|
2004 Workshop Reports -
Taxes and Public
Revenue Discussion Group
Background
According to the Yellow Springs Cost of Living
report, Yellow Springs’ total population declined 5% from 1990 to
2000, and declined 19% since 1970.
The total number of persons employed declined
in 2000, an indicator of a growing retired cohort. The median
household income and housing values were quite a bit higher in 2000,
thus generating more property tax revenues. Yet, the property tax
burden in Yellow Springs is higher than all the comparison communities
in the Cost of Living report except for Bellbrook; however, Bellbrook
has no municipal or school income tax. The higher taxes in Yellow
Springs are "offset" to some degree by lower electric
utilities costs.
The Taxes and Public Revenues Discussion Group
discussed revenue challenges and implications facing the Village, the
Township, and the School District. The group also brainstormed a list
of draft action plans in response to those challenges. As they did so,
group members determined that they shared the following underlying
assumptions.
- A desire to maintain economic
diversity/mix
- A recognition that the status quo is not
working; the greater Yellow Springs area needs sustainable growth to
share cost burdens
- An acknowledgement that residents expect
a certain level of services; yet, the community needs to establish
what that level of service is
The group identified the following three major
challenges.
- Yellow Springs has a high comparative tax
burden
- The cost of capital improvements in the
Village over the next ten years
- The loss of the traditional economic base
in Yellow Springs
Challenge 1: High Comparative Tax Burden
The challenge is to increase the community’s
revenues while not increasing taxes, because Yellow Springs already
has a higher comparative tax burden than other similar communities in
the Dayton region.
One implication of this challenge is that
jurisdictions (schools, local governments, library, etc.) must
maximize revenues, minimize expenses, and save for future capital
expenditures. Another implication of this challenge is that there is
less ability today than in prior years for professional income earners
and wage earners to live in Yellow Springs. The "cost of
entry" into Yellow Springs is higher than in neighboring
communities. One example of "cost of entry" is mid-priced
homes that require a significant investment to update the home after
purchase. (Providing additional options for housing in the Yellow
Springs area is another challenge.) The tax burden and relatively high
"cost of entry" creates marketing challenges for the
community in that the intangibles such as the quality of life are more
difficult to quantify than are the tax burden and other costs.
Action Plan Concepts
- Look for opportunities to share
infrastructure and utilities across the school district, the
Village, and the Township. Develop a committee to look for
synergistic savings areas.
- Aggressively explore federal and state
grant and appropriations opportunities.
- Assess whether to modify the Village of
Yellow Springs earnings tax waiver. (The Village currently waives
100% of the earned income taxes for residents who work outside of
the Village and who work in communities that have a lower tax rate
than the Village.)
- Consider annexation on a case-by-case
basis.
- Explore
state permissible legislation that may allow the Village to blend
the earned income tax and the school tax. The combination of the two
taxes may result in a tax rate that allows Yellow Springs to retain
more tax revenue (e.g., the Village’s earned income tax rate is
lower than Dayton’s and Oakwood’s; therefore, Dayton or Oakwood
retain all of a Village resident’s income tax revenue if that
resident works in Dayton or Oakwood).
- Continue
to explore new utility revenue sources (e.g., power line
communications).
- Given
the phasing out of estate taxes, educate residents and other
stakeholders about how to give to the Village and Township via
living wills and trusts.
- Explore
the viability of rolling Village utilities into the real estate tax
rate to provide a steady source of Village income, reduce Village
costs, and provide a federal tax credit (except for tax exempt
property owners such as the college).
Challenge 2: The Costs of Capital Improvements
over the Next Ten Years
The challenge is to meet the Village’s
future capital improvement requirements. The Village is currently
short approximately $1 million per year to make utility capital
improvements. The plan had been for the Village to retain 25% of
utility revenues to pay for future capital expenditures.
Unfortunately, those retained funds
have been spent in prior administrations.
The implications of this situation
are that the Village may face health impacts if aging sewer pipes leak
toxins. Long-term borrowing will be required to make capital
improvements (on a positive note, interest rates are currently low).
The discussion of options available to address this challenge may
increase the tension of older adults who are already tax burdened.
Action Plan Concepts
- Sell
bonds and increase utility rates where justified.
- Explore
tax exempt bond funding opportunities in which residents could
invest.
- Organize
capital improvement needs into general fund needs versus utility
related needs to develop relevant strategies.
- Obtain
the expertise needed to gain an understanding of the complex
accounting issues at hand, to gain a better understanding of the
implications, and to develop
recommendations.
- Plan
for the pending reduction in the Kilowatt hour tax from the general
fund. (The lost revenues are due to changes in state tax policy.)
Challenge 3: The Loss of the Traditional
Economic Base in Yellow Springs
The challenge to the community is
similar to that faced by many communities in the US and perhaps
particularly in the Midwest. Yellow Springs’ challenge
is to identify and nurture new industry that replaces the traditional
economic base of Yellow Springs—the manufacturing sector, which is a
sector whose jobs will not be returning. The challenge will be to
identify industry that builds upon the assets of the community and is
nested in the knowledge-based economy of the future. Another aspect to
the challenge is to attract or nurture a mix of firms that does not
diminish and, in fact, enhances the unique quality of life in the
community.
One implication is that the loss of
major businesses, such as Vernay Labs, reduces the Village’s
electric, water, and sewer utility revenues and diminishes income tax
and school tax revenues. Furthermore, manufacturing occupations are
typically well paying jobs, and jobs at those income levels are not
easily replaced. In Yellow Springs, manufacturing jobs were primarily
professional and managerial positions; thus, the lost jobs were truly
the superior jobs in manufacturing. There are also environmental
implications of lost manufacturing firms. How will the Village reuse
abandoned facilities that may have environmental considerations? Along
with the environmental challenges and lack of green space, the Village’s
school income tax is another competitive disadvantage that may hinder
the attraction or start up of new firms (perhaps especially Sub S
Corps).
Action Plan Concepts
- Develop
strategies to attract knowledge workers such as using the Village’s
power lines to establish a broad band communications system to attract
IT workers.
- Cultivate
the entrepreneurial environment in the Yellow Springs community. One
example might be to reuse the Vernay Lab facility as an incubator
for start up IT firms.
- Use
the revolving loan fund resources to provide services, such as
financial and business planning advice, to start up companies.
- Provide
opportunities for residents with expertise to give technical
assistance to start up companies.
- Identify
support services needed by existing, large end users such as
Wright-Patterson Air Force Base.
- Monitor
contract employees to determine if they are appropriately paying
income taxes.
- Promote
the excellent location of Yellow Springs and its access to Columbus
and Dayton markets.
- Explore
Tax Increment Financing (TIF) as a means of providing upfront
capital to businesses.
Back to Top
Back to Workshop
Reports
|
|
