Archive for the ‘Uncategorized’ Category

Wrong-headed Trenton City Council moves to ban 5G

There are so many things wrong with out City Council, I’m sure the sunshine up you butt contingent will prefer to not hear it but as has been reported, they are once again falling for Internet hoaxes.

But what about the notion of banning wireless Internet on its face?

Is it a good idea to limit Internet competition in Trenton? That’s the actual impact of the ordinance that was proposed?

Let’s review some basic Economics that perhaps escaped the attention or our well studied City Council.

An increase in supply leads to a decrease in price given a constant demand. We call that the Law of Supply and Demand. It’s covered in Econ 101. If you learn one thing about Economics in school this is what you learned. Apparently our City Council members missed that day.

Allowing new wireless providers (in particular 5G) into a market or enabling existing providers to expand, increases supply of Internet access. To be clear, if AT&T can offer 5G service in Trenton they will be able to compete with Comcast and Verizon for your home Internet business. Increased supply leads to increased competition which leads to lower prices.

The net effect of the Trenton City Council’s proposed ban on 5G will be to keep Internet prices unnecessarily high.

Voters should remember this come the next election. But I won’t hold my breath.

The Case Against State Funding for Trenton

Trenton’s new government isn’t even sworn in yet and they’re already salivating at the prospect of fellow Democrat Phil Murphy funding some sort of big aid package for the City of Trenton.

My question is, why should taxpayers in New Jersey want this?

It’s settled precedent that cities can’t levy property taxes on State, County or Federal governments.  Why do Trentonians think they are different? If so, what’s the formula?

Perhaps we think it’s because we’re a Capital City and therefore entitled to a little extra something because we house so many State buildings.    Of course, legally we’re NOT entitled to a dime.

Many, in and out of Trenton government, think the State should agree to a payment in lieu of taxes (PILOT) out of the goodness of the collective hearts of all New Jersey tax payers.  If it did, New Jersey would likely be the only state in the nation that made such payments.  Most other states do not have formulaic mechanisms for PILOTs on State buildings but a few do including New York and Delaware*)

The State controls 28% of the land in Trenton.  Why can’t we run a successful city on the other 72%?

Perhaps we think it’s because we’re poor. Well sure, Trenton can’t possibly fund its own government.  However, just for background, out of the ~$500,000,000 local cost of government (municipal + schools), Trenton taxpayers pay around $90,000,000 in property taxes (municipal + school).  That’s less than 20%.

The state funds roughly 50% of Trenton’s total cost of government vs. the 20% that Trentonian’s pay in property taxes.   How much more do the fine folks in Trenton think NJ taxpayers owe them?

Perhaps we think it’s because Trentonians are all Democrats and payment will ensure fealty to the NJ Democratic party.   In the absence of a good rationale, this seems most likely.   Trentonians complained mightily when Gov. Christies tried to make performance criteria a condition of receiving aid.   Imagine that, a Republican suggested that Trenton have a responsible plan for revitalization and the people revolted.   Perhaps it’s good that Trenton is expunging Republicans from the city.   Who knows, maybe they’d help lead a statewide Republican resurgence that would force Trenton to be responsible.

There are some valid funds that do flow through the State’s treasury and that have been woefully underpaid in the past.  I’m thinking, of course, about CMPTRA  and Energy Receipts.  Both are essentially business taxes that are collected by the state and owed to cities.  The numbers are big, measured in the tens of millions of dollars.  The State of New Jersey stole millions from Trenton by not paying out correct amounts while previous Mayors were asleep at the wheel.   That’s a problem, but these funds aren’t aid, they’re taxes.

All of this leads to a fundamental reason why our new Mayor wants to bring partisan politics to his government.   Republicans would demand that Trenton be accountable for its future success and not be dependent on New Jersey taxpayers.  Self-reliance is a Republican ideal not just for people but also for local government.   For Trenton to not have a plan and timetable in which to become a normal city confirms that the city will never become self-reliant.  Never!

State funding for Trenton should end eventually.  If the City can’t show a plan for investing State aid in a way that will lead to self-sufficiency, the funding should stop now.

* Thanks to Iana Dikidjieva for correct the article in her Facebook comments.  Correct is always better.

Urban Republicanism in New Jersey

After participating in the 2002 Leadership Trenton program, I became convinced that Republican’s have much to offer cities. Urban Republican change the attitude towards cities away treating them as charity cases and instead viewing them as opportunities.  This can be done by promoting principles of fiscal conservatism, social liberalism and limited government. These principles shape our deep concerns about racism, sprawl, crime, pollution, welfare and drug addiction.

The Leadership Trenton program showed a serious divide between the interest of economic revitalization and social welfare. The emotion of racial victimization underlies the social welfare movement which deeply distrusts white Republicans. However there is a cold hard reality to building a sustainable urban tax base that is at the heart of the Republican fiscal conservative movement.

There are both black and white fiscal conservatives among Trenton’s and other urban small business communities. They denounce failed policies of publicly subsidized housing, poorly funded public safety and high taxes. Republicans support school choice as a radical change to a persistent problem and they support a pro-business stance that finds strategic advantage in urban site location. Rational Republicans also know that racially spurred sprawl has led to government expansion in the form of bloated transportation departments and segregated school districts.

Urban Republicans don’t have patience with social conservatives. They know that the anti-choice stance on abortion is out of touch with city dwellers. They support the LBGT and want government out of the bedroom. They know that addiction is a disease that can be cured. Most importantly they challenge racism not only on moral grounds but as damaging to our vitality as a people.

