They survey and manipulate

For several months now, the City of Xenia has been using a survey created on their behalf by Wright State University to justify and promote a tax levy and an increase in your city income tax. The survey, they say, indicates that Xenia residents want to pay more taxes because they want more services from the city! But is that true? What if the truth is the opposite? What if the city created a fraudulent survey so they can use it as an excuse for justifying a tax increase?

In a meeting on November 7, 2009, while discussing the survey, the Xenia City Council was trying to decide what the survey content should be. In a rare act of honesty, councilwoman Felton said,

...surveys can be geared to whatever you want them to say.

Mr. Percival thought the survey would do a really good job of getting the information they want. They have done surveys in other communities and were able to identify the information staff is looking for. Based on information they got from the surveys, Councilwoman Felton asked if other communities were successful in passing levies. Mr. Percival said they worked with Trotwood, and Trotwood was successful in passing numerous levies.

The City of Xenia, it appears, had engaged in a purposeful act of designing a survey from ground up for the purpose of justifying a tax levy. This is also evident by the statement made by Mr. Bazelak in the same meeting,

...they are trying to generate specific information, not just asking people how satisfied they are with a certain program or service.

What is even more confusing about the path taken by the City of Xenia, is the insistence today that the levy is about police and fire; they constantly repeat the message in order to manipulate the public and create a certain atmosphere of panic and fear; this is in line with advice given by their consultants from Avakian, as we mentioned in an earlier post here.

The problem is that statements made in private by city employees contradict their public rhetoric. In the same meeting on November 7, 2009, the City Council admitted in plain words that their goals are to bring back all the "lost" employees, and the Parks and Recreation department:

Councilwoman Felton said she understood why Councilman Louderback wants to bring back the employees because people need jobs.

Yes...people need jobs...therefore the residents need to pay more taxes...LOTS more taxes! There you have it folks...in plain English.

Despite what the City of Xenia is claiming in public, the survey conducted by WSU was specifically designed to assist with the passage of the tax levy. Again, their own words support this assertion:

Councilwoman Mills asked if the survey results would tie in with the 2010 levy. Mr. Percival thought it was all tied together. Once they know what our citizens want and will support, they can move forward with the appropriate levy.

The results of the survey in fact contradict the City's message that "police and fire are top priorities." Those residents who were surveyed said that their top three priorities were "downtown revitalization, parks and recreation." The city's own documents recognize that Police and Fire were number four on the list of residents' concerns! Yet the city is promoting police and fire as the top, most critical issue facing the city today. This cannot be explained any way other than manipulating and lying to the public.

The promises made to voters have been even labeled as "fluff" by council people:

...his concern is that they took away the Parks and Recreation Department to save dollars and now we are asking the citizens for more dollars, but we are not giving Parks and Recreation back to them. Councilwoman Caupp said no; instead we are giving them hardcore stuff -- Police Officers and Firefighters/Paramedics and smooth streets. Those are vital services -- Parks and Recreation is fluff. Councilman Smith agreed, but the promise of Parks and Recreation might be what sells it -- "the ribbon on the package."

Those of us opposing the City's use of public funds to sell a tax levy are very disappointed by this public manipulation and outright lying by city officials. We are hoping that Xenia residents will do their best to research this and look hard through the fog of manipulation, and we are encouraging everyone to vote NO on Issue 7.

Who is Avakian? The Olentangy Schools Story

Earlier this year, the City of Xenia hired consultant Joel Gagne from Avakian Consulting to "improve the city's image" -- at least that's the story the City Manager tells. But why would you as a Xenia resident believe this? Why was Avakian awarded a no-bid, $25,000 contract after an "emergency" meeting and a hurried contract signing process? Why did all these things happen right before and after the Council's vote for the tax levy, and before the May 4 election? You may not like the answer.

Joel Gagne is no marketing guy, nor is he your average consultant. He had worked in the Bill Clinton White House and for several election campaigns, like Wesley Clark's campaign, Paul Wellstone, and Robert Reich's gubernatorial campaign. These are hardcore, Washington DC political hacks. And as Gagne is not just a backwoods marketing consultant, and rather a hardcore political consultant with extensive experience in campaigning, why is this guy on the City of Xenia's payroll? Why now? Why is the City of Xenia spending badly needed local funds on a Washington D.C. lobbyist? Well, the example of Olentangy School District may give us an answer -- Gagne is successful at manipulating public opinion and getting tax levies pushed through and passed.

