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Crestwood, Ill. How to run a municipality

a_majoor

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If only our mayors would get on board

http://www.heartland.org/Article.cfm?artId=22111

Mayor Returns $48 Million to Taxpayers, Then Retires
Written By: Dennis Byrne
Published In: Budget & Tax News
Publication Date: November 1, 2007
Publisher: The Heartland Institute

Every year, folks in Crestwood, Illinois, a suburb southwest of Chicago, open their mail to find a check paying for half their property taxes.

Who would do such an amazing, generous thing? The Village of Crestwood itself.

Crestwood's gift doesn't cover just the municipal property tax bill; it picks up half the tab for all government bodies that levy a property tax in the village, from schools to Cook County.

This practically unheard-of largesse is courtesy of Crestwood Mayor Chester Stranczek and his trustees, who have engineered such an efficient village government for the nearly 12,000 residents that they literally can pass out money to ease the property tax burden.

'Crazy' Promise Made

When he first became mayor 39 years ago, Stranczek promised property owners that some day the village would pay their taxes.

"They told me I was crazy," Stranczek said, but undeterred he began running the village like a business--a very lean business.

Stranczek, who retires this fall, explains it is done through a combination of privatization of village services, a friendly business climate, and fiscal restraint, all while providing a high degree of personal service.

Long before privatization became a familiar word, Crestwood was actively seeking more efficient and less costly contract providers for just about every municipal service.

Most Services Privatized

"We have only 21 full-time employees," Stranczek said, a remarkably small number for the long list of municipal services Crestwood provides.

"Should I give you the list? You'd be amazed," Stranczek said as he starts ticking them off: garbage removal, sidewalk replacement, street maintenance, water maintenance, sewer repairs, park maintenance and grass cutting, water meter reading and billing, ambulance service, engineering, bus service anywhere in the village for $1.10 a ride, a senior citizen center, youth services. And so on.

There are three full-time police officers and an all-volunteer fire department (whose members are paid for each call). Go down the employee roster, and you'll find one assistant services director, a half-dozen public works employees, a couple of senior service providers, and you're almost at the end of the list.

Community service officers, not police officers, patrol the two shopping centers, and crime is virtually nonexistent.

No Unneeded Equipment

Privatization also brings savings in equipment costs.

"When the weather is bad," Stranczek said, "we don't have any added cost. We don't have to buy all that equipment that just sits in the yard [waiting for the few times a year it's used]."

On the revenue side, the village pulls in more than $4 million from its share of the sales taxes produced from retailers, including a Wal-Mart, Best Buy, PetSmart, and Menard's. Stranczek notes the village has a good number of ma and pa stores, none of which seem to have been hurt by the presence of Wal-Mart.

With plenty of vacant land when he took over, Stranczek realized it would have to be put to good commercial and industrial use to avoiding overburdening residents in the bedroom community. Now Crestwood has a "nice light industrial development that's almost 95 percent built up right now," with no plans for additional residential expansion.

The number of businesses went from about 35 in 1970 to 580 today. Part of the business-friendly policy is a charge of only $1 for a business license. Developers face no impact fees.

39 Years Without Hike

Not only has the village not increased its property tax in 39 years, it has cut the rate every year, to a current low of 38 cents per $1,000 of assessed valuation, Stranczek said. Every tax increase referendum by the schools has been defeated in the past 25 years except the last one--Stranczek opposed them all, except the last one.

Such fiscal discipline hasn't hurt the level of satisfaction with services, Stranczek said, adding, "I wouldn't be in office for 39 years if they weren't satisfied. We don't get five complaints a year," including on the village phone he keeps handy in his home to hear what his constituents have to say at all hours.

Who should complain when the village has given back as much as 75 percent of the tax bill and 48 percent last year? Over the years, the total has come to $48 million.

Confident About Successor

Asked if other mayors might get some ideas by studying how Crestwood is run, Stranczek demurred. "I don't give advice to other mayors; they can swim on their own."

Stranczek is retiring early, with two years left in his term, as the 78-year-old says he doesn't have as much energy as he once had. But he says he's not worried the next mayor--to be selected by the board from its five members, which includes his son Robert--will reverse his policies.

"I have no doubt in my mind that they won't," Stranczek said. "If I did, I wouldn't be retiring."

