First Class City Program2


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A proposal for strategic policy development for blighted urbanities with high crime, public housing, and corrupt officials.

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First Class City Program2

  1. 1. The City of East St.Louis was established June 6, 1820
  2. 2. BIOGRAPHICAL DATA Born at Touchette Regional Hospital in 1967 to Matthew and Hazel Hawkins, both dedicated Christians, who lived in the Virginia Park area of East St. Louis; Has resided in Parson’s Place Apartments since January 2004 with his wife Kim Fisher- Hawkins and their two sons;, Seth (8) and Matthias “Matt” John Hawkins, Jr. (6) Graduated from :  Alta Sita Elementary School (1979),  Hughes-Quinn Junior High School (1982),  Lincoln Senior High School (1985), and  Northern Illinois University (1998) [Political Science]; Served in United States Navy, 1987 to 1992, as a Machinist’s Mate, Southwest Asia Freedom Medal for Desert Storm; Holds Series 7 & 63 FINRA licenses & Illinois Life & Health Insurance Sales Agent licenses; Worked as an investment banker on Wall Street from 2007-2008 in municipal and corporate finance; Worked as a Caseworker for Lessie Bates in Male Involvement and Youth Intervention from 2003-2005; Friday, January 07, 2011 2
  3. 3. Friday, January 07, 2011 Murderous Tax Rates?MAJOR ASSUMPTIONS: 25• As the Property Tax Rate is reduced,the murder rate and all the other 2013 School Board Electioncrimes will be reduced as well;• Further, as we approach the 20average tax rate for the State, our FBI Crime Data Confirms Positive Results on Per capita Murder Rate.murder rate should approach that ofthe State;•Voters will choose what is best for 15 Raw Scoretheir own economic interest outsideof party or person; Tax Rate (%)• Economically, as we approach theregional tax rate, local economicdevelopment will necessarily flow 10 Murder Ratedown the tax rate scale as developers (per 1M)and business owners look for thebest possible value in the market;• The 2013 School Board election willpresent major opportunity to 5accelerate tax reduction efforts and State Avg. for Taxes: 2%produce results by 2016 in therecorded Per Capita murder rates; State Avg. for Murders: .55*• Voters will choose candidates that 0are committed to reducing propertytax rates on City Council but 2010 2012 2014 2016 2018especially for School Board. 3
  4. 4. Friday, January 07, 20112010 OBSERVATIONS 2020 PROJECTIONS Property Tax Rate: 12.78%  Property Tax Rate: 4% Murder Rate: 102  Murder Rate: 32 Private Jobs: 500  Private Jobs: 1200 Businesses: 300  Businesses: 500• In order to stimulate long term growth, we must target long term factors like property taxesand not short term factors like Business Retention Loans or Grants or 50/50;• We propose that we provide immediate and continuous Property Tax Reduction strategies asto stem the tide of 1,000 people that leave East St. Louis annually according to the USCensus Bureau and entice savvy, progressive investors.• Moreover, the question becomes why are people so violent or so aggressive or serious?• Could the tax burden create enough stress to turn minor disagreements into deadly conflictsand sometimes even gun battles?THE VISION: 200TH BIRTHDAY CELEBRATION 4
  5. 5. PROPERTY TAX 101 In East St. Louis, property owners over 6 times the State & National property tax rate, twice what is paid in neighboring municipalities like Fairview Heights. (Moody’s Economy, April 2007) In 1924, Secretary of Avg. Property Tax Rate Treasury Andrew Mellon 14.00% wrote: "It seems difficult 12.00% for some to understand 10.00% that high rates of taxation do not 8.00% necessarily mean large 6.00% revenue to the 4.00% Government, and that 2.00% more revenue may 0.00% often be obtained by lower rates." National State of Belleville East St. Illinois Louis Friday, January 07, 2011 5
  6. 6. Friday, January 07, 2011Tax Structure Total Property Tax (Millage) Rates• Property tax rates per $100 assessed City 2004 2005valuation.• Valuation is 33.3% of real property; East St. Louis 12.53% 12.78%•Other category includes park andhealth districts like East Side Health & Belleville, ILMetro East Park districts. Fairview 6.36% 6.34% FY 2009 Millage Share % Heights, IL* Rate Swansea, IL* 7.58% 7.45% District 7.54 59% O’Fallon, IL 7.55% 7.54% 189 Opa Locka, FL 8.55% 8.55% City Hall 3.099 24% Other 1.23 9.8% *Has no or extremely low City Tax Rate (CTR), or St. Clair .9160 7.2% less than .01% where East St. Louis’s CTR is County twice that of Belleville at 3.066%. Totals 12.785 100% SOURCE: ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY TAX BREAKDOWNS & COMPARISONS 6