It is against Ohio Election Law for a school district to use public funds to publicize or sell a ballot initiative to the voters, but this apparently did not stop the Olentangy School District from signing a contract with Avakian Associates (aka Avakian Consulting) in January, 2008. Local residents in the Columbus area were as outraged about this two years ago as we are today about the City of Xenia's misuse of public funds. A Columbus area resident wrote about these events back in 2008, pointing out that the Olentangy School District, just like the City of Xenia, bypassed the normal purchasing procedures for the district and had the Franklin County Education Services department invoice the Olentangy School District (on behalf of Avakian), and disbursed funds to Avakian via Franklin County as opposed to a direct and clear invoice/payment approach that would indicate a violation of election laws; the Purchase Order description for Avakian's Services was misleadingly labeled "Superintendent Outreach" or "Superintendend Search." (see a copy of the purchase orders here)

Yet in an email message between Rebecca Jenkins, treasurer for the Olentangy School District and Jennifer Smith, a member of the board of education, Jenkins writes

The services were to aid with the levy, were used last year...specifically hired by Scott and Carole Dorn Bell - (click to read the entire email exchange)

Carole Dorn-Bell, the district communications director left the school district and now works for Avakian. She is also currently working as a consultant for the City of Xenia with Joel Gagne.

The entire time this was happening, the school board was claiming that Avakian was there to educate the Olentangy community, provide marketing and improve the image of the school district -- does any of this sound familiar to Xenia residents? It is the same playbook used by the City of Xenia today when justifying the contract with Avakian. Mr. Percival, Xenia City Manager claims Avakian is providing "consulting services." Emails between Xenia City Employees and Avakian prove otherwise: Avakian's sole purpose in this relationship is to help Xenia pass the tax levy, using public dollars for that purpose.

Furthermore, in February 2008, shortly after Olentangy signed the contract with Avakian, the communications director for the district, Carole Dorn-Bell emailed Joel Gagne (the same consultant hired by the City of Xenia) and Paul Fallon, of Fallon Research, another political consulting firm, to strategize how the proposed tax levy can be voted in -- note that she was still on government payroll at this time. Two of them were using using personal email addresses to avoid the Ohio Sunshine laws and keep the public in dark over what is going on, however the emails were still legally obtained by a Columbus area resident.

Carole Dorn-Bell demanded that a "cut list" needs to be created in order to "scare" voters into voting for the levy (cuts in services, etc).

I must have cut list. Unless people can see how it affects them, forget it. I can provide loads of anichdotal (sic) evidence on that one. Third, the board has to -- early on -- come up with the list so that people can see there are no sacred cows. The list is the list. And they have to stick with it.

Joel Gagne from Avakian responded saying

"the time for political pain is way overdue"

-- referring to another city's attempt to pass a levy without providing a list of cuts to voters.

Paul Fallon responded saying,

"Candidly, I also think you should attempt to cull some private campaign fund dollars to have the ability to test questions in the survey that you do not want to be subjected to the Sunshine Law, because they are publicly-funded."

(click here to see the entire exchange)

Yes, avoiding openness and the law, and hiding the real message from the voters seems to be the way to go. But even then, Paul Fallon's response cuts right to the issue for Xenia City residents; the City of Xenia used public funds in 2009 for a survey to assess how the voters in the city would respond to a proposed tax levy. The City was and is developing a campaign strategy on our dime.

If you are a Xenia resident and believe that Avakian was only hired for "improving the city's image," you have been suckered and robbed...by professionals. Instead of helping our image, the arrangements made by the City of Xenia is splitting and dividing our community and creating discord among residents, while wasting tens of thousands of dollars in taxpayer money.

The Numbers Speak

Last year the City of Xenia management and the City Council discussed the proposed tax levy, and revealed some financial projections for 2010 and 2011. The City is projecting that passing the 28% income tax increase on May 4 would prevent a deficit of $1.45 million dollars for 2010 and 2011, however their own projections hint to the fact that the city budget will again be in deficit beyond year 2011! This means that again, the City of Xenia will most likely come back to the taxpayers asking for another income tax increase.

