How to Solve a Structural Deficit

Tuesday, May 1, 2012

Tom Richards' flashy State of the City Address was a wonderful mixture of platitudes and problems.  The jokes were funny and he was not afraid to mention some very big issues.  While most of the presentation focused on the problems it seemed to gloss over the solutions. I want to start where Mayor Richards left off.  Rochester has a structural deficit whereby the City is unable to cover its expenses.  The worst part of this is that Rochester only controls a small part of its financing and the rest is left to the caprice of the State. As a result, Rochester is unable to provide all the services which make Rochester an attractive place to live.  So how do we correct this?  As usual, I have a few ideas.

We should be fighting poverty with home ownership.  I have nothing against rental housing, in many cases,  landlords do not live in the community where they own property.  They may maintain these homes, but they do not spend their money in Rochester.  As a result, they do not support local businesses nor increase the cycling of money in a community. Whenever money is spent, a portion of that money leaves the local economy and the rest is spent again at home.  The larger the percentage that remains local, the more times it is spent and the more the economy grows.  Local spending creates more local spending and when city landlords do not live in the city, the Rochester economy suffers.  A program to increase and preserve home ownership would give greater returns than a huge housing project.

For the same reason, we should be investing in local businesses and rather than creating building projects that house national chains.  If we made loans available for business that required local ownership in projects like College Town, then we would have a stronger economy and generate more revenue for the City.

To facilitate this, the City should be a leader in import replacement.  City Hall should work with other large companies to find out what services they use that are provided by businesses outside the city.  Then, the City can use this information to facilitate the creation of locally-owned, co-op businesses in the city with local residents as owner-workers as was done with Evergreen Laundry in Cleveland.

Finally we need to start fairly assessing all properties.  In Rochester, many middle-income houses are over assessed by a little, but large commercial properties are under-assessed by a lot.  This has created a positive investment environment, but has also created a tax base which is incapable of supporting our needs.  While we may need to occasionally give tax incentives for job creation, these incentives should be temporary leading to the owners paying taxes on the full value of the property. This would allow our city to lower the tax rate but collect much more in taxes.  After all if everyone paid their fair share the burden would be easier to bear for everyone.

With these changes we would still foster growth while creating real wealth in our community.  The focus on jobs and local spending would help reduce poverty and increase revenues for the city while a lower fairer tax rate would stimulate investment at both the small and large levels.  This would solve the structural deficit which Mayor Richards fears is threatening our city and is the only positive solution that has been presented so far.


Listen to Alex...

...on Transforming Rochester on Rochester Free Radio. You can see when it's on at the Rochester Free Radio show schedule.

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