Time is running short for decisions on a proposed property tax. The most pressing issue relates to getting the ballot language done and approved before May 25th – the date set by the state for being on the August ballot. Approving that language and getting the work done is the duty of the council – no one else is charged (or empowered) with that responsibility.
But as the council works to make those decisions, other complicated questions are surfacing. The one that is most challenging to me is the debate over what authority the council is given by the Missouri Constitution to levy an ad valorem tax.
It is becoming more and more evident to me that all municipalities across our state MAY HAVE the constitutional authority to levy a property tax up to $1.00 per $100 in assessed valuation (subject to the mysteries and possible restrictions of the Hancock Amendment). It also appears that municipalities may even be REQUIRED to set a levy sufficient to cover the principle and interest on outstanding bonds and other indebtedness if a municipality doesn’t set a levy by Sept 1 of each year.
At this point, I’ve got more questions than I have answers. I’m hopeful that many of those questions will be answered by officials in Jefferson City before May 25th.
For what it’s worth, I’d take comfort knowing your elected officials are asking these types of questions. It shows that your council takes their role and duties seriously. It also shows that they want to know ALL of the options available to them to deal with the financial situation at hand along with making sure the decisions they make are authorized by law.
I liked your quote from the Joplin Globe
ReplyDelete“I’m not suggesting we cut the police or fire departments, but it shows you that you can’t cut a few positions at City Hall or the parks department to make up that shortfall,” he said. “A cut that size would be devastating to the city of Neosho.”
I think the citizens of Neosho need to see what the ultimate alternative of voting "no" on the property tax really means most believe some cuts at city hall and not spending on more projects will solve our money troubles. I don't think people really see the big picture of how devastating voting no will be I as a property owner don't want to pay more taxes but also realize that voting no means a devastating outcome for the city. I too am upset about the spending that has taken place in the past but it is the past and we must move forward.
I would like to thank you for asking the questions and getting the answers, right now Neosho needs a mayor like you and we appreciate all that you have and will do for the city!
A question Richard, why did the economic develop commission recently approve property tax abatements to four local industries in Neosho. I realize the standard answer is going to be because they are adding 100 jobs to Neosho. I just feel it sends a mixed message to be speaking about the necessity of the property tax on page 1 of the globe and then forgiving industry for the future property tax on page 3.
ReplyDeleteNeosho, along with a number of other cities in Missouri, has an Enhanced Enterprise Zone. Any business in that zone that expands and creates jobs can receive tax abatement on the new investment for a period of time.
ReplyDeleteIn this case, four industries have announced plans to expand and create jobs. If that happens, they are eligible (by being in an EEZ), for temporary abatement on the expansion.
It's not unique to Neosho. It's not an abatement on any portion of their business that was already there...it's only a temporary abatement on the new investment.
The theory behind any EEZ is to attract investment and bring jobs. I've expanded my business twice in 13 years. The abatements were not the reason for the expansion, but every penny you can save is more money you can invest in equipment and people. You don't get rich of off them, but every bit helps.
For a $300,000 building (that's the value of the building I may build), the assessed value is $100,000 (33.3%). If the tax rate is $5 per $100, I'll save $5000 per year for 4-5 years. That's about 1.6% of the cost of the building.
Keep in mind, that abatement is only on expansions. If I decide NOT to build it, I get no abatement. My current property tax on my current building and equipment is unchanged regardless.
I also have to create jobs. So I save $5000 per year in taxes, but I'll be paying $50K-$75K a year in new salaries.
Hope that helps. Check out this link for more info on EEZ's:
http://www.missouridevelopment.org/topnavpages/Research%20Toolbox/BCS%20Programs/Enhanced%20Enterprise%20Zone.html
It seems to me that we the voters will not decide the fate of this tax. This post just shows us that they have found a way around us. Looks like the poll in the daily news is scaring them into forcing this on us. This council will show their true colors in the next few weeks. I guess its time to move out of town.
ReplyDeletewhy are we giving away our future (taxes they avoid paying so we make up the difference) to a Chinese company....Missouri Walnut...
ReplyDeletethe big boys just keep on collecting...let us hope the end of this giveaway is coming
Your explanation does explain how the EEZ's work, I don't dispute that at all. My issue is related to the fact that a significant push is being made for voter approval of property taxes because Neosho is financially in trouble. It makes no sense to me that when a city is needing the property tax so badly that they would turn around and forgive taxes for some business and industry. This also defeats the primary selling point that a property tax involves all citizens, business, and industry in the payment of debt.
ReplyDeleteI personally don't much care for the EEZ's because they have a tremendous impact on those tax districts that depend on property tax, (i.e. schools, road districts, etc.). A business creates jobs, creates more traffic, but is not investing anymore money toward educating the children that comes with those jobs or repairing roads that are traveled on. If one were to ask the school districts with the financial crunch they are facing, I think they would agree.
For me, I'll build the building if my business justifies it...EEZ or no EEZ. But you have to be careful. Some larger businesses take that into consideration. It's a fine line. Not having an EEZ could put Neosho at a competitive disadvantage in attracting new business against the 53 other EEZ's in Missouri (Joplin and Carthage included) or other states for that matter.
ReplyDeleteI'd rather see a business get some help if that means more jobs in Neosho. If I read the post right, you'll get $5,000K in savings by spending $300,000 for a building and $75,000 in wages. Don't see any "get rich quick" scheme there.
ReplyDeleteFor the record, I ran the exact numbers. At the current rate for all taxes on real property, my EEZ abatement would be $4602.40 on a new $300K building.
ReplyDeleteMy 2009 business property tax bill was just over $28,000. That bill would be unaffected by the EEZ.
And yes, I have to spend $300,000 and pay wages in the range of $75K a year in order to save $4602.40.
In the long run, all taxing entities would benefit because of the investment, but the abatement does impact them for the first few years. If that business were to move to Joplin instead, they would benefit -0- forever on that same investment.
One more comment: my business taxes will increase approx. $6500 if the full $1 is levied by the city. While I won't get a dime more for product I sell, I'm good with it for the sake of keeping Neosho solvent.
ReplyDelete