Courthouse debate raises questions at election time

Published 12:00 am Friday, October 25, 2002

&uot;How much is too much?&uot; The opposition against the courthouse project raised that question in one of their flyers.

They claim that this is not the right time to incur a larger tax burden, listing a number of difficulties the nation and the community have gone through, from the terrorist attacks to the Farmland fire.

But, the catch phrase of &uot;let the people decide by referendum&uot; is not a typical venue in representative democracy, particularly when deciding the provision of public goods.

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County Administrator Ron Gabrielsen has been vocal about defending the framework. &uot;We don’t have a referendum on the county budget every year,&uot; he said. &uot;At what point in time is a referendum good? Do we have a referendum when it’s a high-cost item? Do we have a referendum when it’s a controversial item? I want somebody to tell me the criteria for having a referendum.&uot;

One example he has been mentioning is the county’s $21,000 commitment to the senior assisted-care housing project in Glenville. &uot;People in Geneva or Freeborn may say, ‘No, I don’t want the county to spend that money,’ if we have a referendum.&uot;

The arguments surrounding the courthouse project symbolize the problem with how a society determines the appropriate amount of goods or services that are commonly used among the members of that community.

Need vs. demand

Public good constitutes one branch in economics because of its unique characteristics.

What differentiates public goods &045; clean air, libraries, freeways or whatever &045; from private goods is their &uot;non-exclusivity&uot; and &uot;non-exhaustibility,&uot; economics says.

Unlike a cup of coffee that is exclusively consumed by a person who paid for it, a freeway can be accessed by anybody once it’s provided. And, unlike coffee, the access to the freeway is undiminished by the number of people who use it.

These characteristics create an incentive called &uot;free-riding,&uot; where any person asked what level of public provision they want has an interest in declaring it to be lower than they actually want, especially if they fear that their declaration might be followed by a tax demand.

A simplified example is a purchase of a television for a two-person college dormitory.

Suppose the price of the television is $100. Both residents, A and B, are willing to pay $150. If A knows that B wants the television so badly, then he would think that B is going to pay regardless of the A’s decision. And B may think the same way, and then they end up not buying the TV.

In this case, of course, it may be not so difficult for the two to agree on sharing the cost. But, it would be unlikely if there are 30,000 people.

Assessing truth about the people’s willingness to pay is always difficult and if the government would conduct a survey by interviewing every resident, or having a referendum, in the county, the aggregated demand revealed for a certain public good would be surely below the optimal level the society really needs.

This year the school district is facing budget shortfalls due to declining enrollment and a tightened state budget. They are putting the decision for a general levy referendum to voters on Nov. 5. It is state law that they give the voters the choice of whether to raise their property taxes for education.

Last year, when a referendum failed, class sizes became larger, students had to take increased study halls, the French program was cut and many other cuts were made in many different departments.

The school decision will be democratically decided while the courthouse is mandated. What are public goods, and when should we decide on them?

Information gap

While the government has access all sorts of expert information, the public doesn’t always have the same opportunity. This problem of &uot;asymmetric information&uot; is another factor that may change the public demand to levels lower or higher than optimal.

The county has tried to narrow the information gap by having information sessions, special hotlines and public outreach through the media. But it came back to the principal that voting does not necessarily result in producing an appropriate amount of public goods. The representative system would be a kind of middle-ground solution between the efficient production of public goods and accountability of the government with public input.

&uot;I believe in the elected process. I may not always have agreed with Bush or Clinton. But, when I was in the military, they were my president,&uot; said Gabrielsen, who frankly admits the courthouse project would probably be rejected if there were a referendum. &uot;And I did not try a coup. I did not disgrace them,&uot; Gabrielsen said.