Reprinted from Western Roofing magazine September/October 2007.

 

Legislative Follies

Legislative Solutions are at the Expense of the Construction Industry

 

I’m always amazed at some of the regulations and fees our esteemed legislators pass under the guise of protecting the public interest. It’s no secret that many city and state budgets are in trouble (if you’re in California, read “almost bankrupt”). What does surprise me is the way that these legislators go about trying to balance the budget.

                  In the private sector, when things get tight, reducing costs becomes the number one priority. This approach apparently has never crossed our legislator’s minds. They immediately want to increase taxes and fees to make up the difference without regard to what these increases will do to the economy. Can you imagine if a private company, such as your roofing company, decided to double its fees rather than cut-operating costs to make ends meet? The competition would eat you alive. You would be out of business in no time. Since government has no competition, the legislators have no incentive to reduce operating costs.

                  When there’s a budget surplus, states and municipalities put many new programs and services into place. There is never any thought that these new programs should be canceled, temporarily suspended, or cutback when times are tough. Suddenly these programs or services, which we never had before, are something the public can’t live without.

                  Since fee and regulatory licenses are items that don’t require a public vote, these areas have been targeted as profit centers. Within the past few years, building fees and permits have doubled or tripled in cost throughout the West. This is particularly annoying since many of these same legislators are the ones expounding the need for affordable housing. By raising these fees, they’ve just pushed many first-time buyers right out of the market, but they don’t see it that way.

                  Of course, legislators are used to talking out of both sides of their mouths at once. I think it’s one of the requirements. A few years ago, I sat in on a hearing where a developer was testifying before a Nevada Senate committee that had just proposed an increase in statewide building permit fees. He was arguing the point about pushing many first-time buyers out of the market. He noted that this same committee had previously expressed concern about affordable housing. “This new tax would raise the cost of permits for a new home from $9,000 to $20,000,” stated the developer. One committee member stated softly, but loud enough to be picked up by her microphone, “Good. That will just raise my property values.”

                  I turned to the person next to me. Had I heard that comment correctly? Yes, I was assured, I had. This was incredible. Here was a person sitting on a committee that has the power to raise the price of homes in Nevada and her first thought is that her actions could increase her own property values.

                  Legislators that are supposed to be looking out for the public welfare are usually at odds with the people providing service to the public. Will these legislators push for higher permit fees and assessments? Probably. Do they care about the long-term consequences? Probably not. They’re looking for quick fix. And you can rest assured that these taxes and fees won’t come down when the financial crisis is over. They’ll be here to stay.

 

 

Marc Dodson

editor & publisher