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Insight: Price and Value

By Greg Doering

 

“Price is what you pay, value is what you get,” Warren Buffet is fond of saying. That line was running through my head recently as my wife and I were preparing to have some flooring replaced in our kitchen and living room.

We had moved all the furniture out of the way and thought we might try to speed the process along, and save a little money, by starting the demolition process ourselves. The floating floor we installed in the kitchen when we first moved in came out without any problem. The linoleum underneath was a different story.

Actually, it turned out there were two layers of vinyl covering. After working up a sweat removing a small section of flooring that was atomically bonded to the subfloor, we decided the cost savings weren’t as valuable as we initially thought. We left the rest to the professionals.

It’s a good reminder that price is only one side of the equation, and it’s difficult to judge the utility of something by only looking at half the calculation. It’s something I hope everyone keeps in the back of their minds as budget season for cities, counties and school districts is in full swing.

In the coming weeks the majority of Kansans are likely to receive letters from at least one of these governing bodies of their intent to raise property taxes. These notices will include the value of your property, the tax you paid in the last year and a variety of other information. The date, time and location of a public hearing on the budget also will be included, and that’s where community members can offer their input on the proposed tax increase.

The direct notices are relatively new and add an extra layer of transparency to the usual public notices published in a local newspaper and posted on government websites. Hopefully they’ll function as intended and spur more public feedback on budgets. Whether it’s through people attending the public hearings or having private conversations with county commissioners, city councilors or school board members, more engagement in the process will help ensure the taxes levied match the value of services the community desires.

I will note that these conversations should be approached with a degree of caution because the public hearing is toward the end of a months-long process of drafting a budget and setting tax rates. If, for some reason, you’re hoping for a larger tax increase than proposed, you’re going to be out of luck since the maximum mill levy will have already been established. But public pressure can still lower the levy and reduce tax bills if elected officials are persuaded to do so.

Officials have to strike a balance between the services the public wants at a price they’re willing to pay. The wants are often well intentioned, even reasonable, but they’re also unlimited. The appetite for tax increases is usually more subdued, at least by the public.

When offering your opinion on a budget, keep in mind the other side of the equation. Cutting taxes is popular until it results in service reductions. The same way saving money on a new floor sounds like a good idea until you’re on the ground with a pry bar trying to pull off two layers of linoleum. I have no doubt some are willing to pay that price. I, on the other hand, discovered that getting the lowest bid possible isn’t always the greatest value.

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