Okay,
Now that my message's subject line has scared off all but the most intrepid
readers, here's my question...
I was listening to public radio yesterday, and there was a discussion about
a (presumably) unintended consequence of President Bush's proposal to remove
the tax on stock dividends. Apparently, removing this tax will have the
effect of making stocks relatively more attractive to investors as compared
to tax-free municipal bonds - with the result being that municipalities will
have to offer higher interest rates in order to attract investors to finance
local projects like roads, transit, school buildings, etc.
Now for the Minneapolis-specific part of the question:
Is anybody in Mpls. looking at how this might deepen the fiscal crisis
facing the city? Presumably, when you have debt that is accumulating at a
higher rate of interest, your annual cost for debt maintenance goes up -
right? Should we be concerned about this and is it being factored into
budgeting?
It looks like debt service accounted for about 11 percent of the city's 2002
expenditures, so clearly this is a significant line item for the city.
(2002 Mpls budget info is at:
http://www.ci.minneapolis.mn.us/citywork/city-coordinator/finance/services-budget/docs/adopted2002/Section3.pdf)
I'm guessing that the city schools have debt maintenance to contend with as
well.
I feel that city leaders need to be getting out there with the message that
the Bush Administration's economic stimulus plans and war plans are making
things harder for cities - and the people who live in them. My inner-Keynes
is telling me that the federal government should be looking at massive
support for states and municipalities as a mechanism to stimulate the
economy instead of pushing tax cuts such as this one that will help a
relative few and actually end up having a depressive impact on the economy
as a whole.
I bet that a coalition of young, energetic, charismatic, Democratic mayors
including, for example, the likes of Mayor Rybak and Baltimore, Maryland's
Martin O'Malley could help shape the national debate on this issue - if they
got together and spoke out.
I'd welcome the thoughts of others.
Paul C. Rohlfing
Formerly Linden Hills and Lyndale, currently Bethesda, Maryland
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