Central Ohio is likely to grow by at least a half a million people by 2050. Older adults will be a larger percentage of the population. The average household will be smaller. And people will want a greater variety of housing and transportation options.
So, let’s talk about … taxes?
Yes, says Chris Hermann, a principal at MKSK, the Columbus-based landscape architecture, urban design, and planning firm. Taxes are a critical, but too often overlooked, factor in shaping the growth and development of a quickly changing region.
“It’s a critical issue,” Hermann said. “Residents and elected officials think of impacts on schools, traffic, neighborhoods, and other issues. But municipal finance is one of the critical issues, and it often drops off the table.’’
Hermann cites his own hometown, Worthington, which is landlocked with an older mix of residential and commercial property. What once was Class A office space, he said, now is Class B. As communities compete, assets associated with Class A space like location and visibility, new facilities, and the latest technology become tools for attracting employers and expanding the income tax base. This benefits residents, too. For example, communities often desire new or expanded parks. But parks can be expensive to develop and maintain. Such amenities become more feasible when income tax funding from workers in new commercial and office space is available.
Hermann said it helps sustainable growth conversations anywhere “if we look at economics and finance.” But the conversation differs from state to state. Income tax is the driver for municipalities in Ohio. In other states, such as Florida, it’s the sales tax.
“Ohio is jobs-based. If the high school moves out of the center of town and locates on the fringes in the township, the city loses the income tax from, maybe, 120 employees. And Ohio is taking more away from cities — state aid, estate tax, and others.”
For example, he noted that in 2004, income tax accounted for 55 percent of Worthington’s city revenues. Today it’s closer to 80 percent – a result of state tax cuts, loss of the estate tax, and other factors.
Some cities strategically designate land for job growth and recruit companies that can boost municipal income tax revenue. Dublin, for example, zoned land along the I-270 outerbelt for office use, which helped the city become a significant employment center. The suburb’s 2010 population was 41,000, but the top 20 employers alone had over 21,000 workers. This strong employee base enables Dublin to provide good city services, lush parks and other amenities. The tax revenue is not a lucky stroke – it was part of a plan.
“Fortune 500 companies track not only where the jobs are, but also where employees live and what lifestyle they prefer,” Hermann said.
Dublin officials took notice when Nationwide started moving jobs to the Arena District and Grandview Yard, so they made tactical moves to keep the city attractive to businesses and young employees. The Bridge Park development is the first example of that approach.
There’s no single right way or wrong way – no silver bullet, Hermann said. Local governments benefit from a clear understanding of their community strengths and weaknesses to help develop the tax and economic development strategies that best fit their needs.
“It’s critical for elected leaders in cities and townships to understand this and the implications. There’s a need to figure out the right mix of uses to pay the costs [of development],” Hermann said.