Sunday, May 01, 2005

LUS in-lieu-of-tax payments a benefit to taxpayers: Wealth generation

If you missed it, you should go back and catch the "guest columnist" piece Terry Huval had in the Advertiser earlier this week. He walks folks through a by-the-numbers explanation of how In Lieu of Taxes (ILOT) works. it's a clear precise explanation and I can do no better than to suggest that you read it for yourself.

What I can do is telegraph that which would probably be immodest for the director of the Lafayette Utility System to say: LUS has generated vast amounts of wealth for our community.

It does this through a simple but powerful mechanism: what economists call the multiplier effect. This is a kind of positive feedback effect in which each dollar injected into a local community--or kept in that community that would otherwise flow out of it--circulates a number of times before it "leaks" out of the local economy. So a dollar saved has a much greater positive effect on local wealth than just the one dollar.

The way LUS operates results in more money being kept in our community than it would if LUS did not exist. And the money saved generates more wealth as it recirculates in our economy. ILOT is the second of the three generators of wealth that LUS provides this community.

The first is its consistently low prices. Over generations LUS' prices have consistently been cheaper than its regional private competitors. Every penny saved over what would be charged individuals by private providers is money that returns and circulates again and again in our community, creating wealth for all.

The second generator of wealth is ILOT itself. LUS consistently pays more to the local government in ILOT than its private competitors would in local taxes and franchise fees. Every penny paid in ILOT funds government programs that would otherwise have to be paid by local taxes. In this way our citizens enjoy services similar or superior to those of surrounding communities without having to pay the taxes that would otherwise be required.

Harder to quantify but still real is that LUS certainly buys more of its resources from local sources than would its large, private competition.

All three mechanisms drive more money into the local economy than would an outside provider -- and the money multiplies. It isn't simple local patiotism that leads citizens and local governments to believe that locally owned and operated businsses are good for the local community. It is also basic economics.

The net effect of both lower rates, lower taxes, and larger local purchases is to keep money in all our pockets. Money we keep circulates locally and generates wealth here. It is simple and powerful. LUS is and has been good for our economy. Owning our own utilities has been a huge economic advantage for Lafayette.

Owning our own telecom utility will have exactly the same effect. Vote Yes on July 16th!

13 comments:

Anonymous said...

Hey guys, I believe ILOT is a revenue generator. Just like ANY other revenue generator for government! IT'S A TAX!!!! just purely and simply A TAX! Call it whatever you want IT'S A TAX! It's paid by the ratepayers of LUS, it's not anything but a TAX!

baycock said...

Typical democratic “talking points”! Tax and spend! I would expect nothing less from someone that has fed from the public trough for most of his life. As most of the world knows, “those that can, do and those that can’t, teach”!

I will watch with great interest the information that comes out of the class-action lawsuit alleging that LUS has overcharged the ratepayers for many years.

Also, you repeatedly speak of the benefits to the local economy that LUS is responsible for. Then tell us why the majority of our electricity comes from a generating plant located in Boyce, LA.

John said...

Anon,

Sad as it might be your belief doesn't make it true. ILOT displaces taxes. It comes from fees levied for a service rendered.

It is actually eeasy to tell the difference between a tax and a fee for service for anyone who isn't blinded by ideology.

Your property tax is a tax. The easiest way to prove it to yourself is to refuse to pay it. A guy will come to your house.

A fee for service, on the other hand, is fundamentally different. You decide you don't want to pay for electricity at that same house and you can have it turned off and never pay another dime and nobody will every come by.

It is worth pointing out explicitly that this sort of screaming, all caps, post that repeats an irrational point several times as if volume or reptition could rescue an poor point is just the sort of thing that people say anonymously. Nobody wants really wants anyone to believe they think like this--even if they do. They just want to scream it into the conversation in hopes that someone will join them in their irrational belief. Sometimes it works. I suspect it won't work here. I certainly won't let it pass without comment.

John said...

Billy Aycock, I prefer that folks who post here. Especially folks who blitz over to insult people and their profession do it publicly. I can give you the URL to fix your blogger identity to allow anyone who comes across your words to know who is speaking.

Just so you know I spent a big chunk of my life building houses and was partner in a small construction company. This is what, I understand from talking to him, is what Bill Leblanc does. Can you find a way to insult that aspect of my life as well? Have at. I know just how it feels is to sweat my way across a hot slab. I know what work is.

I know that it is at least as hard a job of work to strap down and do the work necessary to get a doctorate and to struggle with classrooms full of students. It is,I will state very plainly, easier to build houses. And teaching is less renumerative though more rewarding in other ways.

I am proud of what I have done with my life. And I am proud to have been a teacher.

And, sorry, but I don't think much of the character of "men" who take potshots from behind anonymity at the life and professions of the people who do some of the most difficult, least appreciated, and poorly rewarded jobs in our community.

Anonymous said...

John: you write:
"A fee for service, on the other hand, is fundamentally different. You decide you don't want to pay for electricity at that same house and you can have it turned off and never pay another dime and nobody will every come by."

The problem with this is that LUS is a monoply. They don't allow competitors to provide electricty or water to the citizens of Lafayette. So the consumer must pay, or go without that service to their home. I know you don't mean to suggest that electricty and water are optional consumer items.

