Sneaking Suspicions
 
Archives-- December 21-27, 2003


This page includes posts from Dec. 21-27, 2003 in the usual reverse order. Each posting on the home page is perma-linked to these archive pages.

December 27, 2003
The money will spend, but it still makes a difference how you spend it

Two items in this week’s news about Delaware’s finances show that the state’s fundamentally conservative approach to budgeting doesn’t mean it won’t spend the cash it has.  

It just means that they know it still makes a difference how you spend it. 

Like most every other state government, Delaware’s been hit fairly hard by the recession. Since it depends heavily on corporate and personal income tax as a percentage of state revenue sources, any such downturn is usually painful. 

On the other hand, thirty years ago the State was in really bad shape, and took some serious steps to fix the funding problems in such a way as to prevent their recurrence, as long as both parties were sane about it.

The state constitution was changed to require supermajorities to increase fees or taxes. State laws also set limitations on increasing long-term debt, tied to revenue projections provided by a uniformly accepted estimating process, the Delaware Economic and Financial Advisory Council (DEFAC). In addition, state spending was also capped at 98% of the predicted revenue, creating a rainy day fund that the State has yet to tap. 

Since the beginning of the state 04 fiscal year last July 1, the State’s revenues have improved, in keeping with the slow general recovery from the recession. The latest DEFAC numbers showed major improvement over prior projections, leading to several suggestions for what to do with the new money.

State employees did not receive a pay raise last July, and the governor is up for re-election in 2004. On the other hand, it’s too early to tell if the new money is temporary, and neither political party is interested in being charged with being too quick to expand the base operating budget when things are this touchy. 

This week Governor Minner proposed instead that the employees be given a one-time bonus check of $500 each. The money won’t be built into the basic pay structure, but it’ll certainly spend in the meantime. 

And, of course, thousands of state employees might just remember this bonus next November. 

That’s why I wouldn’t be surprised if the Republicans who dominate the state House decide to up the ante a bit and propose a slightly bigger bonus, and soon.  

When new money comes in but the budget folks can’t conclude that it will recur in future years, Delaware’s usual practice is to put that new one-time money into the capital fund. Given the pressure for pay raises, this bonus proposal will alter that approach somewhat if it’s adopted. 

On the other hand, no one in position of authority is suggesting that all the new money go into state employees’ pockets, such as mine for example. A story in today’s statewide paper reports that the Budget Office is assuming that much of the new one-time money will be dedicated to funding state construction projects, especially to help meet the pent-up demands for new school buildings. 

That’s probably a safe assumption. After all, recognizing the difference between one-time revenue enhancements and a structural increase in long-term tax revenues carries with it two fundamental attractions—(a) it helps maintain the state’s AAA bond rating, and (b) the obvious signs of state support for education, expressed in bricks and mortar, don’t hurt any incumbent’s chances for re-election. 

Thankfully, neither party seems interested in messing with this fairly successful approach to deciding how to spend other people’s money.

December 26, 2003
Crawfish étouffée

The only crawfish I ever saw as a kid growing up in Delaware were some tiny ones that on rare occasions would be found in the little creek near our home.

That creek was a major hangout for most of the boys in the neighborhood, so if you saw one of these critters one day you weren’t likely to see it again on the next.

Kids just didn’t do catch-and-release in the mid-1960s. 

I eventually came to know and love the sight of crawfish on a menu, and nowadays it’s a lot easier to find them at a local seafood market to make your own crawfish creations. The 2 pounds of tails I bought at Big Fish this week were imported from China. 

I decided I would make étouffée for Christmas dinner, and older daughter graciously agreed to learn a bit more about cooking by helping to prepare the meal.

I based this recipe on one in Favorite New Orleans Recipes, by Suzanne Ormond, Mary E. Irvine, Denyse Cantin, 1989 edition, ISBN 0-88289-198-7 (Pelican Publishing Company, 1101 Monroe Street, Gretna, LA 70053).

