Thursday, August 25, 2005

Legislative Tax Reform Task Force Getting Close to Recommendations

This morning I attended the meeting of the Tax Reform Task Force subcommittee on RDAs and other tax ideas. The RDA restructure proposal put together by the League of Cities and Towns seems to be a reasonable approach, something that will create some new tools for local government for economic development. Legislators, particularly Sen. Bramble, seem to be OK with most of the ideas (everything except eminent domain for true redevelopment-no way that is going anywhere).

Of particular interest are some of the proposals kicking around for changing the local sales tax distribution. Some (most notablySen. Greg Bell) have been pushing for changing the formula to a distribution based 100% on population -- no point of sale. The idea behind this is that it will take away any incentive for local governments to "zone for dollars;" that is, seek after commercial development (particularly big box developments) because of the sales tax benefit.

Another idea, put forward by Sen. Howard Stephenson, would change the formula to also include a component for jobs -- employment numbers or wage numbers, to serve as an incentive for local governments to seek after businesses that create new, higher paying jobs. Legislative staff is in the process of researching and drafting bills to do this.

Interesting ideas, but will they work? Will they really accomplish what these legislators are hoping for? Something I think we need to spend some time and really research!

Proposed legislation for all these ideas is supposed to be ready by early October.

See story in the Salt Lake Trib on this topic.


At 10:01 AM, Blogger ARCritic said...

One problem I have with Bell's proposal to change the sales tax distribution system is that not only has there been zoning for $, there has also been zoning against commercial. Some cities have zoned to keep more commercial out of their cities. They have enjoyed keeping nice residential neighborhoods without the infrastructure (including police and fire and such) requirements that a significant commercial base requires. But the commercial has been built anyway, just in other locations that were willing to accept it, and the sales tax revenue that went along with it.

Now that CITIZENS want more of the less traditionally goverment provided services, the local governments are looking for additional revenue sources and want the taxes being paid by their citizens to be used to provide the services for their citizens in their cities.

I would think that cities that currently don't have significant commercial bases will not have any more incentive to allow additional commercial if there is no bonus to the city for allowing it. And cities that currently have more commercial than they will be able to justify under the new sales tax distribution system will have to not only become hostile to new commercial development but also find ways to replace the revenue lost by the sales tax redistribution scheme developed by the state.

Where does this put the commercial development? They seem to end up being the odd man out.


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