Residential Impact
There seems to be some confusion about taxes, revenue, and housing. Recently, a supporter of a rezoning request argued that the proposed new houses would be a tax benefit to Shenandoah County. Oh how mistaken they were!
It’s been shown over and over again, residential land use consistently costs county governments more than the homes provide in taxes. Residences are a net negative. Balanced budgets are reached with this shortfall being supplemented by taxes from business, industry, open land, and farmland.
There’s a belief that since real estate pays taxes, and house lots pay higher tax, residences are good for government revenue. Far from it; residences demand more than they provide.
STUDIES AND PROOF
Founded by people concerned about the rapid loss of farmland to development, American Farmland Trust (AFT) is an interest group for protecting farmland. In 1986 AFT pioneered the Cost of Community Services study; their methods are still the most widely used.
As economic studies go, AFT’s methods are simple. Local government revenue records are collected and assigned to land use categories, then the same is done with expenditures. Categories are then analyzed and revenue-to-expense ratios are calculated; and results are expressed as a ratio of revenue dollars to the cost of community services.
Other and better analysis methods may exist, but the AFT’s method is the most accepted, understandable, and reliable indicator available. If this type of study has a weakness, it’s that people read too much into them.
Like all other statistics (‘boys are better at math’, etc.) COCS studies can’t be used to determine the effects of a particular dwelling, business, or farm. Nor do they show underlying causes, the extent that tax-positive industry or farmland depend on residences.
CRITICISM
Academic researchers have critiqued COCS-type studies, the most comprehensive one involving every county in Wyoming, that specifically tested the underlying premises of COCS results. As expected, in-depth analysis validates AFT methodologies; with the warning of their limitations.
The main non-academic criticism –implying influenced results— charges bias on the part of American Farmland Trust. The claim of bias maybe true, but doesn’t invalidate the studies’ results, and is offset by several factors.
County-employed consultants or other organizations, not the Trust, perform most COCS studies. COCS analyses require close participation of county administration and finance officers, and their scrutiny. Finally, COCS is a re-statement of currently public records; correlating land use in a county and its budget.
POLITICAL REALITY
Maybe it’s not obvious to non-politicians, but residences are occupied; housing contains the highest voter ratio of any land-use in a county. Even if farmers are all registered to vote, by its very nature agricultural land makes for a dilute, minority population.
Commerce and industry’s employees aren’t all voters; they may not even be residents. Given a choice between tax on personally owned real estate and increased business taxes, voters choose to tax their employers.
We deal with the tax structure as it is; but if it was changed … to a population and land-area system, then the revenue-to-expense ratio would change overnight.
THE CREATION OF WEALTH
Houses are a product, not a means of producing revenue. Dwellings were never intended or expected to produce profit for owners or investors. Manufacturing, commerce, services, agriculture all create wealth; if they fail to profit they are closed down.
COMMONSENSE AND PRACTICE
The biggest error people make –based on the erroneous belief that houses are revenue positive; or rightly knowing homes are revenue negative— is assuming that more or less houses should be built in a county. It’s an abuse to deny housing or advocate for it, against citizens’ wishes or to their detriment.
Government exists to provide for its citizens, not to enrich itself through manipulation of zoning. “… government is, or ought to be, instituted for the common benefit, protection, and security of the people, nation, or community …”
Dazzling clear from Cost Of Community Services studies is houses in any county are inherently linked with industry and –in agricultural areas— with it’s farming. There must be a balance of wealth-creating land use, and homes for the people who drive that economic engine.
The free enterprise system is the most productive supplier of human needs and economic justice. That system needs both productive capability and people; and people need residences.