Ingredients:

1 ½ sticks (6 oz.) butter
¼ cup flour
2 medium or large onions, finely chopped
1 large bell pepper, finely chopped
2 ribs celery and leaves, finely chopped
2 garlic cloves, minced
1 ½ tbs. olive oil
½ tsp. white pepper
½ tsp. salt
¼ tsp. Cayenne pepper
1 cup water
2 pounds shelled crawfish tails, fresh or frozen
1 tbs. lemon juice
1 green onion, minced
1 tbs. parsley, finely chopped
4 cups hot boiled rice

In a cast-iron Dutch oven or similar high-sided pan, make a medium-brown roux with the butter and flour. (We started out at low heat to avoid scorching, but after older daughter wondered aloud if the mixture would ever start turning color, I cranked up the heat and it quickly turned a beautiful caramel tint.) 

To the roux add the onions, bell pepper, celery, garlic, and olive oil, and set to simmer for about 30 minutes, stirring often. The vegetable mixture should soften and become tender and a light brown color. Start making the rice in a separate pot during this part of the process. 

Stir in to the roux/vegetables the crawfish tails, seasonings, and lemon juice, and keep it simmering for about five minutes or so. (Slowly add some water to the mixture to reach the desired thickness. I only used about a ¼ cup.) 

Just before serving, stir into the mixture the green onion and parsley. Serve over the rice in a bowl or plate, and make sure there’s enough liquid added to each serving to give your guests some sopping material for their rolls.

This is a mild-flavored dish. Keep the salt and pepper handy on the table.

BTW, older daughter handled her tasks easily, except for the onion-chopping part. They were particularly pungent, so the tears flowed freely for a while there. Otherwise, we had a great time putting this together.

December 25, 2003
A Christmas gift for tax exemption policy

It seems entirely fitting that on Christmas Eve the Eleventh Circuit would issue a nicely logical decision on tax exemption policy for donations to political groups.  

‘Tis the season of giving, after all.

Considering the obvious and implied strings that come attached to these political gifts, therefore, it’s nice to see that the Court also upheld an ancillary benefit for the rest of us, who subsidize these organizations through the indirect method of tax exemptions. 

Many political entities rely upon Section 527 of the IRS Code. Under this law, these groups can accept donations from their supporters and avoid tax consequences for this income, if they follow the rules.  

One of the basic requirements is to disclose who gave them the money, under Section 527 (j).

As with analogous parts of the IRS Code, this rule carries with it a hefty disincentive—failure to provide the information eliminates the tax exemption status, and the income is taxed at the highest corporate rate. 

For those who believe that knowing who’s making the big contributions is a clue toward how a politician will eventually vote, this kind of incentive toward transparency is a good thing. 

Some folks don’t care for all that free-floating information, however, and would just as soon keep the records of their contribution history away from the prying eyes of others.  

A Republican group filed suit in Alabama to challenge the constitutionality of the 527 disclosure on First Amendment grounds. The District Judge ruled in their favor, but the appellate panel vacated the decision, with the benefit of precedent to support their conclusions: 

We believe that section 527(j) falls squarely under Regan [v. Taxation With Representation, 461 U.S. 540 (1983), construing a similar provision for 501(c )(3) entities.] Congress has enacted no barrier to the exercise of the appellees’ constitutional rights. Rather, Congress has established certain requirements that must be followed in order to claim the benefit of a public tax subsidy. Any political organization uncomfortable with the disclosure of expenditures or contributions may simply decline to register under section 527(i) and avoid these requirements altogether. The fact that the organization might then engage in somewhat less speech because of stricter financial constraints does not create a constitutionally mandated right to the tax subsidy. Similarly, the fact that some self-declared section 527 organizations may later choose to withhold disclosure and, as a result, may pay more in taxes than they would have paid without tax-exempt status does not make the initial decision to register under section 527 any less voluntary. Rather, we consider the statutory scheme as a whole and treat the consequences of violating the conditions of the subsidy as part of the tax framework.

Makes sense to me.

December 24, 2003
Christmas Eve preparations

I'm still making preparations for Christmas.

I worked a half-day today, then returned home to the beach area and joined a small crowd at the Big Fish Seafood Market. The recipe for tomorrow's crawfish étouffée called for one more pound of tails than I thought.

At another store I picked up a new roll of parchment paper, on which will be placed to cool a batch of hot pralines I plan to make tomorrow afternoon. I'm using the recipe from the New Orleans School of Cooking.

Ooooh--Pralines.

For the first time since our marriage, it'll be just our immediate family at home for the holiday. Two of the four of us are recovering slowly from the flu, so we're not planning to do too much. This is in stark contrast to other Christmases, but it's the right thing to do under the circumstances.

