New growth tax base sharing involves pooling a portion of the new growth in a community’s tax base and then distributing the pool back to the participating communities through a formula that reduces tax base disparities. Preliminary modeling has confirmed that reduction in disparities in Northeast Ohio is feasible. Additionally, no community loses existing tax base as a result of the program, and all communities gain tax base.
As such, new growth tax base sharing is not a look back. Each community retains its existing tax base. The revenue pool being considered is a percentage of growth in commercial and industrial property value and income revenues. Therefore, unlike the current “go-it-alone, winner-take-all” mentality, all communities benefit when an industry or business locates, or is created, anywhere within the 16-county Northeast Ohio region.
Currently, there is minimal collaboration among communities because local government officials are duty bound to maximize tax revenues in their communities. Long-held practices limit our ability to share and collaborate, and instead reward communities for competing against each other. Under the present system, local officials must compete with each other to generate tax revenue. To change that, we’ll need to change the rules.
While other regions have instituted new taxes, we do not expect to propose a new tax for tax base sharing. We do propose, however, that we share the growth of future tax base revenues to accelerate and collectively benefit from our region’s economic growth. New growth tax base sharing allows us to view economic development as a regional focus to bring new jobs from outside the region, state and nation to Northeast Ohio and compete as a region in the global economy.
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