Fees In Lieu Of Taxes - March, 30 2010
Columbia has been blessed with many federal, state and local government headquarters that have provided jobs and a stable economy. It has also been blessed with many colleges, universities and other schools along with the headquarters of many non-profits that employ our citizens. These establishments have definitely provided stability for our economy in unstable times. But they also have created a liability to our growth and development.
66% of our city property pays no property tax: governments, colleges, churches, and other non-profits. This means that 34% of our properties pay 100% of the bill for all services. In other words, the owner of any 50x100-ft lot pays tax on that and two more exactly like it. This undue burden has created the highest rate of property taxes in the state, and is causing businesses and residents to flee, mostly to across the river, where they can easily still access the city for all it offers. This is obvious when you note the empty storefronts and buildings along every one of our roads.
What is the real benefit to moving? A business that was located on Huger St. paid $28,000 a year in property tax. The owner moved the business a mile across the river to Sunset Blvd., built a new building and is now paying $6,000 a year, a considerable savings. Many businesses are contemplating such a move, while others are already committed to doing so.
Residents are finding strong appeal to moving outside of Columbia, as well. Not only is property tax less, but the school systems are rated better than Richland 1, which has some of the most poorly rated schools in SC.
Behind water and sewer fees, property taxes and business license fees are our greatest income sources. If the flight of business and residents continues to escalate, our revenues will continue to drop, forcing Columbia to further reduce services, including critical services such as police and fire, or increase taxes and other charges to both businesses and residents.
How do we stem this tide? And how can we increase revenue to meet adequate levels of vital services? Fees in lieu of taxes. Since we cannot tax the 66% of property that receives free services paid for by 34% of the taxpayers, we can, at the very least, allow those 66% to contribute their fair share through fees for services provided.
A simplistic example: Ms. Jones pays $900 for the fire service component of her property tax. Since 66% of properties do not pay for fire service, Ms. Jones is paying 3 times more than she actually costs. Her true cost is $300, but she must pay for the other two-thirds that are not contributing; hence, $900. Suppose Columbia instead institutes a fee for fire service, and reduces Ms. Jones’ fee by half, to $450. It then allows the non-taxable properties to contribute $450 each for their protection. We have now reduced the current taxpayer’s burden by half while adding 50% more to current revenue for fire and other services.
What happens if we do not take this action? As we clearly see, people and businesses are leaving our city limits, reducing our revenues and drastically straining our budget. Columbia was forced to temporarily close two fire stations to restore the budget. Reducing fire protection increases property insurance as the rating services understand that slower response to fires causes greater property loss and higher claims. Insurance premiums increase as a result and, with greater loss of personal and real property, a double whammy occurs for both taxable and non-taxable properties. With slower response and older equipment that is not up to standards, everyone, non-taxables included, will pay far more in insurance costs and real losses than they would in contributing to the health and vitality of Columbia services.
Fees in lieu of taxes can help realize the vision of a growing, prosperous Columbia without the need to cause more urban sprawl through annexation, water and sewer fee increases, property tax increases, or other fee and tax increases. Fees in lieu of taxes will reduce property taxes to a fair level that will not discourage businesses from locating in Columbia nor would it encourage current businesses to escape. Fees in lieu of taxes allows a fair share to all, without placing an undue burden upon a few.
We must develop commonsense, realistic solutions to Columbia’s problems. Fees in lieu of taxes are one. As your mayor, I will create solutions that benefit growth and development while protecting all citizens from undue burden. I have four decades of business experience, creating solutions that grow and develop business, create jobs and wealth. This is the experience and knowledge that I, Joseph Azar, will bring to Columbia to create a vital, growing and dynamic city!