The fact that future projections indicate further deficits -- despite passage of a proposed levy -- should serve as a clear indicator to Xenia management that the City of Xenia is beyond exhausting its revenue capacity. This is being manifested by folks moving out of town, some other folks avoiding Xenia altogether, and businesses being unable to make ends meet in the city. It is generally thought by politicians that a higher rate of taxation is generally speaking, directly connected with higher government revenues…but to a point. Both economists like John Keynes and economists from the Austrian School have been using a very simple concept to illustrate this relationship, a bell curve called the Laffer Curve. The relationship dictates that at a 0% tax of inflation, there are no revenues for a government entity, and also at a 100% rate of taxation, there will be no revenues generated. The "hill" of the curve is, for lack of a better term, the optimum taxation indicator for a given tax base; any further tax increases beyond this point will have in fact the opposite effect on government revenues, namely a loss in revenue, not an increase.

City of Xenia officials do not seem to be willing to face this reality, which indicates that Xenia is well beyond the bearable taxation point; this fact is again, manifested in lower revenues, and projected future deficits even after passing a 28% tax levy increase!

To support the assertions made above, we will reference a 2003 study of local income taxes, titled "Local Revenue Hills: Evidence From Four U.S. Cities", and created by The National Bureau of Economic Research (NBER Working Paper No. 9686). In this study, four U.S. cities were analyzed for the purpose of determining each city's revenue hill, and the path of marginal tax revenues in relation to tax rates. The four cities were Houston, Minneapolis, New York City, and Philadelphia.

For two of the cities studied, New York and Philadelphia, the increase in local income tax led to job losses, and implicitly to lost revenues for the cities. To quote the study,

In 1970, New York City had 5.28 percent of the nation's jobs. By 2001 it had 2.88 percent. The job situation reflects in part the statistically significant negative effect of income tax rate changes: taxes rose from a top marginal rate of 2 percent to 4.66 percent in 1994 before dropping to 3.592 percent in 2001. The authors predict that the city's total job loss because of increases in city income tax rates would have been 490,000 jobs, but Mayor Giuliani's 1994 tax cuts restored 160,000 of those jobs for a final, tax-induced decline in city employment of about 330,000 jobs.

Similarly, Philadelphia lost 173,000 jobs between 1971 and 2001 because of increases in city wage tax rates. However, the authors estimate that without Mayor Rendell's wage tax cuts begun in 1996, Philadelphia's job loss would have been an additional 30,000 jobs. The New York City and Philadelphia experiences lead the authors to conclude that lowering city taxes is likely to be a cost-effective way to increase city employment.

The study further concluded that,

The recent cuts in New York and Philadelphia's income and wage taxes do mean lost tax revenues and presumably lower public services for city residents, but the added city jobs offer an important compensating benefit. The end result is a smaller public sector, but a larger and arguably more productive private city economy.

One of the more important conclusions was that "balanced city budgets will require the city to hold new spending to the rate of inflation" and that,

The authors' study reveals a fundamental tension between the interests of city public employees, poor households within the city, and city taxpayers. Tax increases unmatched by tax-financed compensating benefits for taxpayers -- whether property owners, consumers, or firms -- will drive those taxpayers from the city. Property values fall, business sales decline, and the city's tax base shrinks. To protect city economies, a dollar of taxes paid must be matched by at least a dollar of public service benefits. That was not the case in any of the sample cities, though nearly so in Minneapolis.

All these basic economic conclusions are after all, common-sense conclusions, and someone should not have to point them out to anyone at Xenia City Hall. We can readily observe that property values, jobs, business presence and income levels are all in a decline in Xenia, all proving that Xenia cannot be taxed any further without worsening the effects on government revenues. It is an economic reality that taxation will lead to behavior adjustment by those who are being taxed, so it is natural to conclude that the proposed tax levy will in fact lead to further deficits in Xenia's budget by the way of residents leaving the city, and so on. The City's own budget projections prove it.

So the question Xenia residents need to ask is: how much money will the City ask for again in a few years, when the next deficit rears its head?

Xenia to be among Ohio's highest taxed

Should the May 4 tax levy pass and be approved by the voters, the City of Xenia will become on of the highest taxed cities in the State of Ohio. See the table below for details (this is the top of the table, with 700-some more municipalities following):

Based on data from the Ohio Department of Taxation.

