when their main goal in life is to get re-elected. They know very well that any hint of raising taxes will spawn a back lash at the ballot box.
That’s why the user fee has become such an idol for the elected official. Not only does the user fee allow the elected official to pick-on a select group within the community because the fee will only apply to those who want the specific service, but it allows the elected official to tuck the revenues away in a special fund, out of sight from the general public. The implementation of a user fee for what used to be underwritten by general funds allows elected officials to take that particular public service or program “off the table.” Thus, elected officials can claim that they have cut general fund spending because that particular activity is no longer paid out of the general fund.
In some cases, if the fees are set at levels that will produce more than enough money to fund the service or program, administrators will usually find ways to spend the money. Thus, the user charge can allow administrators to build their own little “empires” because no one has oversight with respect to these programs.
Out of sight and out of mind, no one seems to care. However, in the long run, this situation will come back to haunt future leaders if not current leaders because fees, like taxes, mean less money in the hands of the consumer and less capital in the economy. User fees and the special funds they finance also mean that elected officials have less control over deciding how much government there should be and perhaps whether or not government should be performing that service.
The user fee concept can also have an impact on how voters and elected officials view government. In Honolulu, for example, the City Council is thinking about granting a tax credit against the real property tax for condominium owners who do not receive county trash removal. This move comes on the heels of the Council’s rejection of a new garbage user fee that would have been paid by anyone who receives county trash removal. Instead they raised property tax rates.
However, because the rate of increase on condominium owners was much greater than for the other classes of property, these owners cried “foul” and cited the fact that in most cases condominiums don’t receive city trash collection. Thus, the credit is being proposed to “compensate” condominium owners.
This is sort of the backwards thinking to the user fee concept. However in this case, one must ask whether or not it is appropriate to not have to pay for something – or in this case get a refund – for a city or state service just because you, individually, don’t use the service.
Taxpayers would hope that the sanitation of the city streets is a benefit for all citizens. Just because a taxpayer may not use a specific public service does not mean that the taxpayer should not pay for the service. Where the service provides for the general health and welfare of the community should be enough of a justification to pay for the service out of the general revenues or taxes paid by all.
If one were to apply the same logic to a hook and ladder fire truck that has a ladder that can reach the sixth floor of a high rise that is burning, then one could argue that a single story homeowner should get a tax credit for the amount of that hook and ladder fire truck because the fire department will not need it to fight a fire in a one-story house.
If someone never goes to the park, that person could argue that he or she should get a tax credit because they should not have to pay property taxes to maintain the park.
All this effort does is to pit one group of taxpayers against another. Instead of trying to keep everyone happy, elected officials must look at the big picture and make those hard decisions.