Diamond News

Insolvency isn't restricted to private enterprise; governments go broke, too.

One reason the economy is so much more precarious than advertised is inflation has pushed households and small businesses to the edge--and one engine of that inflation is local government. This is not to dump on local government, which is facing essentially unlimited demands from the public for more services while mandated cost increases in government union employee wages and benefits ratchet higher.

Since personnel costs are 70+% of city and county budgets, those ever-increasing payroll, pension and benefits costs are the key driver of budgets expanding.

But local governments' ability to increase revenues are also essentially unlimited. There are all sorts of fees that can be created or increased if outright tax increases have been voted down by the public.

What amounts to blackmail is generally effective, however: if you want the giant potholes filled in your streets, you have to pass this municipal bond--or else.

Official inflation, growth in the economy (GDP) and increases in wages are typically pegged at around 2% to 3% annually. But cost increases in local government and agency services are soaring at rates far above the modest rates of economic expansion.

Here's a list of tax and fee increases hitting residents of one of the counties I call home; the list includes taxes/fees raised in 2017 and 2018:

1. Property taxes: between 6.5% and 10%, depending on the property class

2. Gasoline tax (county), from 8.8 cents to 23 cents, phased in over 3 years

3. General excise tax, up 6.3%

4. Garbage fee (commercial): up 27%

5. Sewer fees: up 44%

6. Electricity (base rate): up 7.4%

7. Annual vehicle safety inspection fee (state): up $5.81...

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