Should Cities Print Their Own Currency?

Here's one possible idea to try and stimulate the economy for locally owned stores...in Southern Berkshire Mass. they are starting to distribute a local currency called the Berkshare. For $90 you get 100 Berkshares, that can only be spent at locally owned stores. Read the full story here: New England Towns Prints Up Its Own Currency

Dow Takes a Huge Hit

By now I'm sure you are all aware of the Dow dropping over 400 points today, the largest drop since September of 2001. But the question is what does this mean? Are we headed to a recession? Is the economy as strong as we think? Well the way I understand it there were three factors that really contributed to this huge loss:

• Bomb going off near Vice-President Cheney in Afghanistan (psychological effect)
• Econ number for durable goods released this week lower than expected, down over 7% (appliances, computers, and large goods like airplanes)
• 9% drop in the Shanghai Stock Exchange (huge drop...largest in a decade), some analysts are suggesting that maybe this drop is just equalizing the 130% growth the Shanghai market has experienced the past year...others suggesting it is a response to fears of the government is trying to slow down the economy.
  

Most seem unsure if this massive sell off will continue tomorrow or not (I watched Cramer describe this as a great buy opportunity). I'm not sure if this indicates a looming recession, but two points are interesting here: 1)This shows how closely we are now tied to the Chinese market (at least an appearance of what it might mean for the global economy), and 2)It is ironic this occurs a day after Alan Greenspan talks about a possible recession by the end of 2007. Click here to read this article.

How Much Do You Know About Government?

We began the Legislative session showing this video at Local Officials' Day...so I thought maybe it is appropriate to the show the video again with the session ending this Wednesday. You can read the Deseret News article regarding this video here.



Whats the point? The point is we can all become more educated on civics and government. It is easy to be disengaged when we don't understand the process or the players...think about watching a sporting event without knowledge of any of the rules. We think local government can play a part in addressing this civics ignorance. Which is why we recently published a curriculum guide for 4th and 7th grade teachers. Read more about it here. Or if you are in South Jordan City you may want to consider South Jordan University.

City Fiscal Conditions 2007

We know the State of Utah has a surplus of well over $1 billion, but what is the fiscal health of Utah's cities and towns? Each city and town is unique, which makes is difficult to assess budget health in the aggregate the way we evaluate state revenue and expenditures. In an attempt to better understand the fiscal state of municipal goverment we (ULCT) recently conducted a survey of municipal budget officers across the state of Utah.

The survey instrument used is patterned after a survey administered by the National League of Cities and adapted to address Utah's cities and towns. The survey asked respondents to assess if their city was better able or less able to address their budget needs this fiscal year versus the last. The survey also asked budget officers to measure the degree of impact a number of factors had on the budget process. Overall Utah's cities and towns are experiencing fiscal stability, led by the strong state economy, but that doesn't mean there aren't looming challenges (i.e. infrastructure needs and rising health care benefit costs). Click here to read Municipal Fiscal Conditions 2007.

I appreciate the input from staff at the University of Utah CPPA and a small group of city budget officers regarding the design of this instrument. Also, thank you to the 82 cities who responded.

Tax Incentives for Development?

Thanks to the Utah Bloghive I've recently read a couple of interesting blog posts, especially y-intercept's post on how sales tax creates self-destructive behavior by cities. The post and following comments are interesting, I agree in part, but also disagree. First, I don't think cities are providing the incentives (or "subsidies") for retail development like y-intercept or others might think. For one reason the use of sales tax incentives for retail development has been prohibited for cities and counties since 2004 (SB 124). And recent RDA legislation has decreased the use of RDA money for retail development projects.

Of course, some large retail still receive municipal incentives. But these projects amount to a simple cost benefit analysis. It is the same reason why the State of Utah recently offered nearly $2 million to try and lure a toilet paper manufacturing company to Washington County or a $1.3 million rebate to Backcountry.com, read the article here. Not all retail occurs on its own (as suggested by y-intercept and the Utah Taxpayers Assoc.). Projects like Cabela's or IKEA, are often choosing a location between a number of regional jurisdictions, and don't just develop in Lehi or Draper on their own. Governments, state and local, are always going to compete regionally in attempts to stimulate the economy. I don't think I would call this process creating a false economy.

There are two key questions here: 1) How do we get state and local government economic development on the same page? There isn't an easy answer...maybe the state and cities should begin sharing income tax revenue (just an idea). 2) How do we maintain our locally owned unique stores while also allowing larger regional development projects? There is a lot we can do here, which is why we (ULCT) recently co-sponsored a training session/forum with Local First Utah to address this very question. Read the article here.

Anyhow, I'm not a planner...but I do understand the finance side of municipal government and the financial pressures cities face to provide the services we all enjoy. Sales tax revenue, for good or bad, is a very large piece of the municipal revenue pie.

Wild Valentine's Day Love

Some cities (Tampa, San Francisco, New York, and even Boise) are providing a little extra incentive to visit the zoo around Valentine's Day...at least for adults. Wild animal sex tours seem to be catching on at zoos across the nation--that's right, people paying to watch animals mate and in some cases enjoying a candlelight dinner during the 'event'. I'm not sure I would ever attend, but I'm all for innovative revenue generation. Check out the story here or here.

Bush Delivers Federal Budget

With everyone buried in the middle of the UT Legislative Session maybe you missed that Monday President Bush delivered his FY2008 budget to Congress. Just by mentioning the federal budget most eyes droop or glaze over...it is hard to see the relevance to local politics or to relate to numbers like trillions. However, there are some real factors for us to be aware of. Here are a couple of points to note:

• Current budget deficits will likely diminish then disappear over the next decade (According the Congressional Budget Office).
• While the deficit will decrease mandatory spending (Social Security, Medicaid, Medicare) continues to rapidly grow.
• Currently Social Security, Medicaid, and Medicare amount to 8.7% of GDP or $1.1 trillion
• CBO estimates that in 20 years these programs will nearly double, resulting in 14% of GDP.
  

The question becomes...what happens to the discretionary piece of the federal budget while mandatory spending grows? Discretionary spending includes all programs that impact state, county, and municipal governments. It is important to keep on eye on this to accurately assess the future of federal, state, and local fiscal partnerships.

The Tax Policy Center is a great resource to better understand federal budget issues and the budget process. Check here.

Another bad bill

We (ULCT) have taken a formal position opposing HB233, Rep. Morley's bill that would restrict the ability of cities to zone in environmentally sensitive areas. If you've been reading Lincoln's blog you are familar with the background of this legislation. I was surprised, but pleased, this morning to see in the SL Tribune a letter to the editor also opposing HB233. Thanks Steve Glaser, I couldn't agree more. Check here.

The Daily Herald today also took a position to oppose HB282 (removal of sales tax on food). Read the editorial here. According to The Daily Herald Newbold's bill is "fraught with negative consequences." Of course I agree.

Meet Mayor Simmons...

Brian Hall in our office recently initiated a new feature to our website called Ten Big Questions. This will highlight different municipal elected officials from across the state. First up...Mayor Randy Simmons (Mayor of Providence City). Check here to read what is easier for Mayor Simmons, correcting a stack of essay exams or sitting through a city council meeting.