This is the text of my speech at the Charture Institutes 22 in 21 Conference held in January, 2017:

Good morning everyone. Thank you for being here today and for caring enough to be here today. And thank you, Jonathan, for creating this event back in 2012. More importantly, thank you for your passion and commitment to protecting and preserving our community.

Thanks to the past election, we politicians have been liberated once and for all from sticking to the facts. Thus what follows may or may not be true.

1.What has changed in the past year?
A looming change is that county and town governments soon stand to lose about $12 million in revenue. That’s because last fall I asked you to approve a second optional penny of general revenue rather than the traditional second penny of specific purpose revenue. You chose no, and I’m still eating crow.

That second penny of optional sales tax is also referred to as the sixth penny because the county currently collects six pennies of tax on every dollar of sales. The state keeps 61% of the first four pennies. That’s mandatory. Counties are allowed to add up to 3 cents beyond those four and keep 100% of the revenue. Those are optional. There are two types of revenue that can be generated by an optional penny. One is general revenue that can fund both capital projects and government operations. The other is specific purpose revenue, or SPET, that can only be used for the specific purpose ascribed to those revenues on the ballot. Two of the three optional pennies can be SPET and the third general; or two can be general and the third SPET. But they cannot all three be either general or SPET.

Teton County currently collects 1 optional penny of general tax revenue, aka the fifth penny. This penny was forced onto the ballot through petition by 5% of the electorate in 1973 whereupon it was approved by a majority of voters. From ’73 to ’89 it was re-approved by voters every 2 years. From ’89 to 2002 it was re-approved every 4 years. In 2002 it was made permanent by resolution.

Teton County also collects one penny of SPET. SPET was first put on the ballot in 1985 in order to pay the bond on a new jail. It has been re-upped by voters every two to four years since and funded about 50 capital projects that include wastewater infrastructure, schools, libraries, rec centers, transit infrastructure, energy efficiency improvements, pathways, fire trucks and workforce housing. So, since 1985 Teton County citizens and visitors have paid six pennies of sales tax on every dollar spent for the purchase of most goods. Groceries are exempt.

The last time voters approved the sixth penny of SPET was in August when you approved $6 million to stabilize the landslide threatening Broadway and the town’s water main. However because SPET was not on the ballot in November, and since the sixth penny of general that was on the ballot lost, once $6 million has been collected, which will by the end of February, 2017, the county sales tax rate will drop to five cents. It will remain at five cents until action is taken by either the joint elected bodies of the town and county or by 5% of the electorate forcing a general penny back onto the ballot.

A full penny of sales tax brings in about $12 million a year. General revenue, like that brought in by the existing fifth penny, is divided between the town and county at a 45/55 ratio based on the population split in 2010. In the 12 months spanning July 2016 through June 2017, the county expects to collect, and spend, $16 million in general sales tax revenue comprised of 31% of the first four pennies and 55% of the fifth penny.
The county will also collect $7.8 million in property tax amounting to 9 out of 12 possible mils we could levy.

The county’s third largest source of general revenue will be about $2.2 million from the federal government paid to Teton County in lieu of property tax we don’t receive because the Feds own 97% of our county. Or We, capital W, own 97% of our county, depending on how you look at it…Those are our PILT revenues. By the way, if the state were to take over our federal lands, as Wyoming state senate majority leader Eli Bebout favors, a good question to ask is whether Cheyenne would take over and continue those PILT payments?

Once all revenues are accounted for, we will have $37 million dollars to spend, otherwise known as “Blank Checks.” After returning from our publicly funded beach vacation, commissioners will use the rest of our blank checks to fund all the usual operations of government. Fire trucks will still put out your fires; the Sheriff will still pull you over in low-mileage Chevy Tahoes that can outrun any other SUV on the road; public health will still very likely prevent a contagious disease from wiping us all out; emergency management and the county coroner will take care of the mess if disease somehow does spread; planning and building will still be here and be just as much a pain in the ass as ever; the library will be open; the rec center will be open; and roads, bridges and intersections will still get repaired during peak traffic in July and August. In short, government will continue functioning in all its glory.

What you won’t see are the types of capital projects that SPET has funded in the past. You know….fire stations…like whatever….

So some might say government has been right-sized. But it has not so much been down-sized.

Back to the sixth penny. What did I intend when I asked you to approve that second penny of optional general sales tax revenue? I intended to use it to protect our community character. Here’s how. If you have a pen and paper, please draw a vertical rectangle in one corner and divide it into three horizontal equal parts. Each third is the floor of a building you own in downtown Jackson. Fill in each floor with its most lucrative use. Mine looks something like, art gallery on the first floor, real estate offices on the second floor, and luxury townhomes meant for short-term rental on the third floor. Now draw a large rural parcel in the county over 140 acres in size. Make one side kind of wavy because that boundary is somewhere between the levies constraining the Snake River. Fill in your parcel with its most lucrative use. If you drew a ranch, you fail. Ranchers and climbers have at least one thing in common. If you give each of us a million bucks, we’d keep on ranching and climbing until it’s gone.