City of Xenia Sued for Fraud, Misappropriation, Violation of Election Law

Tu ne cede malis, sed contra audentior ito -- Do not give in to evil, but proceed ever more boldly against it.

Today a lawsuit was filed in the Greene County Court of Common Pleas against the City of Xenia, City Council and City Manager for various violations of Ohio Election Law, violations of Title VII of Ohio Revised Code, Fraud and Misappropriation of Funds.

The lawsuit is seeking permanent and temporary injunctions against the City of Xenia’s use of public funds for advertising and promoting Issue 7, an income tax levy increase of 28.5%, and is attempting to put a stop to further spending of taxpayers funds on surveys and consulting activities of Avakian Consulting, a political consulting firm contracted by the City of Xenia for the apparent purpose of helping with the passage of Issue 7 in the May 4, 2010 election.

While the City of Xenia publicly denies that the reason for the no-bid contract with Avakian was for the sole purpose of facilitating the passage of Issue 7, internal meeting minutes, City Council statements, statements from City Manager Percival, and e-mail exchanges between Xenia employees and Avakian tell a different story, and show that the City is indeed spending taxpayer dollars to fund, promote and facilitate the passage of a ballot initiative, in violation of Ohio Election Law. Avakian Consulting also helped the city of Huber Heights with a passage of a tax levy initiative, something which has been referenced by Xenia City employees, showing the focus of the City is the passage of this levy and the promotion of the levy passage to residents.

The lawsuit also seeks a temporary injunction against the Greene County Board of Elections, asking the court to remove Issue 7 from the May 4 ballot until the questions about the City’s activities have been fully answered.

You can read the complaint below:

Xenia City Lawsuit

New City Documents Paint Another Picture

A recently filed FOIA request with the city of Xenia paints a picture different from the one the City is trying to present to the community. What is claimed to be an "emergency" driven tax levy, turns out to be a carefully crafted and created message by the City, with the help of consulting firm Avakian Consulting, from Columbus, OH.

In a completely disregard of its own policies and laws, which are in place for the protection of taxpayers and the prevention of fraud and misappropriation of funds, the City of Xenia awarded an "emergency" no-

bid contract to Avakian for the amount of $25,000 for the purpose of helping "educate" city residents. What the city really means is, "help pass Issue 7." The problem with these actions is that they are in direct violation of Ohio Election laws, and citizens should not, and cannot stand for it. The City of Xenia, to say it in the plainest words possible, is using taxpayer funds to sell taxpayers a tax levy.

Not only this, but as the documents attached show, City Management know what they are doing is highly inappropriate, with City Councilmen being outright confused by the direction taken by Mr. Percival, Xenia City Manager. During a Special Budget Meeting on January 30, 2010, Mr. Percival was asked by Councilman Smith:

"if the goal [of Avakian] was to pass the levy or improve the city's image. Mr. Percival said both. Councilman Smith asked what the number one priority was. Mr. Percival did not think one could be done without the other...The image, marketing and promotional campaign will be directly tied to the levy campaign; you can't separate the two."

Mr Percival even expressed frustration at the fact that Ohio Election law

prevents the CityCouncil from knocking at doors to directly promote the levy, saying "it was ridiculous the city council couldn't go out and promote it [the levy]."

The City Manager was also questioned by Councilman Louderback, inquiring about the same issue: was the purpose of the consultants to pass the levy? Clearly, the ultimate and primary goal for retaining Avakian is being reinforced by the answers repeatedly

: to pass the tax levy. Knowing that it would be very difficult to justify the hiring of a consultant for that express purpose however, the City is attempting to bypass election law by throwing in other services, such as "magazine articles and other things to promote the City."

Unfortunately followup emails originating in the Clerk's office paint a different picture, again, that of Avakian's role being that of solely helping the passage of the tax levy by the city, all using public funds and taxpayers dollars. In an email dated January 28, 2010, City Clerk Michelle Johnson sent an email to Joel G. from Avakian, making it clear what the primary purpose of the relationship was: passage of the levy.

I urge you, if you are a Xenia City resident to stand up to this injustice, to the unjust ways in which the City of Xenia is spending your money, and the ways in which the city is trying to manipulate you and your voting intentions. Please join us on the Stop Xenia Tax Facebook page and voice your opinion about this attempt to undermine your authority as a citizen, and the blatant mismanagement of public funds.