KENNEDY: Revenue enhancement, anyone?

September 7, 2013

Sheila Suess KennedyPublic finance these days reminds me of those fellows we used to encounter at the county fairs—the ones who twisted balloons into fantastic shapes, making horses or dogs from oblong balloons they blew up. Push the balloon here and watch a shape emerge there, and wonder if it would pop.

In these anti-tax times, public administrators are adopting the tactics of the balloon manipulators of old. Unfortunately, what is “popping” is our understanding of citizenship and collective responsibility.

A couple of days ago, I was copied on an email sent by an architect friend to his City-County Council representative. It began:

“Today we were the recipients of an unannounced revenue enhancement effort ‘inspection’ by a member of the Indianapolis Fire Department, acting under authority of General Ordinance #46, supposedly under the guise of State law.”

The message described a fire department program requiring individual tenants of commercial buildings to “self-inspect” their leased premises and pay a fee of $25 for that dubious privilege. Those failing to respond were assessed $60.

Apparently, the owners of the building were not notified, despite the fact that they are responsible for the property’s fire safety compliance. And as the writer dryly noted, “self-inspections” by tenants unfamiliar with fire safety protocols are highly unlikely to generate confidence-producing results.

What particularly irked my correspondent was the fact that the building in which he has his offices is fully sprinkled, has a supervised alarm system, and is regularly inspected by the state fire marshal, and documentation of these measures is on file with the department demanding these “evaluations.”

The real purpose of these “self-inspections” is rather obvious, and it isn’t fire safety. The purpose is “revenue enhancement.”

I realize the city’s taxing authority has been dramatically constrained. The administration is under considerable pressure to continue essential services and to continue to support a variety of sports venues and other urban amenities that have come to consider public subsidies their due. There isn’t enough money for everything, so—among other problematic tactics—the administration is raising “fees.”

There’s a technical difference between a tax and a fee. The former is levied on the population at large in order to provide services that benefit the entire citizenry; the latter—at least in theory—is levied on the people directly benefiting from the service. (Building permit fees, for example, are usually earmarked for inspections of the property being constructed.)

Fire safety is an example of the new elasticity of this distinction.

In colonial times, fire protection was a consumer good. Privately owned fire departments responded only to fires at structures owned by people who’d purchased their “insurance.” That didn’t work well, as one might imagine, and lawmakers soon recognized the benefits of “socialized” fire protection.

Thanks to America’s current hysteria over the very idea that we should pay for public services, we seem to be moving back to the bad old days. Affluent neighborhoods are hiring their own security in the absence of adequate police protection. And now, at least in Indianapolis, we’re evidently going to use the ruse of a “safety program” to charge commercial occupants for a portion of their fire protection.

This isn’t progress, folks. There’s a reason certain services have been considered public goods, and it isn’t simply that collective provision of those services is often more cost-effective.

It’s because we believe there is such a thing as a “public” that is more than a collection of self-interested consumers. Members are called “citizens.”•


Kennedy is a professor of law and public policy at the School of Public and Environmental Affairs at IUPUI. She blogs regularly at www.sheilakennedy.net. She can be reached at skennedy@ibj.com. Send comments on this column to ibjedit@ibj.com.


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