Sutherland favors tax-sharing plan
By Jeff Gallatin
Bay Village
Published Nov. 8, 2006

Mayor 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 well.

“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 communities.

“It’s a good idea for Cuyahoga County communities. I’m supportive of  working with other communities from there,” Clough said.

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,” Clough said.

He said the city has only used incentives on a limited basis after the threat of losing businesses to Lorain County became more prevalent.

Clough said it’s likely the city will consider anti-poaching legislation in the future as well.