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Homework #6 For this homework you will need to read Swiss.ch.Zp.215-220 Application 1 Casterly Rockris an older manufacturing city (population 170,000), and its declining tax base cannot keep pace with the demand for services. The city has a relatively poor population, with 20 percent of its citizens below the poverty line, and relatively few wealthy citizens. The city ran a small deficit last year, which it handled through some creative accounting. This fiscal year is just beginning, but its deficit is likely to be $8 million this year Although the city has severe financial problems, the mayor and city council do not want to raise any across the board taxes for fear of accelerating the out-migration of middle-class families from the city into the county and neighboring suburbs. Virtually all city services are stretched past the breaking point, among them: 1. Swimming pools. The city runs three free swimming pools (There is also a private pool in town that charges $6.00 for admittance). The vast majority of patrons are between the ages of six and fifteen. Each city-run pool can hold 150 swimmers, but the pools are greatly overcrowded. There is often a two-hour wait to get in, and many discouraged www.haina tani kwa 14 ans Bett in fartfolio Download Print Anough mechy na severe umancia problems, the mayor and City Counci UO TIDE Wam to raise any across-the-board taxes for fear of accelerating the out-migration of middle-class families from the city into the county and neighboring suburbs. Virtually all city services are stretched past the breaking point, among them: 1. Swimming pools. The city runs three free swimming pools (There is also a private pool in town that charges $6.00 for admittance). The vast majority of patrons are between the ages of six and fifteen. Each city-run pool can hold 150 swimmers, but the pools are greatly overcrowded. There is often a two-hour wait to get in, and many discouraged would-be swimmers no longer try. Each pool is open 145 days per year and each pool costs $120,000 per year to operate. 2. City bridges. The city built, owns, and now maintains the three aging bridges over the river that separates it from its main suburbs. The only way of avoiding the bridges is to drive more than 30 minutes out of the way. The bridges are now free, but the city is considering instituting a toll that would cover at least part of its annual maintenance costs of $250.000 per bridge. Each weekday, approximately 14,000 vehicles travel over each of the bridges (7,000 in each direction). Surveys indicate that about 40 percent of the users are suburbanites who work in the city, 20 percent are city residents who work in the suburbs. 20 percent are suburbanites who shop in the city, and 20 percent are long-haul trucks and other vehicles from outside the area. 3. Enriched education. After the federal government withdrew funds for supplemental education programs, the city has continued to fund them. All children who score at least one grade below standard on an achievement test are eligible for the voluntary, two- afternoons-per-week program and results have been quite encouraging. The program is free for all 4.000 children participating, but the city can ill afford its price of $1.6 million Address the 1. City leaders are considering whether and how much to charge for the three service areas. Suggest a specific price for each area and defend your price. If a needed piece of information is not available, make a reasonable assumption and then proceed from that assumption. (NOTE: These will be different based on your assumptions. There is no right answer to setting the price.) 2. What are some of the main political and ethical implications of the new or increased prices for each service area? 3. Which service area(s) should have special pricing arrangements for the poor? Which should not? What specifically should those arrangements be? Homework #6 For this homework you will need to read Swiss.ch.Zp.215-220 Application 1 Casterly Rockris an older manufacturing city (population 170,000), and its declining tax base cannot keep pace with the demand for services. The city has a relatively poor population, with 20 percent of its citizens below the poverty line, and relatively few wealthy citizens. The city ran a small deficit last year, which it handled through some creative accounting. This fiscal year is just beginning, but its deficit is likely to be $8 million this year Although the city has severe financial problems, the mayor and city council do not want to raise any across the board taxes for fear of accelerating the out-migration of middle-class families from the city into the county and neighboring suburbs. Virtually all city services are stretched past the breaking point, among them: 1. Swimming pools. The city runs three free swimming pools (There is also a private pool in town that charges $6.00 for admittance). The vast majority of patrons are between the ages of six and fifteen. Each city-run pool can hold 150 swimmers, but the pools are greatly overcrowded. There is often a two-hour wait to get in, and many discouraged www.haina tani kwa 14 ans Bett in fartfolio Download Print Anough mechy na severe umancia problems, the mayor and City Counci UO TIDE Wam to raise any across-the-board taxes for fear of accelerating the out-migration of middle-class families from the city into the county and neighboring suburbs. Virtually all city services are stretched past the breaking point, among them: 1. Swimming pools. The city runs three free swimming pools (There is also a private pool in town that charges $6.00 for admittance). The vast majority of patrons are between the ages of six and fifteen. Each city-run pool can hold 150 swimmers, but the pools are greatly overcrowded. There is often a two-hour wait to get in, and many discouraged would-be swimmers no longer try. Each pool is open 145 days per year and each pool costs $120,000 per year to operate. 2. City bridges. The city built, owns, and now maintains the three aging bridges over the river that separates it from its main suburbs. The only way of avoiding the bridges is to drive more than 30 minutes out of the way. The bridges are now free, but the city is considering instituting a toll that would cover at least part of its annual maintenance costs of $250.000 per bridge. Each weekday, approximately 14,000 vehicles travel over each of the bridges (7,000 in each direction). Surveys indicate that about 40 percent of the users are suburbanites who work in the city, 20 percent are city residents who work in the suburbs. 20 percent are suburbanites who shop in the city, and 20 percent are long-haul trucks and other vehicles from outside the area. 3. Enriched education. After the federal government withdrew funds for supplemental education programs, the city has continued to fund them. All children who score at least one grade below standard on an achievement test are eligible for the voluntary, two- afternoons-per-week program and results have been quite encouraging. The program is free for all 4.000 children participating, but the city can ill afford its price of $1.6 million Address the 1. City leaders are considering whether and how much to charge for the three service areas. Suggest a specific price for each area and defend your price. If a needed piece of information is not available, make a reasonable assumption and then proceed from that assumption. (NOTE: These will be different based on your assumptions. There is no right answer to setting the price.) 2. What are some of the main political and ethical implications of the new or increased prices for each service area? 3. Which service area(s) should have special pricing arrangements for the poor? Which should not? What specifically should those arrangements be

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