TAX BASE

The Covington News - - Front page -

Ev­ery res­i­dent uses at least one of th­ese ser­vices, whether di­rectly by hav­ing a child, or in­di­rectly through the neigh­bor­hood po­lice pa­trols. To pay for th­ese ser­vices res­i­dents and busi­nesses pay a va­ri­ety of fees and taxes.

Wa­ter and sewer tap fees, busi­ness li­cense fees, sales tax, mo­tor ve­hi­cle taxes and prop­erty taxes. Taxes are uni­ver­sally un­pop­u­lar and res­i­dents gen­er­ally be­lieve their tax rates are too high. How­ever, the num­bers say the tax rates could be even higher.

For ev­ery $1 a New­ton County res­i­dent pays in taxes, his lo­cal gov­ern­ment spends around $1.15 to pro­vide ser­vices. The county loses money on the av­er­age home. In a na­tion­wide study of 90 com­mu­ni­ties, not a sin­gle com­mu­nity’s res­i­den­tial tax base was self-sup­port­ing.

“The ob­vi­ous con­clu­sion (sic) is that bed­room com­mu­ni­ties are not eco­nom­i­cally sus­tain­able at tax rates that are likely to be levied,” said Uni­ver­sity of Ge­or­gia Pro­fes­sor Jef­frey Dorf­man, a land use ex­pert.

Based on the lat­est avail­able fig­ures from the U.S. Cen­sus Bureau, New­ton County’s av­er­age home value was $153,500. This num­ber is likely over­stated in to­day’s mar­ket, but that sim­ply means res­i­dences are cov­er­ing an even smaller per­cent­age of their costs.

In 2010, a county res­i­dent liv­ing in a me­di­an­priced home, who re­ceived a homestead ex­emp­tion would pay $1,823.40 in taxes, ac­cord­ing to Tax Com­mis­sioner Bar­bara Din­gler. Based on the ra­tio of taxes to ser­vices that res­i­dent would cost nearly $2,096 to ser­vice.

If taxes were higher, res­i­dent’s homes would pay for them­selves. Res­i­dents, and lo­cal politi­cians by ex­ten­sion, loathe tax in­creases. There­fore, an al­ter­na­tive pay struc­ture must be found. taxes, it uses 28 cents in ser­vices. That re­sults in a hefty profit for the county, es­pe­cially when you con­sider the fact the largest in­dus­tries, like C.R. Bard Gen­eral Mills and SKC pro­vide mil­lions in taxes.

In­dus­tries ac­tu­ally use even less than 28 cents in ser­vices. That is the com­bined fig­ure for com­mer­cial and in­dus­trial users.

“In­dus­trial would be more fa­vor­able, of­fice would be in the mid­dle, and re­tail would be the least fa­vor­able of the busi­ness cat­e­gory,” Dorf­man said in an e-mail.

The rea­son is that busi­nesses in gen­eral, but in­dus­tries in par­tic­u­lar, very rarely use ser­vices and re­quire very lit­tle from the gov­ern­ment.

“They don’t need an­i­mal ser­vices. They re­quire lit­tle law en­force­ment costs. Po­lice aren’t vis­it­ing the plants and serv­ing war­rants and ar­rest­ing folks,” said Danny Stone, man­ager of eco­nomic de­vel­op­ment for Snap­ping Shoals EMC.

How­ever, some in­dus­tries re­quire a lot of up­front in­fra­struc­ture in­vest­ment, which likely off­sets some of those gains, at least in the early years.

The largest in­dus­tries which have to­tal prop­erty and equip­ment val­ues of more than $20 mil­lion, reg­u­larly con­trib­ute be­tween $240,000 and $320,000 of profit to the tax base, which can sub­si­dize the taxes for hun­dreds of homes. They’re not only taxed on the mil­lions of dol­lars worth of prop­erty they own, but also on their ex­pen­sive equip­ment, in­ven­tory and cor­po­rate jets.

That sub­si­diza­tion is par­tic­u­larly im­por­tant for the county, which has about 70 per­cent of its taxes paid by res­i­dents and only 20 per­cent cov­ered by com­mer­cial and in­dus­trial pay­ers. Not only is the city of Cov­ing­ton’s tax base more bal­anced, since nearly all of the in­dus­tries are lo­cated in the city lim­its, but the city also sub­si­dizes prop­erty taxes through the sales of elec­tric­ity and gas.

