The fiscalization of land use 

The job of any mayor or township trustee who wants to be re-elected is to provide the best possible services to his or her constituents while keeping tax rates low. The way to do this is to build the community's tax base, especially by attracting commercial and industrial land uses that pay more in taxes than they consume in services (residential development can be a net loser because of the high costs of schooling children and meeting other service demands). 

When all communities in a region like Northeast Ohio independently seek to maximize their tax base, a number of problems arise: 

• Accelerated outmigration: New communities at the edge of the metro area are under pressure to build their tax base, so they encourage the migration of development from older communities. In a slow-growth region like Northeast Ohio, this can be a zero-sum game where new developments (like shopping centers) cannibalize old. This widens fiscal disparities, as new communities grow wealthier at the expense of older communities.
• Competition rather than cooperation: In a fragmented region, there's little incentive to cooperate for the greater good. The region struggles to achieve more unified, "all for one and one for all" voice when pursuing economic development.
• Distorted land use: Some communities, such as those with a lot of environmentally sensitive land, are pressured to develop at greater intensity than they should. There are costs to whole region when development doesn't happen in the most suitable places.

Regional tax sharing can help to reduce these problems by allowing all communities to benefit from growth anywhere in the region. Recently, there have been some encouraging signs that elected officials in Northeast Ohio are thinking about the benefits of sharing taxes. Cleveland and Independence, for example, are going to share income taxes from the Cavaliers basketball team, which is planning a new practice facility in Independence. The mayor of Hudson is talking about sharing property tax base with neighboring Twinsburg and Stow. And Akron has developed a number of joint economic development districts with surrounding communities to share the benefits of growth.

But, in a regional economy, the sharing really should be done at a larger, multi-county scale. The following links provide more information about how that could happen, focusing on the nation's best example of regional tax-base sharing in Minnesota.

Regional revenue study

May 2008 — The Northeast Ohio Mayors and City Managers Association voted to move forward with a $1 million second pahse of a study of how to implement a land-use planning and revenue sharing system for the 16-county region. The goal of the Regional Economic Revenue Study is to increase economic growth in a way that benefits all communities and promotes greater regional cooperation.

In the next year, the mayors will take some major steps:

• Work out the details of a formula for regional tax revenue sharing.
• Ask the planning agencies in the region to report on how to coordinate land-use planning.
• Ask water and sewer districts to report on how to create integrated, regional systems.
• Request new state incentives and changes in the boundaries of state departments.
• Obtain state enabling legislation.

Here are links to details and more explanation of the plans:

Website for revenue study
Summary of findings and direction moving forward

Other resources
Overview of regional tax sharing
The Minnesota model: History and outcomes 
Studies on regional growth patterns and tax base disparities