Expanding the tax base and economic development are solutions thrown around by candidates in West St. Paul. That’s all well and good, but sometimes they act like it’s a cure all. To get the kind of revenue we need, expanding the tax base can only do so much.
“I think we all know that we have to bring economic development to West St. Paul. That’s not some top secret thing nobody knows about and that nobody has ever heard of. It has to be done, or else we’re going to turn to Little House on the Prairie or something and there won’t be any businesses here. We have to do that, checkmark, everyone knows that.”
Some of the other candidates seem to focus on economic development and expanding the tax base as the sole approach to bringing in more revenue and helping us tackle our budget challenges. Those same candidates don’t seem to be fans of the proposed sales tax (though most seem to agree that they’ll follow the will of the voters).
So let’s do a comparison, just to get an idea of impact (because it’s not a binary choice).
How much would we need to expand our tax base with economic development to equal the $1.3 million the proposed sales tax is estimated to bring in?
Julie Eastman asked this question of City Manager Ryan Schroeder at the Optimists’ Club forum. Schroeder’s response:
“It’d be a pile.”
Schroeder later followed up with Eastman and provided a more detailed answer:
“In order to generate $1.3 million in property tax revenue to the City of West St. Paul we would need $93 million more in taxable commercial value than we have at present. That is the equivalent of just over 8 additional Target stores or just over 54 Walgreen’s. From a residential perspective we would need to create 619 additional $300,000 homes. I’m assuming a 0.70 tax rate for the math.”
I’m not great at math or city economics (which is why it’s nice to have the city manager weigh in), but that seems like a tall order. Based on info from the city, by my count we’ve seen 17 new businesses in or going in along Robert Street in the past two years. The city-wide number is likely bigger, but not that much.
Let me be clear: I’m not suggesting we don’t want economic development or we don’t want to expand the tax base.
But for it to make a significant impact, it would have to be massive. We just don’t have that much available space in West St. Paul.
We should be pursuing economic development (and we are, have you looked around lately?), but we’re going to need more than that if we want nice roads and parks and all the things we expect from our city.
That’s why I support the sales tax. It’s also why I support candidates who talk about more than economic development. It’s important, sure, but it’s not the only thing.
Note: I want to thank Julie Eastman for asking this question and prompting some deeper discussion about the rhetoric of this election season. I pondered this question myself, but I’m no expert and wasn’t sure how to articulate it. This may only be a first step, it’s a complicated issue, but I think this is a lot more clarity than the vague “economic development.” And that’s something.