By The Numbers

By The Numbers

By Chip Cooke – Audit Report Issue 51.

As I will often do after getting through the morning e-mails, this morning I was off to check headlines on all of my preferred news outlets.  Often times I can find inspiration from some local or world event to help craft a central message in my newsletter article.  This morning was no exception.  After scanning down several columns I came across a blurb describing property tax revenues at an all-time high.  Interesting!  Right in our wheel house, so let’s take a look.

The figures quoted from the article seemed to originate from the US census bureau, and quoted 2016 property tax revenues at a whopping $540 trillion for state and local governments across the United States.  That equates to $1,673 for every man, woman, and child currently living in the United States.  This tops the previous high mark from 2009 at the precipice of the housing market, which makes sense as government values and revenues often lag the actual housing data.

The numbers actually send a couple of good signals.  State government revenues only account for about 3% of that total number, so the vast majority of the revenues are driven by real estate at the local level.  This tells me that both housing and the commercial sectors are on the rebound from 2012 lows.  I hope that says something about the overall vitality of the US economy and our collective purchasing power, and not that we are getting house poor again by bidding up homes and buying beyond our means.  Until notified otherwise, I’m staying positive.

The article and associated figures also begged the question, “Where is it all going?”  For every source of revenue at the local level, there is an associated use, so what exactly are we buying as consumers of the social contract?  According to yet another source of data around state and local government expenditures, 28% of our hard earned dollars go towards education, both K-12 as well as higher learning.  Healthcare makes up the next largest distribution at 22% with transportation and pensions each taking 8%.  Protection, which I would have to assume encompasses fire, police and the like came in at 7% and welfare programs at 6%.  General government and miscellaneous expenditures rounded out the balance of the dollars spent across our communities.

Now, for the role playing game.  Let’s say revenue growth is going to be flat this coming year, but we really need to make some cuts.  Where do you do it?  Education is usually a non-starter and as politically charged as anything on the list.  How about healthcare…nope.  You have seen that issue fought to a standstill across the last eight years.  You really can see the dilemma faced by most elected officials at budget time.  Every cut seems to have a consequence.  So, if we want more, but can’t cut, what are we supposed to do?

And, here is the obligatory sales pitch because, honestly, I have to.  What if there were a company out there that didn’t even consider the expenditure side of the equation, but only concentrated on the allowable level of revenues coming in?  What if all that company did was try to help bring in the full complement of your jurisdiction’s dollars in the most efficient and equitable manner possible?  Hey, I get to make fun – that’s what we do every day.

If you have been working with Tax Management Associates (TMA) for thirty years or three months, get to know us again and all of the services we perform to help with your revenue needs.  From cost reconciliations, to valuation issues, to rooting out waste, fraud, and abuse, TMA is here for you.  Check out our revised website, attend a conference – shoot, give me a call – I would love to speak to you and quite frankly, don’t get to do it enough.

A great client of mine stopped through the other day just to visit.  He asked how many states we were in these days (keep in mind this is a current client) because the question had come up with one of his peers.  My client told his colleague “I think nine”.  Well, I sort of sheepishly told him that we are actually in twenty.  Apparently I’m not getting the numbers out there myself, but I promise to do better.