Now ask yourself, “How much community benefit did I just provide in my three story building downtown and in my large rural parcel?” “How much workforce housing?” “How much open space?” On the flip side, ask yourself “How much more workforce housing does the community now need to build to staff and maintain my new development?” If the answer is 0 to the first three questions and something well above 0 for the latter question, ask yourself, “How many cars did I ad to our network of two-lane roads?” If you drew nothing but dense workforce housing, ask yourself, “Did I leave room for wildlife?”

Now ask yourself, “How might I reconfigure my development plan to provide both workforce housing and more open space instead of more commerce, more lodging and more second homes?”

Finally ask yourself, “How best would I like the community to support me, the property owner, in achieving this reconfiguration that develops my property in a way that supports community values as well as earning a fair return on my private property?”

Now draw a large screw, and label it LDRs, for land development regulations. LDRs restrict private uses of property for the greater good of the community.

Go back to your drawing of a large rural parcel. For a couple or more generations you believed that what you just drew—your parcel’s most lucrative use—was your absolute right. Imagine that one day you woke up and were told that overnight the county wrote about 700 pages of byzantine LDRs that dictate in detail what you can do with your large rural parcel, and that those uses allow very little of what you drew on your parcel of private property.

Would you feel screwed?

Is there a better way to achieve workforce housing and open space?
Let’s think about what was done for ranchers when wolfs were reintroduced (wolves—government sponsored terrorists, I believe the bumper sticker reads). Compensation was achieved via a fund established through Defenders of wildlife. Here’s a quote from their website: “Our goal is to shift economic responsibility for wolf recovery away from the individual rancher and toward the millions of people who want to see wolf populations restored. When ranchers alone are forced to bear the cost of wolf recovery, it creates animosity and ill will toward the wolf. Such negative attitudes can result in illegal killing.”

Why couldn’t this read, “Our goal is to shift economic responsibility for open space and work force housing away from the individual rancher and toward the millions of people who want to see expanses of rural open space, ranching, wildlife and a rich and diverse community in Teton County. When ranchers alone are forced to bear the cost of maintaining open space and providing low-cost housing, it creates animosity and ill will toward county commissioners. Such negative attitudes can result in ranchers hanging me up by my thumbs and probably not voting for me.”

My intent for the general penny, was to compensate private property owners for not building second homes or short-term rentals and instead building workforce housing in complete neighborhoods. My intention was to compensate private property owners for preserving open space, weed-free and wildlife friendly.

Now it’s up to the private sector. To be sure buying conservation easements is nothing new. The Jackson Hole Land Trust, The Nature Conservancy, and in the case of the Antelopes Flats parcel, the Grand Teton National Park Foundation, have funded the preservation of huge amounts of critical and iconic open spaces throughout Teton County and northwestern Wyoming. In fact they’ve been so successful that open space was left off the list of community priorities that revenue from the sixth penny was meant to address (the other two being housing and transportation). That said, as Teton County doubles again in population, there are sure to be critical bits and pieces of migration corridors and habitat that these organizations might miss. I believe we would do well to consider maintaining a source of public funds that could be deployed, probably in partnership with private funds, to preserve these spaces.

2. What can people expect in the coming year?
A SPET ballot, most likely in May and most likely looking like any other in the past with very little funding of workforce housing outside of town and county employee housing.

3. What keeps you awake at night? What gives you hope?
All of the above keeps me awake, and all of you give me hope.

4. What is the one thing individuals can do to address our biggest challenges or realize our biggest opportunity?
I think the concept of compensation rather than LDRs is one of the ways we can address our biggest challenges. The private sector needs to lead the way. This is important and merits discussion beyond this speech. How it’s going to pan out for the private sector to compensate private property owners for the provision of local workforce housing I don’t know. The private-sector may also be challenged to produce transportation solutions to avoid a non-functioning road network or WYDOT-imposed widening sooner rather than later.

5. What is the big point to take away today?
Please take your drawings home and hang them on your refrigerator.
Thank you everyone! And if there’s time, I’ll entertain a question or two.

These two graphics, the first borrowed from the Jackson Teton County Housing Authority, the second from Jonathan Schecter’s Jackson Hole Compass, are what an imploding middle class looks like: median home prices completely detached from a community’s wage reality that drive an ever widening wedge between the haves and have-nots.