  7. 7. Friday, January 07, 2011Notes and Comments:• The City Tax Rate (CTR) and the OTHER 14rate (OR) for East St. Louis are at leasttwice that of listed cities; 12• School districts account for the largestpercentage of property taxes in eachmunicipality, 59% in East St. Louis; 10 School Tax• Fairview Heights does not have a city taxrate at all; 8 Rate• Swansea had a near zero city tax ratewhich barely shows up on the graph; City Tax Rate• East St. Louis’ Total Property Tax Rate 6(TPTR) was at least 4 percentage pointshigher than Belleville and 5 higher than therest of the group; 4 County Tax• The TPTR seemed to be trending down forevery city except for East St. Louis which Rate 2was trending upwards over the last fewyears; Other Rate• TIF, a major factor in the tax equation, isnot listed here but accounted for $38M in 0expenses for FY2009 in East St. Louisalone. Total RateSOURCE: ILLINOIS DEPARTMENT OFCOMMERCE AND ECONOMIC OPPORTUNITY SPECIFICS OF LOCAL TAXATION 7
  8. 8. www.alliance1820.comPUBLIC SAFETY 101 6000 5000 4000 3000 US 2000 1000 East St. Louis 0 Rape Robbery Assault Burglary Auto SOURCE: 2007 FBI CRIME REPORTS Theft This data from 2006 shows that, in East St. Louis a person is: • 18 times more likely to get assaulted •8 times more likely to get raped •7 times more likely to get robbed •4 times more likely to get your car stolen •3 times more likely to get your home burglarizedFriday, January 07, 2011 8
  9. 9. www.alliance1820.comELEMENTS OF MURDER The statistical data indicated ratios between murders and other crimes as demonstrated in the table below: Crime 2006 Murder Ratio Assault Rate Rate Rape Rape 251 102 2.46 Robbery 1,347 102 13.2 Burglary Assault 5,847 102 57.3 Burglary 2,442 102 24 Auto 2,068 102 20.3 Theft Murder or HomicideFriday, January 07, 2011 9
  10. 10. MURDER 101 200 100 US (5.6) East St. Louis (102) East St. Louis (102) 0 US (5.6) Murder (2006)•In 2006, East St. Louis tied with Opa Locka, Florida for the highest per capitamurder rate in the United States at about 102 per 100,000, which means that aperson is 20 times more likely to get murdered.•With an estimated population at that time of 30,000 people, we see that therewere about 31 murders that year;•Put another way, 97% of the United States was safer than East St. Louis, Illinoisaccording to Friday, January 07, 2011 10
  11. 11. LONG TERM PROPERTY TAX REDUCTION Property Tax Reduction Project: 5 to 10 Years  Phase 1: Develop legislation to authorize a property tax rebate program based upon duration and condition of property;  Phase 2: Develop legislation to authorize at least a 20% reduction in overall municipal tax rate each year for the next four years;  Phase 3: Develop departmental reorganization plan that establishes TIF as part of Planning Dept.;  Phase 4: Formulate intergovernmental agreement with District 189 to alleviate tax burden on property owners;  Phase 5: Submit 2012 budget proposal that eliminates over $8M in historical waste, fraud, and abuse; Friday, January 07, 2011 11
  12. 12. Friday, January 07, 2011The Laffer curve was popularized byJude Wanniski in the 1970s, with Revenue (Millions)Wanniski naming the curve after thework of Arthur Laffer. Laffer later 90pointed out that concept was notoriginal, noting similar ideas in the 80 The optimal property taxwritings of both 14th century North rate in this graph isAfrican polymath Ibn Khaldun — who 70 around 6%, or .06.discussed the idea in his 1377Muqaddimah — and John Maynard 60Keynes,[3] and other historicalprecedents exist. 50 Revenue 40Laffer presented the curve as a (Millions)pedagogical device to show that, insome circumstances, a reduction in 30tax rates will actually increasegovernment revenue and not need to 20be offset by decreased governmentspending or increased borrowing. For 10a reduction in tax rates to increaserevenue, the current tax rate would 0need to be higher than the revenuemaximizing rate. 0 0.1 0.2 0.3THE LAFFER CURVE: WHAT IS THE OPTIMAL PROPERTY TAX RATE? 12
