Opinion as contributed by Mike McDermott
from http://mcdermottforcouncil.com
This past May, I worked with a peer group of residents at the behest of City Council to frame up, propose and eventually promote an increase in the local income tax rates for Tipp City. The income tax increase was to benefit specifically the capital improvements across our community. Roads, Fire, and EMS would all benefit from much needed improvements, setting the stage for City Council to focus on other things than pushing back capital improvements once again. Residents responded and by nearly a 60/40 margin Tipp City residents agreed that the need for local spending was there.
Unlike the federal government, your local income tax dollar goes directly to the City which in turn uses nearly that entire dollar to improve our community. City streets employees benefit with the increased work by being able to continue to pay their mortgages and buy groceries. Elderly with heart conditions benefit from having new CPR machines that monitor their vitals as they are rushed to the hospital. Your dollar spent wisely.
Enter the Federal Government
During the 1960’s federal granting to state and local governments exploded. In fact under President Lyndon Johnson, aid programs were added for housing, urban renewal, education, health care, and many other activities. President Johnson’s social activism dealt a severe blow to the federalism of the nation’s Founders. Ronald Reagan attempted to re-sort and re-evaluate the federal granting being performed and was able to re-prioritize some efforts, giving power back to local government. Future administrations reversed many of the Reagan policy changes again building the number and size of federal grants. According to the Catalog of Federal Domestic Assistance, there are more than 800 state and local aid programs ranging from the massive $250 billion dollar Medicaid to “smaller” aid programs like $15 million dollars going to fund “Nursing Workforce Diversity” research.
Why Grants are Wasteful
The basic incentive structure of aid programs encourages overspending by our local politicians. The system allows City Council to claim credit for spending on a program, while relying on another level of government to collect part of the tax bill.
Recent examples of this would be the re-consideration by City Council of the widening of 25A. Federal and State grants have provisioned a whopping 81% of the funding to widen one mile of 25A from two lanes to five lanes. All Tipp City has to do is pony up $750,000 for their match. Match you say?? Yes, the costs of this capital improvement expansion are split between federal and state taxpayers. Matching reduces the “price” to our City’s added spending, thus prompting them to expand a road that really has no burning need to be widened. Two-thirds of federal aid spending is on grant programs that have matching requirements.
So Why Does this Matter
Well, matching gets the project started, worked on and then completed, but in 12-15 short years those 3 additional lane miles will require resurfacing which comes out of the City’s Capital Improvement Fund. Even after passing the additional quarter of 1% income tax, those additional 3 lane miles are in nobody’s calculation, budget or plan. Those are lane miles that we must hope we have funding for in the future. Does this really matter if Tipp City is able to increase commerce with the widening of this mile of road? Possibly. However there are no financial mechanics to apply this desired/planned increase in tax revenue to a future capital improvement project.
Bottom Line
Grants distract the City from properly allocating scarce resources by dangling carrots of questionable value to project-hungry staff and progress minded City Council members. The Federal and State governments use grants to exert inordinate and unfocused control over local governments with the offer to “double down” on projects with them. If these grants were turned into block grants (without matching) there would be less competitive need for local governments to go after them and also make them easier to rescind over time. There is this largely unnoticed fight between the cities of Troy and Tipp City as they duke it out over who will get the next round of funding for their parks or roads or infrastructure. We have to fight hard because if we let too much aid slip through our fingers Troy will be the “happening place” where businesses are more likely to commit and build and expand. it is paradoxical how these packages provide unfair advantage, artificially lowering the cost of entry for a business or allowing a city to provide a public works project that is well beyond its own capabilities.
Being at the local level, there is no way this candidate for City Council can solve the problem. However you have my commitment to very seriously scrutinize every grant-laden “gift” presented to us and then demand that future accountability is put into place so the next generation does not end up footing the bill for our wanton disregard to maintenance costs.
Mr. McDermott’s campaign is paid for by the Friends of Mike McDermott, Rick Mains Jr. Treasurer 115 S. Tippecanoe Rd. Tipp City, OH 45371