When the world discovered Teton County—bucolic, quiet, neighborly; surrounded by wooded hills teeming with wildlife; next door to some of the finest protected public lands in the nation—we became the it place to live. And when Teton County became the it place to live, the world opened its wallet and started buying it up, parcel by parcel, home by home, condo by condo.

Locally-earned wages haven’t kept up to the value placed on our land by the global market. Indeed you’d need a county full of the world’s top financiers/entrepreneurs/scientists/sundry 1%’rs to generate local wages that match local real estate prices—a mix one might expect in downtown Manhattan, or Silicon Valley, but not here. Our economy is tourist-based with average annual wages hovering in the mid-20k’s. Sure there’s some construction and wealth management here too. But the overall mix leaves the median income around $65,000 (around $95,000 for a family of 4), or well short of the market price set when global demand intersects with a miniscule supply of developable private land.

In economic speak, our real estate market is “distorted.” Why does this matter? Because the market is indiscriminate. It does not care if the best teacher can’t afford a home here. It does not care if your hospital staff is a nurse or two shy because they’re commute is blocked or congested. Or if the mental health provider responding when a kid is suicidal lives too far away to prevent a preventable tragedy. It does not care whether there are 50 volunteer firemen and women nearby to fight a fire, or 5. The market simply says either you can afford to live in Teton County, Wyoming, or you can’t. And right now, many can’t.

Losing entrepreneurs is one thing—our community becomes less vibrant as they take their energy, passion and creativity to enrich other communities. Losing health care workers that serve rich and poor alike is another. Or losing teachers that ensure the best quality education for our youth, or veteran peace officers who know our community and its quirks, or construction workers who also volunteer as fire fighters, or wildlife biologists and game wardens who monitor and defend our wildlife and ecosystem.

“Subsidized housing!? Doesn’t a tax dedicated toward housing just mean growth, urbanization and a handout to the private sector and ski bums!?” worry those opposed to this policy. “Let the market sort this out,” they might say.

But can we be so sure that laissez-faire policies will result in less growth? As the world’s deepest pockets continue to see gold in our green pastures, the price of even small lots that normally target middle class workers keeps going up. And up. Last I checked, town-size lots cost around half a million dollars, and there were only 5 homes on the market priced less than three quarters of a million dollars.

You can fit a lot of town-size lots on a couple hundred acres of ranch land. But would you price them to sell to the local work force?

You’d likely design them to attract the broadest possible demand, especially the very wealthy. Perhaps you’d use your water rights to make a few ponds, enhance some trout habitat. In the ultimate laissez-faire world you’d make them short-term rentals. Then you’d trickle them onto the market so that a flood of supply doesn’t drive down prices. In so doing you’d double, triple, maybe quadruple the asking price over what you would get selling to Teton County’s local work force.

Thus it’s unlikely that goosing the supply of market lots to the tune of hundreds of new units will provide the workforce housing one might expect. In the face of demand from the global one-percent, a developer pricing lots that locals can afford would be leaving money on the table. Sure we’d require 25% of the total to be deed-restricted workforce units (see LDR division 7.1.4.E). But 25%? That’s hardly going to house the workers filling the jobs created by the other 75% market-rate units, let alone replace the 8,000 or so existing units already leaking out of the aging hands of long-time residents and workers.

And even if piling on supply were to provide workforce housing, for a time, how would it impact our wildlife and open space values? What would a free-market ramping up of supply do to our over-all build-out? How could it possibly fit our town-as-heart, community-first-resort-second vision?

It can’t. Markets deliver critical information via price signals. But free-market policies need to live in a practical, real world context. In Teton County, a free market solution to our housing and community health challenges would lead to growth for growth’s sake at the expense of our core values.

Out of concern for those core values, we’ve put the brakes on growth. Recently implemented land development regulations removed around 2,400 potential units from the rural county. Even if only half of those units would have ever been built—higher end homes one and all—we’re still well-below build-out numbers hashed out during the drafting of the 2012 Comprehensive Plan. In fact we’re knocking even more than that off of our overall growth because about every four high-end homes requires another dwelling unit’s worth of workers to build it, care-take it, and provide services to its inhabitants.

The way to stop growing is not to gut the middle class and cut the lower class off at the knees. The health and welfare implications are too dire: over-crowded, cost-burdened, dilapidated housing is already Teton County’s second highest rated health issue. Twenty percent of county households have severe housing issues, meaning that a household lacks complete kitchen facilities, lacks complete plumbing, is severely overcrowded or is severely cost burdened (costs including utilities exceed 50% of monthly income). The collateral damage of severe housing costs us tax dollars too, whether it’s for expensive emergency care or broader and more comprehensive safety nets.