Also, I would like to point out that because electricty and water are essential of life, like food, drugs & etc. (every one must have them). The fee for service or tax, whatever we want to call it, is paid on consumption. So the poor pay at the same rate as the wealthy. Personally, I consider this a regressive tax.

Tim Supple

John said...

Tim,

Yes LUS is a monopoly in all these dimensions. Crucially it is a natural monopoly. In exactly the same way BellSouth and Cox are also natural monopolies. Under the pressure of IP and other digital/network technologies their separate monopoly control of differing landline networks is collapsing into a single natural monopoly based on IP and fiber optic transport. This is coming down on us all. At stake is whether these monopolies should be regulated, ungregulated, or publicly owned.

Reasonable men may prefer regulation or public ownership. I know of no reasonable argument that leave monopolies free to exploit their status --even if some choose to ignore that monopoly for ideological reasons.

The game with trying to confuse a fee with a tax because the entity offering it is a monopoly just doesn't make sense. Nor will pretending that government can't charge fees for service play either. Just think of campground fees. The crucial difference remains: With fees you pay for what you use. With taxes your money is taken for the common good. Trying to obscure this difference actually works to make taxes seem like simple exchange of value...which they are not.

However you try to shoehorn the world into your ideological strictures it can't get you around the essential issue of this post: LUS has added wealth to this community. It does it through lower rates, displacing actual taxes citizens would pay and by its larger percentage of local purchasing.

This is not exotic, communistic, or socialist logic any more than is the concept of ILOT itself. It is the standard issue economic logic of every local or state government that favors local businesses in purchasing and contracting and the logic that has fueled each and every tax give-back scheme from Cingular to Fruit-of-the-Loom. Pretending it doesn't exist does not make it go away--or reduce its effectiveness.
Having a local publicly-owned utility system has helped fuel Lafayette's growth throughout the 20th century. Having a locally owned telecom will do the same in the 21st.

All that while offering consistently better prices and better service.

Trying to confuse the issue with the utterly false issue of taxation won't change these facts.

Anonymous said...

Sorry John, maybe your logic works on 18 to 24 year olds but it doesn't work for me. A charge above and beyond a service provided by a government is a tax. You may want to call it something else but it's a tax on the citizens. You are using the same smoke and mirror technique that our leges used to pass gambling off as gaming. Nice try though and you know what,it will probably work on about half the ignorant voters here. I bet your reasoning sounds good to the Republicans around here also. Thanks for the forum.

Neal Breakfield said...

john:

What service do LUS customers directly receive for the $ 17,000,000 that they paid to LUS over and above the monies that LUS used to render services to them?

Neal

GumboFilé said...

It quacks like a duck.

John said...

Anon,

If you had the courage of your convictions you would leave your name. You take cheap shots at people who do have the courage of their convicions, and in doing so you cheapen the cause you pretend to be for by doing so. Tim may be, IMO, wrong. But he stands up publicly and if you think he's wrong you can tell him to his face.

My guess is that you really don't want your neighbors to know that you hold them in contempt.

Or maybe you are unwilling to insult your Republican friends...

Or maybe it's that you are begining to wonder if you are wrong... that maybe the Republicans aren't socialists, and maybe the chamber is right, and maybe your favorite talk show host is right,and maybe your fellow citizens aren't just ignorant.

Maybe it not all those folks who are wrong.

Maybe it is you.

And that is what you don't have the courage to face.

baycock said...

It has been brought to my attention that my recent post at this blog painted all teachers with a broad brush. For this I apologize. It was not my intent to place all teachers in this same category. The vast majority of the people that choose this noble profession do so unselfishly and only to make the world a better place for all.

However, since it was wrong to paint all teacher as I did, it would be equally wrong to argue that they are all saintly and without ulterior motives. This is a case by case judgement each of us will have to make for ourselves.

With the likes of Ward Churchill and others roaming the halls of our institutions of higher learning, I personally don’t have to look directly at the sun to see the light. The American people are pretty smart once they take the time to strip away the fluff. I put my trust in them to make the right judgement

Again, my sincerest apologies to the good teachers out there.

Billy Aycock

John said...

Billy Aycock,

Thanks...the clarification is noted and appreciated...and I don't find anything to argue with here.

Recognizing your right to still have a poor opinion of me,:-) I am yours,

John St. Julien

GumboFilé said...

I shouldn't have to tell anybody that I get pretty passionate about the LUS FTTH issue. That's the one thing we all have in common.

Regardless, I have lines I try not to cross when criticizing. In particular I have defended Terry Huval and Kal Saloom because, believe it or not, they are the only two people involved in this that I know personally.

John, I don't know you personally, but in this case, even though I agree with Billy's point on the ILOT, I rebuke his point regarding you being on the so-called "public trough."

The world we live in today doesn't offer a sufficient multitude of choices in many professions that are not at least partially tax-funded.

I cannot criticize someone simply for taking a job in the public sector and I defend your choice to do so. You wouldn't have made that choice if it wasn't the best choice for you and your family.

I know I've strayed way off point but this has been sticking with me for several days. It doesn't mean I never cross the line and say things I regret. Nor does it mean that my next post on your forum won't tick you off.