Dennis Byrne (dennis@dennisbyrne.net) is a Chicago newspaper columnist and freelance writer.

Given that this has been possible for 39 years, including the Stagflation of the late 1970's, and through multiple business cycles, not to mention vast changes in technology, education and management practices and both Democratic and Republican administrations, any argument against adopting this plan based on unique circumstances is instantly rendered null. The first Canadian city to adopt this plan will have a huge compound interest advantage over its competitors.
 

geo

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Starting from scratch and building a sensible mix into his community, this mayor was able to tweak his municipal structure into a lean mean fighting machine. 

I live in a community that uses current tax revenues to pay for major infrastructure renovations.  They plan 5 years in advance, notify all service providers who could possibly have an interest in doing work (Kydro, Bell, Cable, Nat gas, etc) advising them that the city will not tolerate ripping up the street for basic / non-emergency work for xx years afterwards.

Then the Community was gobbled up into the City of Montreal for 2 years.  The major work was continued BUT, Montreal financed all the work (and pocketed all tax revenues).  When we split away from Montreal again, we ended up saddled with the debt... which will take xx years to pay off.
 

Reccesoldier

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Arthur, we have had sucessfull communities like Kanata and Nepean, but alas, these local governments that were debt free were swallowed up by Ottawa and now wallow in its debt.

We've been subdivided and conquered.
 

geo

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Recce... as was the case in Westmount, we were sold a bill of goods - told that there would be economy of scale by merging the entire municipality within the larger City. 

We got suckered. 

Where we were efficient with our negociations with the public service employees - Montreal wasn't and all salaries rose to parity with the highest one.

Fortunately (+/-) we were given the oportunity to hold a referendum on the municipal fusion and got a chance to bail out - and we did.  We'll be paying off for that big mistake for years to come...
 

Reccesoldier

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Geo, our integration into Ottawa was mandated by the province.  We were and are not allowed to stop it. :rage:
 

rw4th

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Reccesoldier said:
Geo, our integration into Ottawa was mandated by the province.  We were and are not allowed to stop it. :rage:

Montreal suburbs were not allowed to opt of the fusion either. They instead had to wait until the next mayoral election, where allowing the municipalities to de-merger became an election issue.
 

DirtyDog

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My township was amalgamated into Ottawa, much to everyone's dismay.  You only have to look at how the local hockey area is run now to see just how much fat there is in the city.  I can't see Ottawa ever turning back.  Being a vity employee is just too lucrative.
 

a_majoor

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Alas, there are outside forces and perverse incentives that work against that plan.

However:

Smaller cities and municipalities have fewer obstructions (read vested interests) to adopting some variation of these plans. These places can use this sort of financial management to become low cost/ low regulatory magnets for business and workers. Capital goes to the highest rate of return and labour follows capital.

The sooner a city adopts this plan and the longer the plan is in effect provides a powerful "compound interest advantage" over other regional centres (just look at the growth of business and presumably workers in Crestwood during the period in question). Even if large cities like Ottawa, Toronto, Montreal or London refuse to go along initially; they will see an erosion of their competative position as business and workers leave the high cost, high regulatory places to the low cost, low regulatory poles. The erosion of the tax base will be an irrefutable argument; attempting to use tax and spend attractors like "Creative Cities" will only backfire (like it has in the United States, see The Curse of the Creative Class) and accelerate the downward spiral.

 

Reccesoldier

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The worst thing is if you asked Jill or Joe six pack why our cities are in such crap shape they would tell you that the provincial and the federal governments are not supporting them with enough tax dollars.  In fact, this article demonstrates that the real reason is the self-perpetuating bureaucracy at work within the cities creates waste and inneficiency.
 

geo

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rw4th said:
Montreal suburbs were not allowed to opt of the fusion either. They instead had to wait until the next mayoral election, where allowing the municipalities to de-merger became an election issue.

Mergers / Fusion was decreed into law by the old PQ gov't.
The Provincial Liberals used the forced mergers as a campaign item upon which they were elected to power...  Once they were in, they dragged their feet about it but, in the end, they allowed for municipal referendums whereby municipalities could opt out of the merged city.  Some services were left with the City, but the majority went back to the suburb.
 
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