Voting to approve a penny of sales tax, half of which would go towards housing (the other half towards transportation alternatives to single occupancy vehicle travel), allows local government to target housing towards the middle class and protect community character without blowing the lid off build-out numbers. Investing half of that penny in housing can subsidize new construction through various channels. It can also be used to purchase easements on existing homes, keeping existing stock in the hands of workers while justly compensating owners expecting a market price for their property. The former targets housing exactly where the Comprehensive Plan calls for it: in our complete neighborhoods, not out in important wildlife habitat and open spaces. The latter adds no new housing, helping ensure we remain within the community’s vision for build-out.

A severe housing shortage locks in the extreme gap between the haves and have-nots, destroys community vitality and drains hope. Voting to approve the sixth penny protects space for middle class families to thrive without trying to build our way out of the problem only to the detriment of our wildlife and open spaces.

The private sector in Teton County has delivered almost 4,500 acres of conservation. But has it protected and will it protect the most important natural resources critical to wildlife? Or do private sector efforts skew towards providing the most benefit for a handful of private citizens? Will the private sector reliably protect migration corridors that allow wildlife to cross arterial roads and skirt development? Or protect critical habitat? Will the private sector provide a central, convening authority to organize the resources of wildlife biologists and conservation staff across federal and state agencies?

A wildlife and open space program funded by the community priorities fund could be overseen by a staff biologist and receive input from a private sector task force. The program could produce wildlife crossing master plans and maps identifying the conservation easements necessary to ensure the long-term viability of those crossings. It could identify and catalogue the highest priority lands for habitat preservation and wildlife permeability.

The program could include a small fund that serves as a source for grants to developers seeking to go above and beyond in providing open space, habitat mitigation and other community benefits. Grants could act as seed money leveraged by private sector donations. For example, matching grants could help fund improvements along the Flat Creek corridor that improve and protect Flat Creek as a natural resource and community benefit as properties along its banks redevelop.

Funds up to 10% of the cost of an easement could be contributed to help acquire easements essential for wildlife migration and habitat where such easements are too small or simply aren’t in the right view corridor to attract the attention of private donors.

While strict zoning and strong private sector efforts have preserved substantial tracts of open space, in the long run, the private sector might leave critical habitat and migration corridors unprotected and open to development. Failing to address this as a community priority is a critical flaw in the community priority fund as structured.

On February 1st, 2016, Teton County commissioners and Jackson town councilors voted to approve asking November 8th voters the question of whether or not there should be a sixth penny of general revenue sales tax. Since 1990 or so, Teton County voters have voted every two or four years for a sixth penny of sales tax for specific purposes (example here) such as multi-use pathways, public facility upgrades and workforce housing. This year the choice is whether the sixth penny should be in the form of general revenue. I voted in favor of putting the question on the ballot to let voters decide. However the final resolution describing how the funds would be spent left out conservation. Are we trying to sell the community a cherry pie without the cherries?

The additional revenue is meant to address community priorities outlined in the Teton County Comprehensive Plan, the community’s guiding vision document. There are three community priorities discussed in the plan: to preserve and protect the areas ecosystem (conservation), to protect the community’s character and vitality by housing 65 percent of the local workforce in Teton county, and to reduce per capita vehicle miles traveled to avoid widening roads traversing the county. Alas, the final resolution on how to direct the spending of the revenues included the latter two only, not even leaving a placeholder for conservation. I abstained from the vote.

The government should not force citizens to pay taxes unless the increase in public welfare through the provision of the goods and services the revenue enables is measurable and substantial. There are certain goods and services clearly best provided by government—public safety, an impartial judicial system, and defense, for example.

In Teton County protecting the environment, housing, and transportation exhibit credible market failures that decrease community welfare. Development that doesn’t consider costs to wildlife and wildlife habitat threatens a sustainable tourist-based economy. A lack of transportation alternatives and key infrastructure threatens our ability to transit the county to receive medical attention, conduct commerce, or run errands. A lack of housing affordable to the middle class erodes a demographic structure sufficient to provide core services and support the needs of a thriving community.

To ensure measurable community benefit, projects funded by the revenue should follow the private sector’s lead. The Housing Action Plan calls for the private sector to lead efforts to deliver housing. The Integrated Transportation Plan targets transit and efforts to reduce congestion to match where the private sector delivers housing. If the spending resolution had included conservation, a private sector task force comprised of conservation experts and federal and state wildlife officials could identify how best to synchronize with the private sector and optimize wildlife habitat and open space preservation.

In a nutshell, the role of the Community Priorities Fund is to mitigate fundamental threats to the overall community welfare where the private sector has consistently failed. While housing and transportation suffer from market failures, at least they have lobbyists. Wildlife don’t. And most certainly the market will not fully account for them in the long run without help from the public sector. Indeed our Community Priority pie seems to be missing its cherries.