  13. 13. PROPOSED TAX REBATE OVERVIEW Rebate program has an estimated total cost of about $4.5M per year maximum; There are an estimated 6,000 owner-occupied property owners that would be eligible for the program; ( Rebate amounts would vary from $500.00 to $1,000.00 depending upon tenure and the condition of the property; Property owners who are currently receiving abatements will not be eligible for rebates; Units Average Annual Rebate Cost 3,500 $750 $2.63M 4,000 $750 $3.00M 4,500 $750 $3.40M 5,000 $750 $3.75M 6,000 $750 $4.50M Friday, January 07, 2011 13
  14. 14. www.alliance1820.comPROPERTY TAX REDUCTION PLAN141210 ESL Tax Rate 8 6 Belleville 4 Illinois 2 US 0 2012 2013 2014 2015 •As the tax rate becomes aligned with regional, state and national averages, the potential for economic development becomes real based purely upon the numbers; •This plan assumes the other tax rates remain constant as we cut 300 basis points, or 3 percentage points, from the cumulative tax rate per year on average; •Some parts of this will require the cooperation of District 189 and we have developed strategies to account for whether that cooperation is voluntary or involuntary.Friday, January 07, 2011 14
  15. 15. www.alliance1820.comEXPECTED OUTCOMES 14 12 10 ESL Tax Rate 8 Tax Avg 6 4 Murder Rate 2 Murder Avg. 0 2012 2013 2014 2015•The per capita murder rate used here is modified from “per 100,000” to “per 1,000,000” sothat the relationships could be graphed more readily;•We believe that there is a direct, proportional relationship between the average murder rateand the tax rate so when one goes down the other should follow;•Higher property tax rates seem to accompany higher murder rates;•So, by reducing property taxes there should be direct, proportional reduction in the per capitamurder rate with a lag in time of about 12 to 18 months between the two eventsFriday, January 07, 2011 15
  16. 16. 2015 2014 Revenue 2013 Expenses UFB 2012 •UFB = Unrestricted Fund Balance or the Reserve Fund or Savings Account$(10.00) $- $10.00 $20.00 $30.00 $40.00 $50.00•Increasing our capital position will lead to increased bond rating & insure the ability to access fundsneeded to address Infrastructure Repairs comprehensively, from sewer to street;• Recent estimates predict this amount to be between $200M and $350M and would take about 2 years;• Even with the above budget strategy, it will take about 40 years to reserve in the General Fund;• Federal and State grants may be available for some of these efforts but this data assumes none;•The Financial Advisory Authority’s (FAA) departure in 2014 will restore “regular government” which willallow for City to access municipal finance market to secure sufficient funds for ComprehensiveInfrastructure Repairs (CIP); Friday, January 07, 2011 16
  17. 17. Friday, January 07, 20112009 REVENUE ANALYSIS Revenue Taxes 2009 TOTAL REVENUE: $39, 590,905 Grants Service Charges Interest/Investments Miscellaneous Source (2009) Percentage Amount Taxes 86.2% $34,127,360 Grants 10.7% $4,236,226 Service Charges 2.4% $950,181 Interest/ Investments 0.3% $118,772 Miscellaneous 0.4% $158,363 17
  18. 18. Friday, January 07, 20112010 STAFFING LEVELS: 196 2012 STAFFING LEVELS: 140 DEPARMENT STAFF DEPARTMENT STAFFPolice 86 Police 75Fire 59 Fire 40City Council 3 City Council 2Public Works 22 Public Works 12Treasurer’s Office 5 Treasurer’s Office 2Mayor’s Office 3 Mayor’s Office 1City Clerk 3 City Clerk 2City Manager 4 City Manager 2Finance 4 Finance 2Reg. Affairs 4 Reg. Affairs 2TOTAL 196 TOTAL 140BANKRUPTCY OR CHANGE??? 18
  19. 19. Friday, January 07, 2011EXECUTIVE SUMMARY By focusing our budgetary and legislative efforts on Property Tax Reduction, we will have a positive and measurable impact on:  Homeownership and business retention;  Public Safety  Revenue Generation  Balanced Budgets  Fiscal Management & Execution Some 2014 benchmarks that will indicate success along the way to meeting our ultimate objective of getting to the State average of 2%:  Population shrinkage will cease and new property owners will begin to occupy vacant lots and empty homes and tax revenues will respond accordingly by 2014;  Per Capita Murder Rate will decrease in 2014 as new homeowners and businesses return based purely on numbers and the increased population may also have the effect of more crime reporting which is most important when it comes to meaningful public safety ;  The Financial Advisory Authority will depart after Council has satisfactorily complied with the schedule, content, and management requirements for at least three years around 2014; 19