Tuesday, December 19, 2006

Regional Answers Demand Regional Taxes

It’s a tale of two cities, and only a short drive is needed to come face-to-face with the telling.

In Nashville, the drive takes you to Williamson County, the 11th wealthiest county in the U.S. with a median family income that’s a staggering $95,470. Four nearby counties shatter the $55,000 mark. Outside of Fulton County, Atlanta has five counties with median family incomes of more than $60,000, peaking with Fayette County’s $85,794 and Cobb County’s $77,447. In Indianapolis, Marion County gives way to Hamilton County and its $90,119 median family income. Three others top $55,000.

Here, things are different. The other counties in the Memphis metro do nothing to improve income and education levels, raising a red flag for companies evaluating the region for new operations and investments.

Wake-Up Call

Shelby County is ranked #200 in median family income, and in its MSA, only DeSoto County manages to eke over $50,000. Meanwhile, 19.2 percent of Shelby Countians do not have a high school degree and 25.3 percent have at least 16 years of education. That compares to 26.3 percent and 12.4 percent respectively for the other metro counties.

It’s a troubling reality, particularly in light of a decade’s worth of talk about the importance of the region.

It’s been five years since the Memphis Regional Chamber released the Memphis Region Sourcebook, the product of more than two years of work and costing almost $500,000. Intended to give form to the Governors’ Alliance on Regional Excellence, the unique tri-state organization cheerleading the report, its 27 oversized pages of gripping graphics, key facts, an inventory of assets, and recommendations are artifacts of a flirtation with regional thinking.

It's About Shared Reponsbilities (And Taxes)

It’s too bad, because the report went to great lengths to identify opportunities for the region to learn how to work together on issues every one should care about – air and water quality, farmland preservation, heritage tourism, transportation, and workforce development. It was always hoped that the experience on these issues would inspire confidence to tackle the really tough ones - think taxes.

More and more, some kind of regional tax pooling makes sense here. Without it, it is inevitable that Memphis and Shelby County will be forced to take unilateral action like a payroll tax on the 88,000 people who commute into Shelby County. Despite all conventional wisdom to the contrary, cities like Portland, Minneapolis, and Denver have actually used regional taxes as a way to unify their regions, and here, it could delight commuters by taking the payroll tax off the table as an option for city and county governments’ ailing finances.

The existing tax structure is outdated and unfair, treating each jurisdiction as if it is self-contained and its interests are walled off from its neighbors. There’s no connection between who uses roads, arenas, and museums, and who pays for them.

Fighting Over The Pie

With no rationality and no imperative for regional cooperation, multiple jurisdictions claw for more of a finite tax pie, as Collierville did in pursuing a huge shopping center to get the huge sales taxes that came with it, and in the process, fueling sprawl and commercial zoning designed to create optimal taxes, rather than the optimal community.

In Minneapolis, where the suburbs subsidized the central cities 30 years ago, it reversed when older suburbs were in decline and needed help. Governments put 40 percent of the growth of their commercial and industrial property tax base into a regional pool, and from it, several hundred million dollars a year are redistributed on regionwide priorities like public transit and light rail, parkland, water quality, and smart growth.

In Portland, a three-county, 24-city regional agency makes land use and transportation decisions and helps pay for regional services like the convention center, performing arts center, stadium, exposition center and regional parks. In Denver, seven counties and 31 cities agreed to a regionwide sales tax to pay for light rail.

Acting Differently

The Mid-South has the muscle to get it done. The Sourcebook called for creation of the Regional Congressional Caucus, which would take advantage of the Mid-South’s six U.S. senators and six Congressmen inside the Beltway, and the Mid-South Legislative Caucus to fight for shared priorities in the capitals of Tennessee, Arkansas, and Mississippi.

Challenges to the Memphis region are no respecters of state or county lines – an aging workforce, too few 25-34 year-old workers, low educational attainment, racial divisions, and unsustainable sprawl. Sadly, there’s a sense in the region outside Memphis that if the future of the city is about a middle class exodus, entrenched poverty, and hollowed out, deteriorating neighborhoods, that is Memphis’ problem, not theirs.

It’s what psychiatrists call “magical thinking” with little connection to reality. There’s nothing magical about the fact that regions are the competitive units for the new economy, and without a stronger regional platform, any economic growth plans for any part of the region are in jeopardy before they even begin.


Anonymous said...

Dear Smart:
If the metro counties around Nashville, Indianapolis and Atlanta have higher incomes than the central city, shared taxes would be logical. (Indianapolis and Nashville are consolidated governments and already have shared taxes to some extent).

However, if the counties around Memphis are not much better off financially, then what is the point of shared taxes.

Further, to get 3 state legislatures to do what Minnesota did for Minneapolis-St Paul metro is like attacking windmills. Maybe the cities and counties around Memphis could "adopt a neighborhood" in Memphis, like the "adopt a school" program?

Smart City Consulting said...

Tax sharing in most cities isn't based on incomes, so they don't play into regional strategies in a particularly strong way. It's about the responsibility for taxes being aligned with those who use the services of Memphis. Indianapolis is not truly a classic consolidated government, and as a result, it's never really had the regional clout of some, and Nashville is just beginning to experiment with things like light rail that benefit from regional tax sources. We envy the imagination that its MPO has shown in pursuing solutions Here, we rest our public services on the old government models of taxing a finite group more and more. The future requires regional cooperation, regional solutions, and as a result, regional tax-sharing. If we could only get Mississippi and Tennessee legislatures to act, that would be a start, and we are unwilling to rule it out without anyone even trying. More than one-third of all metro areas in the country cross state lines, but here, we act like it paralyzes us from doing anything. Unfortunately, the tendency to act like we are different that we can't do anything is prevalent here, but when you strip away the old mythology, we're essentially no different from many cities who are figuring ways to succeed in new thinking. And for our money, the region should adopt a Memphis neighborhood. After all, it was subsidizing their sprawl that hollowed out so many of them in the first place. Thanks for your comments.