Sunday, July 18, 2010

Placing faith in growth

The Placer County city of Lincoln had just over 11,000 residents in 2000. By 2010, its population had boomed to more than 41,000. Now the town is struggling to make ends meet.

As discussed in recent article in the Sacramento Bee, Lincoln residents will be voting this November on a utility tax to help prevent more layoffs in their police department. It seems that as property values – and property tax and sales tax revenue – went down during the recession, Lincoln has found itself unable to support its police force.

Here’s a priceless quote from the Bee, “After years of being a largely rural small town, the city decided to ride the housing boom. But after the boom went bust, Lincoln finds itself stuck in the middle, having given up its volunteer fire department and smallish police force.”

It appears that the majority of the city residents support the tax, because they understand the importance of having a functional police department. At the same time, one can’t help but wonder: If Lincoln hadn’t grown so rapidly, would it be calling on local residents to pay more taxes? Or would the city be in better fiscal shape?

It’s an important question to consider. Here in Amador County, some folks are loudly beating the drum for population and housing growth as a panacea to all that ails us. But they rarely present any facts or examples to back up their theory. They simply believe that more houses and people create a more affluent community with adequate tax revenue. It’s a faith-based approach to economic development: "In Growth We Trust."

But does it always work that way? Let’s compare Amador and Calaveras counties. Calaveras had more rapid population growth than Amador over the last decade (13.1 percent vs. 8.3 percent).

Who has the higher unemployment rate right now? Calaveras.

Which had the higher sales tax revenue for the last available recorded year (2008-09)? Amador.

Who has more private sector employees? Amador.

Who has the higher median household income? Amador.

Calaveras does have higher property values, so we’ll give them that. But on several measures of economic well-being, it’s not doing as well as its slower-growing neighbor to the north.

Maybe fast growth is not all its cracked up to be, especially if you have no other real strategy for a strong, sustainable and resilient economy.

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