However, for Urban Republicans to make progress, our national leaders must root out the latent racism of the party. Republicans have a hard enough time talking about tough social issues without that albatross around our necks.

There are hard cold benefits to a state like New Jersey in helping our cities thrive.   Cities are where innovation happens best.  They’re economical to develop and don’t add to sprawl.  And best of all they conserve energy and reduce our carbon footprint.

A strong Urban Agenda appeals to the business community and many of the traditionally Democratic interests as well.   It’s what we need in New Jersey to grow our state and become national leaders for a better society.

Thoughts on the merits of a “State” bank in New Jersey?

I was asked to take a look at Phil Murphy’s “state bank” idea. So I did and here are my thoughts.
The general idea is that the State would create a bank that would service the State of NJ and then make loans to municipalities and possibly special classes of citizens, like students, at favorable terms.
I had three initial thoughts
  • By charging lower rates than commercial banks for the same amount of risk, taxpayers will bear the cost
  • What problem is this idea trying to solve?
  • Why would NJ, in 2017, model anything after North Dakota, in 1919 (as apples and oranges a banking environment as you can possibly get)?
I read the Politico article about this which was fairly in depth and came away even more confused.
It seems that the Murphy campaign is struggling to figure out how it can protect a State Bank from political corruption.   That’s good, because it would seem that a State controlled bank would be like a sandbox for malfeasance of one type or another.   You can just hear the back room bargains now for funding of this or that local infrastructure project in return for some sort of favor.
Meanwhile, the question that is NOT adequately addressed is “what problem are we fixing?”   The answer can NOT be that commercial banks are charging too much.   If that were the case then there are plenty of other banks that would charge citizens less if it were possible.  A State bank could only charge less if it were subsidized by taxpayers, which is exactly what will have to happen.   The public can be easily duped on this note because not many people understand the relationship between risk and cost.    Basically, a State bank could charge lower interest on loans if taxpayers guarantee the loans.   If loans go bad, it’s not the bank who takes the loss, it’s the taxpayer.
Presumably, we DO have a problem with corruption in our use of banking services.  Why wouldn’t we?  NJ politicians have found ways to corrupt all types of government contracting.   While a Public Bank could address this corruption, it seems like we would be simply shifting the corruption from one place to another.
We do a lot of dumb things in NJ.  As an example Trenton used public money ($65M in state and local funds) to build a publicly owned hotel back in 2000.   This happened because private money didn’t think there was a good business case for the hotel.   And there wasn’t.  So taxpayers were left holding the bag when the hotel went bankrupt.   This is what happens when we let politicians with big chunks of public money make investment decisions.   A New Jersey Public Bank would fund a field day for politically motivated bad investments.

Funding Government Mistakes

On Thursday May 5th, Trenton’s City Council will vote on an administration proposal to sell a bond (i.e. take out a long term loan) to pay a debt to the Internal Revenue Service caused by our payroll company (IPS) having stolen employee payroll taxes.   The amount of money is large, $4.7M so paying for it out of Trenton’s current funds is impractical.

As of this writing neither the public, City Council nor I know the proposed term of the bonds (I assume 15 years),  whether this is all that Trenton will owe (do we owe the State of New Jersey money?), will we recover money from IPS (the thief) or even how did this happen?  The City of Trenton has been stingy on letting taxpayers know what’s happened to their money.   That’s too bad but blogger Kevin Moriarty has done a great job writing about it and actually researching what’s going on.

I’m hopefully calling this a mistake because our administration shouldn’t have been so lax in its supervision of IPS.   It was a mistake to renew IPS’ contract even after the city was warned that IPS hadn’t been paying payroll taxes to the Federal Government.   Kevin’s research is turning up facts that potentially make this worse than a mistake, but for now I’ll chalk this up to plain old bad management in City Hall.

Reinvent Trenton mostly restricts itself to the economic issues and that includes how we use the budget as a policy tool.  So when a proposal (as vague as it seems) gets floated to fund a large $4.7M mistake made by the current administration over the next 15 years, in order for future voters to enjoy paying for a current problem, I take notice.

Responsible money managers know as a basic fundamental tenet that long term debt should only be used to fund long term assets.   We fund new water treatment facilities, new garbage trucks and even new hotels with long term debt (i.e. bonds).    We do that in our personal lives as well, our houses and cars are funded with long term debt, but not our clothes and food.

This $4.7M payment is a current liability and if we don’t have the funds in our budget we have only two responsible options:

1) change our budget by cutting something, or

2) fund it with short term debt (2 years or so) and raise taxes to make the payments.

Funding this mistake should happen during the course of this administration.   Spreading out our pain over 15 years deflects responsibility for this monumental blunder to future Mayors and future generations.   As voters and taxpayers, WE are responsible for this administration and this City Council, therefore we are responsible for the pain that our voting decisions have wrought.

Our decisions about how to budget and fund our operations are important.  They’re important in both matching priorities to our precious tax dollars and they’re also important in matching the benefit (or pain) of an expense to the actual taxpayers who will receive the benefit, or pain.

I know that none or our elected officials want to burden current taxpayers with this $4.7M mistake.  I’m sure that some voters would prefer to kick the cost down the road.   However, we are stewards of the financial health of our city.  Pushing this mistake into the future is both wrong and unfair to future voters.