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Home My WebLink About012208 Blue Ribbon RevenueBlue Ribbon Tax, Fee and Blue Ribbon Tax, Fee and Spending Task Force Spending Task Force Report to City Council Report to City Council Revenue Committee Report Revenue Committee Report January 22, 2008 January 22, 2008 Members of Revenue Members of Revenue Subcommittee Subcommittee Robert C. Goodman, Jr. –Chairman Robert C. Goodman, Jr. –Chairman ? ? Rosemary Wilson –City Council Liaison Rosemary Wilson –City Council Liaison ? ? Terrie Suit –General Assembly Delegate Terrie Suit –General Assembly Delegate ? ? Frank Wagner –General Assembly Delegate Frank Wagner –General Assembly Delegate ? ? Chandler Scarborough –CCO Chandler Scarborough –CCO ? ? Frederick J. Napolitano –Citizen Frederick J. Napolitano –Citizen ? ? 2 2 There is There is ? ? “No Free Lunch” “No Free Lunch” 3 3 Purpose of Subcommittee Purpose of Subcommittee Determine whether City should continue Determine whether City should continue ? ? to rely on residential real estate taxes to to rely on residential real estate taxes to fund services fund services Provide revenue neutral alternatives that Provide revenue neutral alternatives that ? ? would permit a reduction in residential would permit a reduction in residential real estate taxes real estate taxes To examine other revenue sources in To examine other revenue sources in ? ? light of “guiding principles” light of “guiding principles” 4 4 FY 2008 City Revenues FY 2008 City Revenues Other Revenues, 10.4% Real Estate Taxes, General Sales Tax, 28.6% 3.2% Federal Revenues, 6.4% Personal Property Taxes, 8.0% Commonwealth Revenues, 28.7% Charges for Business License Services, 9.2% Tax, 2.6% Utility Tax, 2.9% 5 5 Each 1¢of Residential Real Estate Tax = $4.7 million Each 1¢of Residential Real Estate Tax = $4.7 million Guiding Principles Guiding Principles Need for fairness in the distribution of Need for fairness in the distribution of ? ? taxes/fees among various taxpayers taxes/fees among various taxpayers Recognize economic impact of current Recognize economic impact of current ? ? and proposed alternatives and proposed alternatives Identify consequences of proposed Identify consequences of proposed ? ? alternatives on neighborhoods & alternatives on neighborhoods & 6 6 taxpayers taxpayers Guiding Principles Guiding Principles (continued) (continued) Identify alternatives that have growth Identify alternatives that have growth ? ? potential linked to the economy potential linked to the economy Identify alternatives that minimize Identify alternatives that minimize ? ? administrative costs to collect administrative costs to collect Propose tax neutral solutions that can be Propose tax neutral solutions that can be ? ? used in conjunction with spending used in conjunction with spending 7 7 reductions reductions Committee’s Approach Committee’s Approach Look at major sources of revenue that Look at major sources of revenue that ? ? could support a significant reduction in could support a significant reduction in residential real estate tax rate residential real estate tax rate Look at other fees/taxes that there might Look at other fees/taxes that there might ? ? be a question of fairness and equity be a question of fairness and equity Examine economic development as a Examine economic development as a ? ? partial solution partial solution Identify where changes in State Law are Identify where changes in State Law are ? ? needed needed 8 8 Options considered Options considered Do nothing Do nothing ? ? Lower residential real estate tax rates Lower residential real estate tax rates ? ? and substitute a revenue source on a and substitute a revenue source on a revenue neutral basis: revenue neutral basis: –request the General Assembly to provide –request the General Assembly to provide local options for one or more of the local options for one or more of the following: following: 1% local income tax –could lower real estate 1% local income tax –could lower real estate ? ? taxes by 15 cents taxes by 15 cents 1% local sales tax –could lower real estate taxes 1% local sales tax –could lower real estate taxes ? ? by 11 cents by 11 cents 9 9 Options considered Options considered (continued) (continued) –Use existing authority –Use existing authority Personal Property tax –moving to the regional Personal Property tax –moving to the regional ? ? average could lower real estate by 4 cents average could lower real estate by 4 cents Garbage fees –$18 per month could lower real Garbage fees –$18 per month could lower real ? ? estate by 6 cents per month estate by 6 cents per month Examine other fees and taxes Examine other fees and taxes ? ? Invest in Economic Development –could Invest in Economic Development –could ? ? grow the economy and reduce the grow the economy and reduce the reliance on real estate taxes reliance on real estate taxes 10 10 Recommendations Recommendations 8.1 Regardless of the passage of the 8.1 Regardless of the passage of the ? ? homestead provision, City Council homestead provision, City Council should consider options to lower the should consider options to lower the real estate tax rate real estate tax rate –Support some offset in real estate –Support some offset in real estate through lowering expenditures through lowering expenditures –Pursue General Assembly authority to –Pursue General Assembly authority to have a local income tax or sales tax to have a local income tax or sales tax to generate revenue to allow reduction generate revenue to allow reduction 11 11 Recommendations Recommendations (continued) (continued) 8.2 Do not adopt the Homestead 8.2 Do not adopt the Homestead ? ? Provision without identifying a strategy to Provision without identifying a strategy to address –either expenditure reductions address –either expenditure reductions or off-setting revenues or off-setting revenues 8.3 Consider surplus property for sale for 8.3 Consider surplus property for sale for ? ? capital investments capital investments 12 12 Recommendations Recommendations (continued) (continued) 8.4 Where there are equity issues 8.4 Where there are equity issues ? ? identified by the Committee, the Council identified by the Committee, the Council needs to consider making those revenue needs to consider making those revenue adjustments adjustments 8.5 That fees be adjusted at least 8.5 That fees be adjusted at least ? ? biennially for inflation to ensure cost biennially for inflation to ensure cost recovery recovery 13 13 Recommendations Recommendations (continued) (continued) 8.6 That the City 8.6 That the City ? ? continue strong efforts continue strong efforts to stimulate continued to stimulate continued economic growth economic growth –Work with strategic –Work with strategic partners partners –Identify needed assets: –Identify needed assets: transportation & land & transportation & land & buildings buildings –Use first rate advisors in –Use first rate advisors in analysis and negotiation analysis and negotiation of investment of investment opportunities opportunities 14 14 Conclusions Conclusions There is “no free lunch” There is “no free lunch” ? ? 15 15 Conclusions Conclusions There are definitely trust issues that There are definitely trust issues that ? ? need to be addressed need to be addressed 16 16 Conclusions Conclusions Implementation of this report will take Implementation of this report will take ? ? –time, –time, –energy, –energy, –and leadership! –and leadership! 17 17 Conclusions Conclusions Invest in the future! Invest in the future! ? ? 18 18 The Choice is Yours The Choice is Yours Lower Residential Do Nothing Real Estate Taxes 19 19