Excise tax report comes up short on needed funds

October 11, 2007

On Tuesday, the Washington County Commissioners received an eagerly awaited report from the task force working on revisions to the excise tax, most of which funds school construction.

The task force's draft eliminates some loopholes and instead of a flat fee on new residential construction, it substitutes a $2-per-square-foot charge.

The only problem, according to Commissioner James Kercheval, is that at the $2 rate, the tax would generate less than the present formula does.

Commissioners President John Barr said he favors the $2 rate, saying that it would encourage more people to build homes here. In essence, Barr is proposing that the county make up for the lower rate by increasing the number of homes built.


We have two problems with that argument. The first and most obvious is that the more houses that are built, the more students will be sent to schools that are now overcrowded.

Because school construction usually lags behind the need, it would be difficult, if not impossible, for the county to ever catch up.

Our second concern about Barr's argument is that if getting a decent amount of excise tax revenue depends on approving more homes, wouldn't planners be under pressure to OK more than might be wise for some tracts?

Washington County residents have heard a version of this argument for many years - that new homes would bring new taxes and that everything would work out just fine.

What no one promoting that idea said was that residential growth seldom covers the costs that serving it requires, particularly when it comes to schools.

The commissioners must ensure that, as much as possible, new residential construction yields a fair share of excise tax revenues. Betting on volume to make up the difference is a long shot, given the current housing market.

The commissioners also might want to look at the task force's proposal to eliminate the fee schedule for differing types of non-residential construction and replace it with a flat fee of 75 cents per square foot.

Is that enough? Would a higher fee deter economic development? Should the schedule be set up to encourage one type of non-residential construction - a lower fee for manufacturing, perhaps?

These are some of the questions the commissioners should ask while they review his proposal.

And when they complete their review and make their decision, they need to assure existing taxpayers that the members of the county board have done all they could to keep the burden of growth - and its costs - from falling too heavily on local residents' shoulders.

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