The Republic Masthead

EDITORIAL: Special use taxes too tempting for officials


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IT’S likely that a few eyebrows were raised among readers of a recent story in The Republic about how local governments are spending revenues generated from an economic development income tax.

The most common reaction, however, appears to be a collective shrug of the shoulders, coupled with the rhetorical question, “What else would you expect?”

Taxpayers have become accustomed to the kind of creative bookkeeping that most local government units have employed simply to stay solvent and provide basic services.

Ostensibly the economic development tax was intended to assist local governments in creating long-term job opportunities. In that respect the effort should be in attracting new companies and helping existing companies grow. Local units have stretched those intentions pretty far in their spending plans.

The city of Columbus, for instance, has used the bulk of its $2.5 million annual allocation for road and building maintenance, purchasing police cars and funding maintenance of The Commons.

Seymour has been able to pay for health insurance for city employees, and Jackson County has allocated most of its share to pay the lease on the county jail.

Indeed, many of these special use taxes and fees have been used as life preservers by cash-strapped governments. Had the money not been available, the city of Columbus, for instance, would have fallen even further behind in maintaining streets.

In some respects the use of these tax revenues is appropriate in that good roads are a selling point in attracting investment and keeping existing businesses happy.

On the other hand, there already is a special use tax that is supposed to provide for road maintenance and repair — the fuel taxes that have obviously not been enough to keep up with demands.

While some of these special use taxes have been used in a manner that stretches beyond many imaginations, the unusual approaches are far from uncommon.

One of the most creative uses of revenue streams was the telecommunications fund, which was fueled by franchise fees paid by local cable television companies. At its inception, a committee of local officials and volunteers established a formula by which revenues were to be used only to develop public access opportunities. While well-intentioned at the time, the fund turned out to be a grab bag for an assorted number of projects, one being the purchase of advertisements to promote Ethnic Expo.

The bed tax assessed on local hotels was supposed to promote tourism, but there have been some unusual uses of that money throughout the years, such as the appropriation of $25,000 by the county to use as its share in the funding of the Mill Race Park project in the early 1990s.

While county officials suggested that the project would increase tourism, critics suggested it was a last-minute gesture to avoid embarrassment about the initial withdrawal of the money from the general fund and the plan to replenish it by reducing the welfare budget by the same amount.

In many cases, local officials have few options when it comes to financing basic needs on existing budget.

Unfortunately, using the option of these special use taxes has stretched the interpretation of their intent and increased cynicism among taxpayers.

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