tax policy

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Scott Wiener Thinks He Knows How to Fix California's Housing Crisis

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Other legislators aren't so sure.
BY  | JUNE 2018
California's go-for-broke legislator failed this year in his bid to spark a revolution in housing policy. He's ready to try again. (AP)

To California Sen. Scott Wiener, nothing epitomizes his state’s housing failures more than the seemingly endless fight over a five-story condo building at the corner of Valencia and Hill streets in San Francisco’s Mission District. The area is in the Eastern Neighborhoods Plan, which rezoned a third of San Francisco in 2008 to increase density near transit and to make housing more affordable. The lot was formerly home to a fast-food restaurant whose neighbors included several three-story apartment buildings and the historic Marsh theater.

Shortly after the Neighborhoods Plan took effect, a developer proposed a 16-unit building with two affordable housing units on the site of the restaurant. Although it adhered to the new zoning plan, the 1050 Valencia project was to be the tallest building for many blocks, and Mission District residents moved to stop it. In addition to complaining about the project’s height, they insisted the modern building would damage the historic character of the neighborhood. This was despite the fact that the stucco and wood-shingled restaurant there at the time was neither historic nor aesthetically appealing. In addition, the Marsh theater owner was concerned that construction noise and a proposed first-floor bar would disrupt theater business. It took years for the condos to be approved. The developer agreed to mitigate the noise impact and reduce the number of units from 16 to 12.

Not satisfied, the opponents turned to the Board of Permit Appeals, which sympathized with them and lopped off the top story of the building. That reduced the number of units from 12 to nine—and eliminated the two affordable units. “Welcome to housing policy in San Francisco,” wrote Wiener, who was then a member of the city’s board of supervisors. “A policy based not so much on our city’s dire housing needs but on who can turn out the most people at a public hearing.”

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How Cities Fell Out of Love With Sports Stadiums

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Major league teams used to get everything they wanted from sports-mad cities. Now they have to fight for it -- and increasingly, they’re losing.
BY  | MAY 2018
(AP)

St. Louis is used to getting stood up by football teams. The city has been home to four different franchises, and all of them have left town. But the last two departures -- and especially the loss of the Rams to Los Angeles in 2016 -- have been gut-wrenching experiences that seem to have broken much of the city’s storied enthusiasm for sports.

In 1987, St. Louis’ NFL team, the Cardinals, skipped town abruptly. Tired of the old Busch Memorial Stadium and increasingly indifferent fans, the team packed up after 27 years and headed for Arizona. The loss was a bitter one for St. Louis. But the city went after another NFL team with zeal. In the early 1990s, local officials had little trouble winning approval of a new downtown stadium funded entirely with taxpayer dollars. The city failed to win one of two NFL expansion teams awarded in 1993, but eventually it lured the Los Angeles Rams, who had their own problems with an ancient facility and a waning fan base. By 1995, the Rams were kicking off in downtown St. Louis.

It was a time when other cities were making similar choices. The Maryland Stadium Authority built a new publicly funded football stadium in 1998 as a prize for the NFL team it had stolen away from Cleveland two years earlier. Cleveland, in response, built a taxpayer-funded stadium and won back an NFL franchise in 1999.

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Taxpayers Have Their Own Bill of Rights in Colorado. But Who Benefits?

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The unique anti-tax tool has defined spending in the state, and it may spread to more states.
BY  | OCTOBER 2017
Anti-tax advocate Douglas Bruce led the TABOR effort in 1992. "No one has had the impact on Colorado politics" that he has, according to one academic in the state. (AP Photo/Ed Andrieski)

The blue tag on the streetlight outside Robert Loevy’s Colorado Springs home in 2010 didn’t signal an upcoming utility project. It was a receipt to show he had paid the $100 to keep his light on for the year. The city was facing a decimating $40 million budget gap and, among many other cuts, it was turning off one-third of its streetlights. That is, unless residents could come up with the money themselves. “I could afford to pay it,” Loevy says today, “but I have to think that would have been a stretch for many lower-income people.”

Loevy, a retired Colorado College professor, says the lights-out incident -- which earned Colorado Springs international infamy that year -- is just one of the many instances in which Colorado’s Taxpayer Bill of Rights (TABOR) has only benefited those taxpayers who can afford to pay for services out of their own pocket. Loevy has been a vocal critic of the law. As he sees it, “TABOR has had its worst effects on poor people.”

TABOR was approved by Colorado voters 25 years ago next month. The constitutional amendment limits the state’s year-to-year revenue growth to a formula based on inflation plus the growth in population. If revenues exceed TABOR limits, the money has to be rebated to voters, unless they approve an increase in spending.

Halfway across town, the author of TABOR holds a more cynical view of Colorado Springs’ recession-era cuts, which also included shuttering pools, terminating bus service on evenings and weekends and eliminating 550 municipal jobs. The deeply conservative Colorado Springs has its own TABOR that puts even more limitations on the city’s property tax rate. To Douglas Bruce, an anti-tax advocate who spearheaded the bill of rights effort in 1992 at the state level, the cuts were nothing more than a “publicity stunt” designed to fuel resentment against TABOR. “It confirmed my belief,” Bruce says, “that the people running city government are sadistic bastards.”

