The cost of college education is definitely an imperfect proxy for the costs towns face as they run primary education programs. In my mind the main differences are that colleges often have research programs that may or may not be funded by outside grants and staff is more expensive. However, I think that enough of the same forces are at work to conclude that the costs associated with running a town school system are rising faster than general inflation. Both maintain buildings, employ teachers, support extra-cirriculars, …

I completely agree that the current state of the housing market is a blip in the long-term picture. Like all investments, it has periods of below average and above average performance. Thank you for underscoring this point, because I think it got lost in my post with all the talk of pitchforks and torches.

You also raise a fascinating question of whether or not there is a better way to financially run a town. Is there an alternative to property taxes as the primary revenue source? Is it feasible to move to a pay-as-you-use model such that the inevitable pro-education and anti-taxes factions can peacefully coexist?

My current sense is that the status quo will be nearly impossible to change. So taxes will go up, expenses will be reduced, and everyone will be unhappy. And the battle will be fought again next year.

So, couple of thoughts. First, the education inflation number that you linked to includes college tuitions which shouldn’t impact town budgets much (state, federal, maybe).

Second, this is likely to be a blip. housing prices have to drop, the market will correct itself and then it will return to being a solid investment. Imagine backing away from the stock market after the crash in 1929 or in the late 80s.

That’s my generally optimistic long term view, but in the next few years we’re likely to see some issues. I really wish WH hadn’t taken on so much debt, because this correction was coming for a few years.

In the short run, it would be great if the town could suspend some raises. Ultimately, they don’t have too many choices: fire people, cut back on services, or borrow.

It would be interesting to see towns and the unions look at models like big companies use where raises are contingent on “making the numbers.” its got risks, and I hven’t thought this through, but it’s how companies manage costs.