favors tax-sharing plan
By Jeff Gallatin
Published Nov. 8, 2006
Debbie Sutherland is asking her city team to buy into a plan for
sharing income taxes with other Cuyahoga County communities when
businesses move from one city to another in the county.
Sutherland, who is also president of the Cuyahoga
County Mayors and Managers Association, sent a Nov. 1 memo to the
Bay Village City Council and members of her administration asking
them to support discussion of and passing a resolution of support
for principles advocating sharing the income taxes when the businesses
move within the county. The memo came a few days after the 57-member
Mayors and Managers Association approved Tax Revenue Sharing Principles,
which would support having both the community getting the business
and the one losing it share the taxes for up to five years.
Sutherland said having county cities approve such
an arrangement would benefit all communities in the long run.
“One of the glaring challenges that became very apparent
early in the discussions was how to coordinate a focused effort
on business attraction when so many communities war among themselves
and trade businesses through incentives,” Sutherland said in her
memo. “The net result is that we all lose, and that certainly does
not benefit our region.”
Sutherland said later in the week that she is only
asking Bay officials and other communities ultimately to share the
income tax from the business moves.
“I want to emphasize that its only for those moves
- we certainly would not be sharing our other income taxes or asking
other cities to do that,” Sutherland said. “We’ve been working hard
as a group in the Mayors Association and with other county groups
to try and find ways of stopping communities from poaching businesses
from each other. It’s counterproductive and wastes resources and
energy in all our communities.”
She said the Mayors and Managers Association and the
other groups have worked for close to a year on the principles to
come up with a viable plan which would serve all the communities
“The principles … will serve as the basis underlying
future agreements that may be regional in nature. Only by truly
working together can we strengthen this region – preserving and
protecting our communities, schools and the livelihoods of our residents,”
Sutherland said in the memo. “As you can see from the principles,
the probability that the parameters in Bay Village would ever trigger
an opportunity to share with another community is minute. As president
of the association and one of the architects of the principles,
I strongly believe that this is the right thing to do for our region.”
In the principles approved by the association: tax
sharing applies to the jobs in existence immediately prior to the
move; tax sharing does not apply to new jobs created at the new
site and it does not apply when the payroll being moved is less
than $500,000 in gross salaries.
Sharing terminates at the earlier of two dates: five
years after the move, or when the original host city “back-fills”
space at the same payroll value with a similar end-user; provided
that A. if the user who moved the jobs adds equivalent new payroll
in the original host city, jobs qualify as backfill and B. if a
new user fills only part of the vacated space with jobs and payroll
of lesser quality, that partial payroll will be deducted from the
tax sharing. Tax sharing is a concept based not on poaching, but
on an integral part of all business moves within the county.
Sutherland said she plans to discuss the principles
with city officials in more detail later this month.
Council President Brian Cruse said the plan has merit.
“It’s just another sign of the growing importance
regionalism is going to have for the area,” Cruse said. “We all
have to work together to try and survive. This is something I believe
would be good for Bay and for other communities.”
Cruse said it’s likely council will consider the resolution
by the end of the year.
Westlake Mayor Dennis Clough, who abstained in the
vote at the Mayors and Managers Association meeting, said the abstention
was due to concerns about Westlake being raided by Lorain County
“It’s a good idea for Cuyahoga County communities.
I’m supportive of working with other communities from there,”
He said Westlake traditionally has not used many incentives
to draw other businesses into the city.
“We’ve done a good job of attracting businesses with
our balance of residential and commercial and a good business climate,”
He said the city has only used incentives on a limited
basis after the threat of losing businesses to Lorain County became
Clough said it’s likely the city will consider anti-poaching
legislation in the future as well.