Monday, November 12, 2012

Tax increase dangerous to homeowners and small businesses

Commentary by Cathy Donohue

Now that voters have approved the tax increase Measure 2A on the notion of trusting the current city administration, it is critical that citizens watch how the money is being spent.

Passage of Measure 2A allows the city to retain up to $68M in refunds mandated by the Taxpayer Bill of Rights (TABOR).  This revenue windfall, essentially giving the city a blank check, is the most damaging raise in taxes imaginable.  It is a gamble on wispy promises and the threat of dire consequences.

While voters blithely hand over $68M to those supposed to be guiding the city, the actual tax increase may be the final nail in the coffin of many small business owners who are struggling.  Our honorable mayor and the honorable councilmen and women know nothing about business economics.  The only one who has useful knowledge about business success is District 2 Councilwoman Jeanne Faatz.

We have no idea if Mayor Michael B. Hancock is wise enough to administer such a huge influx of “play” money, nor do we know if Council is smart enough to appropriate these funds.  Hancock’s record of leadership or ability to govern is thus far untested.   Since he has been in office, we have had virtually no reviews of his management capabilities.  Council has shown no interest is actually finding out how he is running the city; and we no longer have two newspapers to engage in the usual political wars.

As an elected and appointed veteran of city government, I have some opinions about this lack of inquisitiveness.

Prior to 2008, when the city fathers and mothers oversaw the re-codification of the City Charter, the following procedures were in effect under Article 3, General Police Powers (of Council):

 ...the Council, or a committee authorized by it, shall have power to investigate any Department of the City and County and the official acts and conduct of any officer thereof, and may compel the attendance and testimony of witnesses and the production of books and documents.

After the Mayor and Council approved and the voters agreed to a Charter “Re-codification” the City Charter said:

...the Council, or a committee authorized by it, has the power to investigate any departmental official of Denver city government accused of certain type of misconduct. (Note:  The type of “misconduct” is not explained and Council deleted the rest of its power.)

In the final version of the newly codified Charter, all of the former duties of Council to “investigate” any Department of the City were given to the Auditor and are now called Performance Audits.

Auditor Dennis Gallagher, a former councilman, approved the change in accounting procedures as recommended by Mayor John W. Hickenlooper, and made lots of noise about his new duty to do Performance Auditing.

These audits included reviews of the time it takes ambulances to reach locations, parking at Denver International Airport, or the issuance of building permits.  But Gallagher’s audits have not scrutinized the performance of an entire agency.  Unless I have been completely asleep at the wheel, I am not aware that these small but worthwhile reviews produced any changes.

Under the old system, I can think of only three genuine performance audits that were approved by Council. 

One, requested by the Council’s Public Works Committee of City Council in 1991, examined the city’s development process.  The results were ignored by the mayor’s office and forgotten.

Another performance audit of county courts resulted in computerization of the court system.  The public might not like the results, but the audit did what it was supposed to do.

Greg Romberg, the first mayoral appointee to a new agency called Regulatory Reform, started an audit of Excise and Licenses.  When Romberg resigned in February 1994, Mayor Wellington Webb appointed me to run the office and supervise that audit.  Mayor Webb and Council ignored the results.  About five years later, the entire inspection staff resigned, and the inspectors were indicted.  The audit showed very serious problems with the issuance of liquor licenses.
Although none of the Councils during and since Hickenlooper have displayed any desire to delve into the workings of any part of any of mayoral agencies, there is still a desperate need for someone to occasionally investigate.  Gallagher also has not displayed any burning desire to see that one of his minor audits changed any departmental procedures.  Performance Audits seem to have a history of being ignored by everyone except the authors.

These two reasons – lack of interest by a Council and lack of toughness by our Auditor –do not mean that such an “outside” review is not needed in all governments.  The state legislature has an Audit Committee and the state lawmakers frequently stick their noses into the workings of a state agency.  The federal government has the Government Accounting Office (GAO), which takes orders from various congressional committees to investigate federal agencies.

I am reluctant to hand over such a very large amount of money without a greater guarantee that the Mayor and Council will spend it wisely.  Vague references to more police and fire officers, longer library hours, and more pot holes filled are just not enough.  There are promises to allocate only $21M and the reminder of the money can be spent without any strings. 

The people of Denver need to learn much more about Mayor Hancock’s ability to run the city.  The city’s so-called performance auditing is a sham.  People need to think critically about who’s watching the store.

I am deeply concerned that people “on the edge” of financial failure, such as low-income homeowners and small business owners, have little idea what is about to happen when the new “taxes” take effect.


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