Pledge of ‘No New Taxes’ Hurts Local Governments, Report Says

The “no new taxes” promise of federal and state politicians is a fine campaign slogan but it has put many cities in bad shape, the National League of Cities reported Monday.

Officials said that, in the end, local governments are the ones stuck with raising taxes and fees to pay their bills.

“The ledgers of local government show the reality of what happens when others say ‘no new taxes,’ ” Alan Beals, executive director of the league, said. “The burden is shifted, the taxes are shifted and the cities get clobbered.”

He said local governments not only have to carry out their traditional responsibilities but they have to cope with a growing list “of crisis issues or unfunded mandates” from state or federal agencies.

The league’s report showed that half of the 362 cities surveyed are spending more than they expect to take in in 1989, and 57% said their income is not keeping up with inflation.

Sixty-nine percent of the cities increased fees and charges for municipal services last year, 41% raised property taxes, 36% reported imposing new fees and charges and 10% instituted new taxes, the report said.

Beals pointed to new drinking water regulations expected to be issued by the Environmental Protection Agency that would cost $3 billion for plants and equipment and $500 million a year to operate them, saying the cities will have to foot the bills.

Douglas D. Peterson, senior policy analyst for the league, said that, of the 362 surveyed communities, only 108 reported that they are ahead financially. He cited Sunnyvale, Calif., as taking in 10% more than it is spending; Winston-Salem and Raleigh, N.C., 3%; Virginia Beach, Va., 2.4%, and Kansas City, Dallas and Minneapolis, 0.5%.

Beals called drug abuse and affordable housing the top problems facing communities but said they have gone begging for federal money.

“At the same time, we see a massive $285-billion bailout of the scandal-ridden savings and loan industry sailing through Congress without much anxiety, even though it represents the largest federal outlay since the cost of fighting World War II,” Beals said.