New Richmond as a “Laboratory of Democracy”

Supreme Court Justice Louis Brandeis referred to the states as “laboratories of democracy”. Brandeis envisioned states experimenting with innovative approaches to social problems. Americans are free to move to another state if they prefer that state’s governing philosophy. Does the “laboratory” analogy also apply to communities or school districts? New Richmond is a small city in St. Croix county on Wisconsin’s border with Minnesota. The people of little New Richmond recently approved the largest school bonding referendum in state history. Watching the bold “New Richmond Experiment” will be interesting to say the least. There will be lessons in the New Richmond example.

Wisconsin has experienced slow growth in total population over the last decade. Birth rates have been in decline for over 25 years. The population is aging and the overall number of school children is declining. The few school districts that are experiencing growth are without exception those districts that are gaining students through migration. This migration is sometimes from another district within Wisconsin. But the fastest growing districts have been attracting migration of families from other states. In the western Wisconsin counties like St. Croix the majority of new residents have been emigrating from Minnesota.

The reason for the migration is subject to debate. Could it be that Brandeis’ “laboratory” theory has been at work? Are the Minnesotans choosing to move to Wisconsin because they have consciously chosen a different bundle of government benefits, roads, schools, laws, regulations and taxes? Maybe instead they are oblivious to the state border or school district boundaries and are simply migrating outward from the urban center to the suburban fringe. One could argue that the greater quality of life in semi-rural St. Croix county is the main attraction. Higher quality schools could also be drawing the new residents. Which of these is the dominant factor? The answer won’t be black and white. The NR experiment will shed some light on these questions.

The NR voters accepted a philosophical house of cards in voting to spend $95 million on new schools. First, growth in student enrollment will be steady for years. Second, the schools won’t be paid for by the just the current taxpayers, but also by hundreds of new taxpayers -taxpaying homeowners and taxpaying businesses – soon to come to New Richmond. Third, the new schools will therefore have a moderate impact on taxes in NR. Fourth, the new schools will attract new families with students. New families need new houses and shop at new stores and are employed by new businesses. All this economic activity leads to prosperity and low taxes. At least that’s the theory. But it isn’t hard to see that the theory is vulnerable. Like a house of cards collapses if just one support fails, the NR experiment could quickly fall apart.

The NR experiment is based on the belief that migrating families and businesses care more about schools and quality of life than taxes. This may be true if the difference in taxes is small. But what if the taxes are double those in a neighboring town? There surely must come a point when the home buyer considering a move starts to look closely at the schools in nearby towns instead.

New Richmond has a history of being a working class town. Union support is very high in New Richmond. The political demographic skews heavily toward the Democrat Party. The City Council in New Richmond could be described as liberal leaning. Back in May I wrote about how the NR officials would soon be begging businesses and developers to come to NR. That has definitely not happened yet. In fact the New Richmond City Council recently chased away about 50 new jobs when they nixed the construction of a new private nursing home in NR. But the light is starting to dawn on some city officials. New Richmond News editor Jeff Holmquist has a story in the newspaper this week about a plan cooked up by a city official. I read it in the print edition but Holmquest chose to put only an excerpt in the online edition. Here is part of the story:

Not to be an alarmist, but Jessa Nelson can see bigger tax bills on the horizon if the area’s housing market doesn’t pick up soon.

Nelson, New Richmond’s housing program director, said as construction begins on new schools and the District borrows money, the community’s continued growth is important to spread the cost across more taxpayers.

Projections used to compute the cost of new schools to individual homeowners assumed that the area would keep growing at high rates, Nelson said.

The growth rate has slowed considerably in recent months, however, and an end to the housing slump doesn’t appear likely any time soon, Nelson said. Home values are also coming down, which can play a role in the overall tax picture.

“It’s the first time we have had a depreciating market,” she said.

That’s not good news, unless you’re among the small group of homebuyers looking right now.

“What we’re looking at is a potential crisis for our taxpayers,” Nelson said. “The cost of the new schools was significant before, but this could potentially double the taxes to pay for the schools.”

Some City officials don’t want to just wait around and see what happens. Nelson is among those pushing for the City to consider an “outside-the-box” idea to spur home construction in New Richmond and beef up the local tax base. New Richmond News

The story goes on to describe how the plan hinges on a state grant of over a million dollars to put in the sewer and water for the project. The City would lease the land to the homeowners for $1 to lower the cost of the homes and develop a new stream of tax payments. Of course “Doctor” Nelson has the right diagnosis but the wrong prescription. Why not be an alarmist? Every thinking taxpayer in NR should be alarmed right now. The NR experiment is a high-stakes bet on continued rapid growth. If that growth doesn’t materialize taxpayers will see astronomical tax increases. In Texas Holdem poker parlance, the NR taxpayers have pushed in their whole stack of chips on this one. They better do everything they can to see rapid growth in homes and jobs.

But Nelson’s plan stinks to high heaven. It is wrong to build subsidized low income affordable housing in the face of a housing glut. The inventory of homes available in New Richmond in the affordable range is adequate, it’s just that these are often older smaller homes, not new construction. And it is morally wrong to build such subsidized housing at the expense of taxpayers from elsewhere in Wisconsin. Don’t ask us to bail you out from your failed experiment. Everytime state taxpayers are asked to get involved in the NR experiment we will resist. We’ve got our own problems. We’ve been to the polls and answered the same question in a different way. Will beautiful (and expensive) new schools attract new families despite the higher taxes or is it really lower housing costs (including the taxes) that attract new families? Ms. Nelson seems to want it both ways. So does the NR City Council.

If the NR City Council doesn’t get on their knees and beg Christian Community Homes to come back to the negotiating table, the county-owned nursing home should be closed. It is time for NR City residents to start recruiting challengers for the spring City council election. The current group couldn’t find their own backside with both hands and a coon dog. Wake up, New Richmond. All your chips are in play. Now it’s time to start acting like it.

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