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Legal or Not, States Forge Ahead With 401(k)-for-Everyone Plans

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Congress jeopardized the future of state plans to help private employees save for retirement. States don't seem to care.
BY  | AUGUST 2017
Fifty-seven million American workers don't have access to a retirement plan through their jobs. (David Kidd)

Matt Birong spent years cooking in upscale restaurants in Boston and New York City. In an industry notorious for low wages and zero benefits, he did something very unusual: He opened a retirement savings account for himself. Birong admits that if his parents hadn’t insisted he do so, he likely would have skipped the process. Even then, the notion of setting up an investment plan on his own would have been overwhelming if he didn’t have a trusted friend in the financial services industry to walk him through it.

Now, as owner and head chef of 3 Squares Café south of Burlington, Vt., Birong wishes he could do the same thing for his employees. He already offers other unusual perks for the industry to attract quality and loyal workers, such as paid time off after one year of service. But setting up a retirement savings program for his roughly 15 employees? “I’ve got my head under a sink making sure the water’s not leaking on the tenants downstairs,” he says. “I just don’t have the time; it’s not that I don’t want to.”

Birong’s situation is similar to that of many small-business owners across the country and is a big reason why half of private-sector workers don’t have an employer-sponsored retirement plan. Of those 57 million people, only a small percentage have saved on their own and those savings are generally paltry. According to the National Institute on Retirement Security, the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households.

Some states want to change that. This July, Oregon became the first to offer a retirement plan to full- and part-time private-sector workers who don’t have access to one through their employer. Eight other states -- California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Vermont and Washington -- are implementing similar plans that should reach full rollout within the next five years. In general, the programs will run independently from the state and will be paid for through retirement account fees. When the nine state plans are up and running, they will serve roughly one-quarter of private-sector workers across the country. In California alone, the plans will cover nearly 7 million people.

A Sneak Peek at the Seismic Shift in Corporate Tax Breaks

New rules are forcing states and localities to calculate how much revenue they’re losing to business deals -- and whether they pay off. It’s something Washington state has been doing for a decade.
BY  | NOVEMBER 2016

Earlier this year, Washington state lawmakers got a wake-up call. A tax incentive package they’d approved in 2013 for aerospace giant Boeing -- largely regarded as the most expensive incentive deal in history -- was actually on pace to surpass its estimated $8.7 billion cost. According to a Department of Revenue report, the deal, which extends to 2040, had already amounted to half a billion dollars in giveaways in just the first two years alone. In other words, the state was losing out on a whole lot more money than it had planned.

And the kicker? Just months earlier, Boeing had announced plans to cut roughly 4,000 jobs in Washington. The year before, the company had transferred thousands more jobs out of the state.

Some lawmakers were livid, openly contemplating whether the state should consider revoking the tax breaks if the company didn’t add back some jobs. (Boeing, for its part, says it has continued to invest in the state, including $1 billion last year for a plant to build its new 777x aircraft.) But on the whole, response from officials and local media was measured. Most lawmakers said that in the bigger picture, the company was still good for Washington.

The China Factor in America's State and Local Economies

As the world's second-largest economy falters, pensions and tax revenues here are feeling the pinch.

BY  | AUGUST 2016

Earlier this summer, New York state’s pension fund announced a mediocre year. Investment earnings were essentially flat, and as a result the fund lost $5 billion because its other receipts -- contributions from government and from current employees -- didn’t cover retiree payouts.

The New York pension system was the victim of a global event that began halfway across the world a year ago this month. In August 2015, the world’s second-largest economy officially began to stumble. China’s central bank stunned investors by devaluing the yuan, lending credence to what outsiders had long been suspecting: China’s years of astounding annual economic growth -- at times cresting at double digits -- was slowing down.

The Curious Case of Disappearing Corporate Taxes

Over the past two decades, corporations have doubled their profits but contributed increasingly less to state revenues. Where is all the money going?
BY  | JANUARY 2016

When Rick Snyder became governor of Michigan in 2011, his state had been on a 10-year economic slide -- businesses were leaving and so were people. Where the rest of the country saw growth in the first two-thirds of the 2000s, Michigan’s fiscal health was slip-sliding away.

Reversing a slide is difficult, and Michigan’s governor and legislators focused a good chunk of their turnaround efforts on taxes. They wanted to reform the tax code so that it would lure businesses and generate the revenue needed to underwrite the kind of quality services that make people want to live there. Snyder’s first step was to ask the legislature to slash business taxes. Within months, lawmakers repealed the unpopular and complicated Michigan Business Tax -- though businesses could opt to stay with parts of the old system and its arcane web of credits and rebates. That isn’t all the legislation did. The new tax law created a flat 6 percent tax that only certain types of corporations paid on their income. Talk about simplification: Nearly 100,000 businesses no longer had to file corporate returns.

Michigan has made economic progress since the 2011 tax reforms were passed. The population has stabilized, and the state ranks fifth in the country in job creation. Earlier this year, Michigan’s bond rating was upgraded, an affirmation of a more stable fiscal environment.