Inflation is a Good Thing (2.5 mill levy increase) – Um, NOT!

Okay, I’ll bite.

Saturday’s Rocky Mountain News (Daniel Chacon) provided a piece on the upcoming November ballot issues. With regard to the 2.5 mill levy tax increase which, ostensibly, is pegged to provide ongoing infrastructure maintenance (estimated $27 million per year), a curious comment was forthcoming from Ed Scholz, the city’s Deputy Director of Budget. Scholz said, “For the first time, you’re providing a revenue source that’s growing with inflation, so right off the bat, we’re in a better position because it’s growing.”

Ed Scholz was one of the brightest public servants I encountered during my stint with the city. But, I’ve got to ask the question: Isn’t the specter of inflation and how the mill levy increase will be affected by the same, a little more complex than Scholz explains? Given that inflation generally provides an easing of credit, more money in circulation, more buying, more demand for goods and services, isn’t the consequence of inflation a rise in costs for those good and services and a tightening of supply? I think–and I’m not suggesting I have much expertise in economics here–that with inflation there will be a kind of “wash” with regard to what the 2.5 mill levy increase will provide? Isn’t there a kind of stasis engendered with inflation? With inflation, if that $27 million provides, for example, $30 million won’t the cost of good and services rise, and, consequently, what the 2.5 mill levy increase will provide pre and post inflation remain pretty much the same in real dollars? Additionally, what about recession? That’s the bigger flip side to this issue. Depressed real estate market? Indeed, the mill levy is tied to property taxes based upon the assessed value of homes. Recession ensues, value of real estate plummets–that $27 million falls accordingly.

Like I said, I’m no genius when it comes to economic theory. But, I kinda think that Scholz’s take on this thing is skewed a little too conveniently toward the happy face illusion that if 1A (the 2.5 mill levy increase) passes, God will be in his heaven and all will be right with the world.

Just wonderin’.

P.S. Oh, most importantly… With inflation, property values rise. And, of course, property taxes will, consequently, rise. Those on a fixed income will, therefore, feel the tax hit a wee bit more intimately than those not on a fixed income. No “…better position…” for them, Mister Scholz.

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