Target Government (think Value!)

Target Bullseye

The Statesmen editorial board thinks the City Council should ease the burden on Austin taxpayers.  I am all for limited government, but the Statesmen’s editorial was a tad disjointed.

First, it fails to put the proposed tax increases in context.  It indicates that the new taxes and fees will be about $19 a month, or $228 a year.  Median household income in Austin is estimated at $48,227 by the Census ACS.  That means the new taxes and fees will take up less than half of one percent of median income.  Nobody likes higher taxes, but this is not a huge new burden.  Maybe the editorial wants the City to reduce spending, but it needs to make a better case than this.

Second, it’s unclear if the editorial board wants a shift from fees to more property taxes or no fees. It sort of indicates a desire for a shift, but doesn’t really get there.  While one or the other might be more regressive depending on the services covered by fees, it’s generally a good ideas to have a mix to prevent revenue volatility.  Again, the editorial doesn’t explain why a shift might be good.

Third, and I think most importantly, the negative reaction is to the wrong thing.  A relatively small tax increase isn’t a bad thing if it preserves an incredible amount of public value.  By “public value” I mean that public spending still generates a high marginal return in the public goods we want. It would mean that government is at the frontier of both cost efficiency and quality provision. Think of the retail chain Target, but as a government. It is hard to have a good discussion about the appropriate level of municipal spending without engaging in some common ground of what constitutes public value.

For example, the public outreach sessions conducted by management emphasized the desire to preserve public safety positions.  Public order is a high priority.  This makes sense.  However, at some point, additional public safety positions yield diminishing returns in public safety.  The same thing can be said of all other government functions.  At some point, smaller classrooms no longer substantially impact student achievement.  I’ve rarely seen discussions on spending be driven by a focus on what empirical data tells us are the frontiers of public value.

The reality is that right now, our political discourse and local data collection and evaluation methods focus on spending.  We do not focus on optimizing for public value.    This makes discussions about the appropriate size of government ideological instead of empirical.

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One Response to Target Government (think Value!)

  1. Tim says:

    It’s that Texan – “But we should be able to have all the government I want while paying nothing for it” ethos.

    I’m still baffled at how a tax increase on par with a single monthly trip to McDonalds will “significantly increase property taxes”.

    I would love to see more metrics though. I also think it would be useful every time a neighborhood wants a park if they could see exactly what effect it would have on their taxes.

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