Services, Taxes and the Figures


June 26, 1994|By MIKE BURNS

There's a new study about the public costs and benefits of growth at the residential-business community of Riverside that tells us what we mostly already know.

To wit, business development generates more tax income than it requires in county services. And communities with fewer children in school are in a break-even situation, using as much in county services as they pay in.

The study by Legg Mason Realty Group, commissioned by BLC Properties, the development owner, concluded that business-industrial components of Riverside generated 2.5 times more in taxes than their demand for county services. (They produced even more of a surplus in the county's favor, but business personal property taxes were not included in the analysis.)

During the 1992-93 fiscal year, Riverside produced nearly $5.5 million in county property taxes, local income taxes and county fees. Subtracting the calculated county expenditures for the community, the surplus was about $1.1 million for Harford County, the study found.

Riverside's economic contribution to the county has been abundantly obvious, even without this fiscal impact analysis. (The study was previously done annually by Harford Community College for developer Bata Land Company, now BLC, but had been discontinued for several years.)

Planned two decades ago, Riverside incorporated the business park as part of the large residential development, reflecting the historical philosophy of integrated work-living communities promoted by the worldwide Bata Shoe organization.

The planned community along U.S. 40 includes the county's largest industrial development. More than 2,100 people work there, generating payrolls of some $52 million, and the assessable tax base of the land is $93 million.

And yet . . . had the number of school-age children among those 1,700 Riverside households increased by 50 percent (to a ratio that exists in some other Harford communities), the tax revenue surplus would have been wiped out. Legg Mason counted 751 pupils living there, and multiplied by the average $2,507 spent per student that year.

Such is the powerful budgetary lever of the public education system. And if Harford had spent what Montgomery County spent per child on schools, the tax surplus for Riverside would have turned into a deficit.

And had Riverside reached its original goal of nearly double the number of homes now in that development, the balance would also have been heavily tipped into deficit.

In general, every residence demands more in county services than it pays in taxes. The one-time revenues of home construction are soon overtaken by the public expenditures for servicing those residents.

The Riverside study, while useful in its own way, reminds us of the way in which we conduct our economic debates. The controversies are not so much over the basic figures, but over which figures should be considered and how they are massaged and interpreted.

An ongoing example is the battle between Maryland's administration and Money magazine over public spending and taxation. That was the periodical that dubbed Gov. William Donald Schaefer "the Prince of Perks" for the estimated $2.3 million in perquisites attached to the Maryland job, even though Mr. Schaefer didn't ask for and, in some cases, doesn't even use these appurtenances of the office. The magazine's point is that these perks are still made available at taxpayer expense.

The periodical also placed Maryland in the "tax hell" category for its tax rates. State officials protested that the magazine included "local" income taxes for Maryland but not for other jurisdictions. That increased Maryland's state income tax burden calculated by Money by about 50 percent.

On the other hand, most local jurisdictions in the U.S. don't impose a separate income tax on residents; every Maryland county does. And, it can be reasonably assumed, those other states use their state income tax revenues for more local allocations than does Maryland, which knows all its counties are directly collecting income tax revenues.

It depends on how you personally are bitten by the various taxes.

Individuals that make a lot of money but have a modest home may be more focused on income tax rates; those with limited income but a home that has significantly increased in value are more concerned with property tax rates and assessments. Those with limited income and modest housing are more affected by the sales tax.

Harford countians will have another go-round at weighing and sorting economic claims this year as they decide on the charter amendment question of whether to create a county police force RTC or keep law enforcement duties in the elected sheriff's office.

Supporters of the status quo, backed by the Maryland Sheriffs Association, calculate the cost for separating law enforcement duties from the sheriff will exceed $1 million for the first year. Advocates of creating the new police department figure the cost will be less than $300,000.

In between these two extremes are some costs that may not be necessary, some that will be needed regardless of which office is in charge, and some that have already been paid for.

In the end, voters will likely make their choice based on other factors, but they'll be sure to justify their position with the properly selected financial figures.

Mike Burns is The Baltimore Sun's editorial writer in Harford County.

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