Middletown question: Fix crumbling streets or invest in East End?

The Journal News is rehashing old news again, but it stirs people up (is that the role of the media?) and so it’s worth taking a few minutes to talk about this again.

The two main thrusts of the article were, first whether we should invest one-time new construction payroll income tax on developing the east end economic development or on street paving.  The second was a rehashing of an old idea to assess the cost of street lights to property owners to assist in paving costs.

I’ve covered both of these fairly extensively in prior posts, but we can do it again if it helps.

Back on February 13, 2016, I posted the following under Journal Story Updates (Part 2):

Street Light Assessments

The Journal article discussed a possible $3 monthly assessment for City street lights to be paid by our residents and used for paving.  At the City Council retreat, as part of the overall model presented, I told City Council that most area communities charge their residents for the costs of the electricity to run the street lights.  I told them that the cost annually for City street lights was around $800,000.  With 29,000+ city residences, that would equate to something like $3 per month per household.  If the assessment was made and it then paid for street light electricity, the General Fund money now used for street lights could be redirected to paving while we worked on raising other revenues through Economic Development.  I asked City Council if they were interested in having staff fully develop the concept by gathering information and then reporting on what other communities did on street lights and how they handled this issue, and by getting real numbers on actual electric costs and actual number of residential and business accounts and then calculating what the real dollar number per household would be per month.  We also talked about converting the city street lights to LED to reduce future electric costs.  City Council asked if there was a way to force the freed up funds to be dedicated to paving so that they could not be redirected to some other cause in the future.  I told them we would gather the information and present it to City Council at some future meeting.  We have not started on this process yet.

We are now looking at converting street lights to LED to reduce the annual city cost for street lights considerably.  That will change this entire discussion.  The short answer is that it will be a year or two before we even discuss this idea and when we do, it will be a complete public presentation with lots of opportunity to comment.  I’m not planning on charging you $3 per month at any time on the horizon.   But… I guess it sells newspapers.

On the one-time construction payroll issue.  The City will receive a one time influx of construction payroll for projects such as the AK Steel Research and Innovation Center and NTE power plant.  The question becomes what do we do with what could be $ 1+ million in one-time revenue.  Do we invest in economic development or pave streets now?

I can frame the choice up for you fairly quickly and clearly.   We are likely to receive at least $1 million in revenues from construction projects.   Our current estimate to repave all streets is just under $162 million.   That $1 million in revenue represents 0.6% of our paving needs.   Said another way, if I use that money for paving, there is a 99.4% chance that I won’t be paving your street with those funds.  It’s a drop in the bucket and then it’s gone forever.

If  you drive over by the hospital, other than the Atrium campus and the new AK building, you will notice mostly two things… woods and crops.  Most of the 600 acres available on the East End lack the infrastructure necessary to be developed.  There are no roads, water, sewer or electric in the area.   That means that the land is likely to stay as woods and farmland until that infrastructure is available to allow new construction and jobs to come to the area.  The cost of bringing water and sewer into the area is estimated at somewhere around $ 1 million.  If we invest in infrastructure, we open up the East End for new business and new jobs.  The new construction brings construction payroll taxes, there will be property taxes for the new buildings and the new jobs bring new income taxes. All of that can be used, year after year, to fund street paving on a sustainable basis.  Additionally, as we complete the long term control plan for our combined sewers and upgrade our water and sewer infrastructure over the next couple decades, I’m going to have to distribute that cost amongst our water and sewer users.  If the East End is developed with buildings and jobs and new water accounts, those new accounts can help offset raises to your water and sewer costs in the future.

People have asked why we don’t just reinstate the charter budgetary requirement that makes us spend so much on paving each year.  The answer is fairly simple… where do you want to take that revenue from?   How many police and fire staff are you willing to lay off to make that happen?   The city is a zero sum game.  If you want $2 million per year for paving, it has to come from cuts in other areas.   Our budget and our checkbook is online.  You can see where we budget and where we actually spend your money.

As a city and as a government, we MUST stop taking the easy and fast way and start building our city to be self funding over the long haul.  There are three ways to do that.  First, I can add substantial taxes and fees to your monthly bills each month and we’ll get right to work on paving.  The second way is to lay off significant public safety forces and use the saved funds to pave your streets.  The third and smarter and harder way is to build revenues over time through new jobs and let those new jobs pay for most of the needed additional revenues instead of asking you for additional money or jeopardizing your public safety.

Every proposal I have given to City Council recommends that we re-impose the capital charter provision requiring funding of infrastructure AFTER we build those revenues in a sustainable way back into our city budget.  There’s a right time to do it, and it’s not now.

It took us thirty years to get where we are.  It’s going to take years of doing the right thing every day to bring it back the other direction.  I’m attempting to build a Middletown that is self funding long after I retire.   It’s very hard to do and it’s slow, but it’s the right long term answer to rebuild and maintain your city.

 

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