I’ve written in my blog before about the great ponzi scheme that many suburban townships like ours fall into. You can read more about the ponzi scheme I’ve written about here at strongtowns.org. I found an old Geeting post titled the “5 stages of municipal death.” Again, this always amazes me how you can literally see this playing out here in LMT. It’s scary, but also sad that our elected officials don’t see it. This isn’t some theory. It’s literally played out over and over again all throughout the commonwealth.

Here’s the lifecycle:

1. Low taxes with Greenfield Growth
2. Gradually rising tax rates and increasing demand for services.
3. Plateau of tax base with reductions in non-core services.
4. Insufficient taxes or tax base with reductions in core services.
5. Loss of tax base and distress

Right now, we’re entrenched in the 1st stage. Artificially low taxes. 0% municipal tax rate. Due solely because of the perfect storm of subsidized greenfield growth and the EIT revenue it produced over the last 2 decades and the state taxpayer forking the bill for our police services. We’re about to very clearly enter the 2nd stage (the convo about an LMT police dept…which I believe we would be insane to enact until the state enacts critical reforms) with the 3rd stage on the horizon. (increasing enrollment in EPSD leading to school taxes going up year after year after year with outcomes stagnating) It might take a decade to get to stage 4 and 5 but if you don’t get this train off the tracks now it gets ugly down the road.

First you start your new township on some farmland, and pretend like you don’t need any services and set tax rates way too low.

Then the richest people flee higher tax places for the fake low tax rates. You get by for a few years and then Whoops! it turns out your township needs the same municipal services that every other town does.

Then people stop wanting to pay the increasing taxes, so David Jaindl builds yet another ring of suburbs on former farmland, forms a new government, and the new government Lower Macungies poaches other communities with fake low tax rates and steals your residents and businesses.

But now your tax base has shrunk and you still need to provide the same services over the same territory, so you have to raise taxes again just to maintain the same service levels. More people don’t like the tax increases, so they abandon you for the new Lower Macungie, and on and on.

How do we break this cycle? Through these 5 mechanisms we can break the cycle.

1. Getting the most bang for our taxpayer buck (ROI) on existing infrastructure. (value capture). And do not except any more unfunded maintenance obligations.
2. Conserving green space with mechanisms that are fair to landowners. (purchasing development rights)
3. Requiring complete cost benefit analysis of all greenfield projects to make sure the taxpayer sees benefits not just in the first lifecycle but after the shiny new roads and storm water mechanisms have been dedicated to the taxpayer.
4. Engaging the community in development decisions.
5. Don’t issue any new debt until current debts are fully paid off and limit what we bond for.