Merry Christmas, and best wishes of the holiday season to you and yours!

December 23, 2003
When your attorney tells you to treat that money as if it’s someone else’s, he might just be right.

At some point every week you can watch a television infomercial about how to make easy money in real estate. 

Don’t kid yourself. The buying, selling, and leasing of property is as full of pitfalls for the unwary as any other enterprise.  

It’s even worse if you don’t take your lawyer’s good advice. 

Bertha McGee rented a single-family house in Chicago to Gloria Nelson and Nelson’s mother. The two renters gave McGee a $2,500 security deposit.

Under a city ordinance, the $2,500 should have been placed in a separate interest-bearing account, with all interest credited to the tenants. The ordinance also provided that until a court ordered otherwise, the security deposit must be considered as the tenants’ money. 

Instead, McGee stuffed the $2,500 in a strongbox. 

As sometimes happens between landlords and tenants, things did not go swimmingly. McGee eventually began an eviction proceeding against Nelson and her mother. After moving out of the house, the tenants counterclaimed for a return of their security deposit.  

McGee’s lawyer then found out where the security deposit was, and told McGee to put the money into the proper account.  

At first, McGee followed her lawyer’s advice. She deposited the cash in a local bank.  

Sometime thereafter, unfortunately, McGee somehow came to the conclusion that the judge in the eviction proceeding was going to rule her way. Without waiting for the court order, she withdrew the security deposit and spent all of it. 

Whoops. 

The judge ruled in favor of the tenants.

Since McGee illegally took their money, the state court also ordered the landlord to pay the tenants double damages plus interest. 

McGee then filed for bankruptcy to escape her liability. 

Whoops again. 

This week the Seventh Circuit affirmed the District Judge’s decision that this was the kind of debt that just can’t be discharged in bankruptcy: 

The [Chicago] ordinance charges landlords with duties to be carried out on behalf of tenants, to protect their entitlement to return of deposits with interest if they keep their part of the bargains….

Having demanded and received $2,500 under (statutory) terms designed to ensure that the money would be available for return to the tenants if they kept their own promises, McGee was obliged to act as the tenants’ fiduciary in investing and preserving the funds. Instead she made off with the money, an act of defalcation that disqualifies her from receiving a discharge.

Ouch.

Self-confidence is not necessarily a bad thing, in and of itself. When it’s combined with impatience and a failure to heed your lawyer’s advice, however, you’re just asking for trouble.

December 22, 2003
Suing your fellow legislators might make you feel better, but it’s not likely to help much

Some folks have trouble comprehending that you can’t make a federal case out of every dispute in which you find yourself embroiled. 

Last week the Third Circuit issued a brisk reminder of that fact to a Pennsylvania legislator who had the temerity to sue her fellow Democratic state representatives over a standard bit of political payback.

Rosita C. Youngblood wasn’t all that happy with her party’s leaders in the Pennsylvania House of Representatives, H. William DeWeese and Michael Veon. She made no secret of her opposing views.  

In return, the objects of her disaffection used their positions of authority to make significant cuts in the House appropriations budget for her district office staffing and constituent services. 

Youngblood and a few of her supporters then sued the two legislative leaders in Federal Court, alleging that she had been denied her equal protection rights under the Fourteenth Amendment, and seeking relief under 42 U.S.C. Section 1983. 

The District Court denied the defendants’ motion to dismiss the case on immunity grounds, but the appellate panel made quick work of that decision. 

The Circuit opinion is a nice little primer on legislative immunity: 

Since 1951, state legislators have enjoyed absolute immunity from suit and liability for their legislative activities. Tenney v. Brandhove, 341 U.S. 367 (1951). The scope of state legislators’ immunity is “coterminous” with the absolute immunity afforded to members of Congress under the Speech or Debate Clause, Art. I, § 6, of the United States Constitution [citations omitted]....

Since Tenney, the Supreme Court has defined the sphere of legitimate legislative activities to include activities that are “an integral part of the deliberative and communicative processes by which Members participate in committee and House proceedings with respect to the consideration and passage or rejection of proposed legislation or with respect to other matters which the Constitution places within the jurisdiction of either House.” [citation omitted]. 