Over the past two decades, as res­i­dents poured into the west­ern end of the county, the cost of do­ing busi­ness has con­tin­ued to in­crease. How­ever, for years prop­erty val­ues were sky­rock­et­ing even faster than pop­u­la­tion num­bers and, there­fore, the county’s cof­fers re­mained full.

As the fall­out from the sub­prime mort­gage cri­sis occurred, res­i­den­tial val­ues and tax rev­enues plum­meted. Here’s where the un­bal­anced tax base be­comes so im­por­tant; in­dus­tries are more sta­ble and their prop­erty val­ues are more im­mune to large de­creases. Not many in­dus­trial prop­er­ties are be­ing sold at fore­clo­sure auc­tions.

The lack of tax base bal­ance ex­plains part of the rea­son why the county and school sys­tem are slash­ing mil­lions in ex­pen­di­tures and be­ing forced to cut per­son­nel.

Ob­vi­ously houses aren’t a bad thing, but sprawl­ing res­i­den­tial de­vel­op­ment is harm­ful. In gen­eral, con­cen­trated growth and very dense com­mu­ni­ties mean less in­fra­struc­ture, fewer pub­lic safety of­fi­cials and lower costs.

The most ob­vi­ous and di­rect ben­e­fit of in­dus­tries is in the hun­dreds of jobs they pro­vide. Rang­ing from C.R. Bard, which in the past has em­ployed more than 500 work­ers, to smaller in­dus­tries which em­ploy a dozen or fewer work­ers, in­dus­tries pro­vide jobs.

While small busi­nesses are and will con­tinue to be the largest em­ploy­ers in the U.S., in­dus­tries em­ploy their fair share and are much more sta­ble. Ac­cord­ing to the Cov­ing­tonNew­ton County Cham­ber of Com­merce, man­u­fac­tur­ers em­ploy 4,147 work­ers.

In gen­eral terms, th­ese em­ploy­ees earn higher wages than their re­tail coun­ter­parts and, there­fore, in­crease the ex­pend­able in­come level in the county. Earn­ing wages of $20 per hour al­lows em­ploy­ees to make more pur­chases, which in­creases sales tax rev­enue and also makes a county more at­trac­tive to fu­ture re­tail, some­thing New­ton County is lack­ing. It’s a pos­i­tive eco­nomic chain re­ac­tion.

Fi­nally, in­dus­tries are among the most in­volved or­ga­ni­za­tions in the county. They do­nate hun­dreds of thou­sands to groups like New­ton County Recre­ation, the United Way and the YMCA. Their em­ploy­ees par­tic­i­pate in non-prof­its through­out the county.

“You look at how in­volved they are through their var­i­ous func­tions. They’re in­stru­men­tal in the United Way’s fundraiser, and they’ll be a big part of mak­ing the Mir­a­cle League field a re­al­ity,” Stone said.

Eight New­ton County in­dus­tries were nom­i­nated this year for Ge­or­gia’s Man­u­fac­turer of the Year award: Beaver Man­u­fac­tur­ing, Cla­iron Met­als Cor­po­ra­tion, FiberVi­sion, Gen­eral Mills, Nis­sh­inbo, Pac­tiv, SKC and Tread Tech­nolo­gies.

When many res­i­dents think of in­dus­try, they may re­vert back to his­tor­i­cal stereotypes — large smoke stacks, un­pleas­ant odors and gen­er­ally poor con­di­tions. But, the Cham­ber’s Eco­nomic De­vel­op­ment Di­rec­tor Shan­non Davis said to­day’s in­dus­tries are much dif­fer­ent.

“The ma­jor­ity of our in­dus­tries to­day are clean, high-tech, clean and green. They’re ad­vanced man­u­fac­tur­ers that are among the leaders in their fields,” Davis said.

For all of those rea­sons, past and present leaders have con­tin­u­ally sought out in­dus­try. It all be­gan with Cov­ing­ton Mayor Walker Har­ris, who was the driv­ing force be­hind the county’s first big in­dus­tries in the late 1960s: Her­cules, Mo­bil Chem­i­cal Com­pany, Bard Uro­log­i­cal Divi­sion and Cov­ing­ton Mould­ing Com­pany. The trend was con­tin­ued by Mayor Bill Dobbs and County Chair­man Roy Varner who con­tin­ued to make the county a leader in at­tract­ing in­dus­try through­out the 1970s and 80s.

And al­though the econ­omy is reel­ing, to­day’s leaders rec­og­nize the im­por­tance of con­tin­u­ing to seek large in­dus­try. With all of the ben­e­fits above, it’s not hard to see why.

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