johnv2 • 2 years ago
OK, tax revenue is straightforward, but how do you calculate the city's expenses per lot?
Charles Marohn Mod johnv2 • 2 years ago
That took a year to figure out and might take me almost that long to explain. It was very complicated and, needless to say, included some assumptions that we could debate to no end.
For example, someone living close to the core of town has their sewer flow by gravity to the treatment facility. We allocated the cost of the pipe and other gravity infrastructure proportionately to them. Someone living out on the edge would have their sewer flow by gravity to a lift pump and then pumped (electricity + pump replacement + maintenance) to another gravity line. We found some properties where their sewage was pumped 20+ times before treatment. We would proportionately allocate the pipe cost and the pumping cost to those properties. Note: you pay the same price for residential sewer whether you pump 20 times or just use gravity.
You can see how this gets to be a complicated algo to apply geographically, and that's just the sewer. We also had water, drainage, streets, sidewalks, transit service, police/fire, etc...
Revenue was actually not that straight forward either. Sales tax, which is a huge part of their budget, cannot rightly be allocated solely to the store. Some of it would go with the family -- we thought of this as non-discretionary, stuff that a family purchases whether there is a shiny new big box store or an old corner store -- and some would go with the store (non-discretionary spending as well as spending pulling from people outside the city, such as tourists, commuters and people who simply drive to Lafayette to shop).
We did an entire webinar on it last year for our members. I'm not suggesting it's not arguable at the margins, but I am comfortable with the basic distribution.
johnv2 Charles Marohn • 2 years ago
Interesting. Did you wind up allocating part of the cost of roads from homes to the stores, at least partially, using the same sort of discretionary/non-discretionary split? How did fuel taxes wind up being allocated? What about... I can see how this gets complex fast. Thanks for a brief overview.
Charles Marohn Mod johnv2 • 2 years ago
I'm pretty sure the city doesn't get any fuel taxes.
Roads were the most fascinating and took the most intellectual effort. We finally ground out a network node analysis kind of in the same way one would analyze a computer network. We ran an analysis of all the possible routes one could travel to get from one intersection to another and then used those relationships to distribute costs. This had the effect of making dead end cul-de-sacs distributed mostly to the people who lived along them (nobody else really has need to use them) and the cost of the collector roads tended to be distributed over more of the population.
That part of the analysis was utterly fascinating. Josh McCarty is a certifiable genius.
Michael Henderson Charles Marohn • 2 years ago
Is there anyway you can share the technicals of the network node analysis? I need a way to demonstrate this during rezoning hearings.
Charles Marohn Mod Michael Henderson • 2 years ago
I wish. I helped in the theoretical discussion but I was not the technical guy that ran the model. Sorry.
Michael Andersen Charles Marohn • 2 years ago
Do you know if the infographic includes non-infrastructure expenses such as policing?
johnv2 Charles Marohn • 2 years ago
So you are charging infrastructure costs, like roads, against the city finances only? I'm not sure how it works elsewhere, but my city gets most of the infrastructure funding from the county (via sales tax), State (various taxes), and Federal (more taxes). In fact, IIRC, something like 80% of a recent road maintenance project nearby came from government funding other than the local city funds. I'd think one should account for this in understanding how infrastructure is maintained.
Federal, State, and County governments all want a hand in allocating funds because that's where political power originates. Local/city government can't afford infrastructure solely on the local/city budget because capital improvements and maintenance isn't funded solely from local/city taxes. If residents weren't sending all that money to the State capitol and to DC, then the increased local tax to fully fund infrastructure might be feasible.
In any case, understanding how we pay for all the things we have is indeed both fascinating and complex.
Charles Marohn Mod johnv2 • 2 years ago
We counted the sales tax because that is allocated back by a formula. Not sure how your state funding works, but as for federal, there is no ongoing and consistent funding stream. Federal dollars are given primarily to states or are used for specific projects that don't recur on an annual basis. The feds build it and then the local government maintains it, a problem I wrote about last week:
http://www.strongtowns.org/...
I suspect your state works the same way, although there are often state programs to pay for major roadways. These programs often have the same effect: spend more to oversize streets that would otherwise be less expensive and actually nicer to live on.
The other reality is that, if your city is counting on federal and state money to do basic maintenance of your critical systems, that's more than a little risk. State and federal governments underfund maintenance on their own systems and, when budgets get tight, have a long track record of cutting funds that would go to local governments. If you've overbuilt beyond what your own local wealth supports -- and we all have -- then you are dependent on the good graces of state/federal decisionmakers for your critical systems. That seems like a tenuous position to be in.
Plus, just the sheer math of it suggests that there is no way state and federal spending can bridge this gap either. It's just too big.
johnv2 Charles Marohn • 2 years ago
"These programs often have the same effect: spend more to oversize streets that would otherwise be less expensive and actually nicer to live on." This is going to disappoint the Complete Streets crowd, including me, who would like to see bicycle-friendly infrastructure.
I completely agree about the worrisome aspect of Federal/State funding, but the reality is the Feds and the State are going to keep control of every dollar of tax revenue they possibly can instead of letting cities make their own decisions. Even if cities (read, local politicians) could make their own choices, it isn't clear to me that we'd see better results. Politicians don't care about anything beyond the next election in all but the most extraordinary circumstances.