The Pennsylvania legislative budget process gives the party in power the full authority to allocate money for district offices and constituent services. Therefore, it was a short stretch for the panel to conclude unanimously that DeWeese and Veon were absolutely immune from suit for their decision about how much or how little Rep. Youngblood would receive: 

If we allowed Representative Youngblood to challenge Representatives DeWeese and Veon’s budgetary discretion in court, we would enable the judicial branch to scrutinize the manner in which the General Assembly allocates internal funds. This would compromise the independence of the legislative branch, the very principle legislative immunity is intended to protect. [citations omitted]. That Representative Youngblood is challenging the punitive nature of Representatives DeWeese and Veon’s allocation further evidences that in this case legislative immunity would serve its intended purpose of protecting against inquiry into legislators’ motives. [citation omitted].

The next Pennsylvania House Democratic caucus meeting should be lively, don't you think?

I can just feel the love.

December 21, 2003
There are legitimate ways to preserve open space.
Reverse spot zoning is not one of them.

Most of us enjoy seeing open spaces. 

They’re not free for the viewing, though. 

Somehow, some way, we all pay to keep them open. For example, our Federal and state tax dollars paid for the cost of acquiring millions of acres of government-owned land, as well as its upkeep. Dozens of states have also enacted tax preference laws relating to open space, such as Pennsylvania’s Act 515, which is an indirect public contribution to preserving undeveloped areas. As detailed in a Washington Post story today, some enterprising developers also use conservation easements to generate hefty tax benefits. As with other forms of charitable deductions, these arrangements alter who pays for government, and therefore provide another indirect means of public support for open space, even if it’s a golf course.

Under most circumstances, a government’s zoning code can also create the legal conditions for creating valuable open space. Nonetheless, there are some zoning techniques which the courts won’t approve.  

Last week the Pennsylvania Supreme Court joined Florida and other court systems in holding that a reverse spot zone of a commercially valuable property, allegedly for the sake of open space preservation, was just not the way to go. 

The Valley Forge Golf Club sits on 135 acres of land, right next to one of the country’s largest shopping mall complexes, the Court and the Plaza at King of Prussia, in Upper Merion Township. Except for the golf course, the area is intensely developed, sitting as it does at the confluence of several major highways in suburban Philadelphia. 

The course is privately owned, and the current owners entered into a conditional sales agreement with a developer who is trying to convert the property to similarly commercial uses as the course’s neighbors.  

The Township’s been fighting this and similar ideas for the club’s demise for over thirty years. In the 1960s Upper Merion imposed a three-year moratorium on the property, but the club owners had that overturned in a lawsuit. The township then tried the buyout route with a bond issue approved by the voters, only to see that idea tossed by the courts because (a) its municipal authority didn’t extend to condemning land for open space, and (b) the “naked bond” financing structure was inadequate in any event. 

Meanwhile, the club’s owners unsuccessfully tried several times to have their property rezoned. In the last attempt, the developer challenged the continuing agriculture district classification as an illegal case of spot zoning. The lower courts upheld the Township, but the Supreme Court ruled otherwise: 

Spot zoning challenges have at their conceptual core the principle that lawful zoning must be directed toward the community as a whole, concerned with the public interest generally, and justified by a balancing of community costs and benefits. … Spot zoning is the antithesis of lawful zoning in this sense. In spot zoning, the legislative focus narrows to a single property and the costs and benefits to be balanced are those of particular property owners…. 

It turns reason and land use planning precepts on their head to assert, as the zoning board’s decision implies, that this tract’s restricted, agricultural zoning is justified by its ready access to the region’s primary arterial roads on every hand... [emphasis in original].

On this record, no characteristic of the Golf Club’s property justifies the degree of its developmental restriction by zoning as compared to the district designation and use of all of the surrounding lands both within the Township and in the adjoining municipality. This is spot zoning.

As an avid golfer, I don’t like the conversion of golf courses to other uses. On the other hand, if the property is in private ownership, I have two basic choices to preserve that open space. I can ask the appropriate government to use its legitimate powers to buy the property or provide appropriate incentives to the owners to keep the land in its current state, or I can try to buy the land myself.

Forcing the landowners to keep their land open without paying for the privilege is just not an option.


   

Contact Information:

Fritz Schranck
P.O. Box 88
Nassau, DE  19969
USA

fschranck-at-
sneakingsuspicions.com


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© Frederick H. Schranck 2002-2003