Council Action Sends $1.1 Million in Revenue to Local Schools
May 20, 2019
Revenue Sharing Continues Council Commitment to Students and Teachers while Fighting for Jobs. Economic Development Committee Chair Emmanuel Remy Calls for Independent Economist
[Columbus, OH] Columbus City Council passed ordinance 1327-2019 appropriating $1,113,492.34 to local schools during its May 20, 2019, meeting as a result of the City’s revenue sharing program.
“This action injects cash into the affected school district’s general revenue fund allowing for immediate access to funding from newly created jobs,” said Councilmember Emmanuel Remy, chair of Council’s Economic Development Committee. “Although municipalities don’t have the authority to determine school funding policies – that’s the responsibility of the state of Ohio – that doesn’t mean we don’t fight for our students, our teachers and our schools.”
Incentives Agreements are an Important Tool to Increase Funding to Schools
Revenue Sharing Agreements provide additional revenue to schools in the short term, while tax abatements are a long-term real property investment tool. This short- and long-term investment strategy allows the Columbus City School District to receive an immediate influx of revenue while a property is being developed, in addition to the current base property tax payments the schools continue to receive. These agreements drive millions of dollars in new revenue to Columbus City Schools. The Columbus Board of Education approves all projects above 10 years/75% to ensure the agreements produce a mutual benefit for all.
“Council supports students and teachers,” said Remy. “We are concerned that misinformation is being spread regarding economic development incentives, especially incentives designed to create living-wage jobs, build more affordable housing and help sustain our schools long-term.”
The City shares 50% of the net new income tax revenue from jobs created on a tax-abated project above $1 million. “Our role is to keep Columbus moving in the right direction, and key to that responsibility is to retain and create jobs within our municipal boundaries,” said Remy. “We fight on a regular basis to retain jobs in our community which also directly benefit our schools here in Columbus. That’s our ongoing commitment.”
In the past four years, Columbus City Schools received $6,000,075.60 in revenue sharing on abatement projects in addition to the base property tax payments received during the abatement period.
- CY2019 (RY2018): Columbus CSD Revenue Sharing Payment: $785,907.76*
- CY2018 (RY2017): Columbus CSD Revenue Sharing Payment: $1,630,156.66
- CY2017 (RY2016): Columbus CSD Revenue Sharing Payment: $1,526,902.22
- CY2016 (RY2015): Columbus CSD Revenue Sharing Payment: $2,057,108.96
* Lower revenue sharing for CY2019 demonstrates the successful completion of several abatement agreements. The income tax revenue sharing therefore stops and full property tax payments are made directly to the schools.
The City of Columbus tracks economic development agreement outcomes annually to ensure companies are meeting the goals as outlined in the incentive agreements approved by City Council.
The Columbus Tax Incentive Review Council (TIRC) meets annually to review property tax abatements and Tax Increment Finance (TIF) districts. The TIRC found that the City again exceeded job growth and payroll numbers for reporting year 2018 (calendar year 2017). New private investment by companies reached $967 million.
The TIRC reviewed 65 Enterprise Zone and Community Reinvestment Area agreements. The companies:
- Created 2,769 new jobs (181% of goal);
- Created $223 million in new annual payroll (172% of goal);
- Retained 6,277 jobs (129% of goal); and
- Invested over $967 million in real property improvements (138% of goal).
City Council Fights for Students and Teachers While State Legislature Debates School Funding
“While the General Assembly continues to debate an unconstitutional public school funding system, we are doing all that we can to fight for our students and their families,” said Remy.
“While Ohio cities have no legal role in school funding or management, the City of Columbus remains committed to fighting for students, teachers and our community by investing in programs and neighborhoods,” Remy continued. The following investments were reviewed by Council in 2018:
- Investing $5.5 million in early childhood education in 2019
- Investing $12.5 million over the next five years in sidewalks around schools.
- Investing $2.6 million in City and grant funding for wrap-around services with local social services agencies including the Children’s Hunger Alliance and contracting with Columbus City Schools for the summer food program through our rec centers to ensure that every child can receive a nutritious meal over the summer.
- Investing more than $400,000 annually in a summer jobs program to give our children real-world, paid summer employment experiences.
Request for Independent Economist to Provide Historical Data and Projected Revenue
Councilmember Remy continues to be concerned about the false narrative about economic development incentives that benefit Columbus’ neighborhoods, our schools, students and teachers. He asked for Council’s support to engage an independent economist to study the impact of past, current and future economic development projects created through the incentive program.
“As Development Chair, I’m engaging an independent economist to study the impact of City economic and housing development incentives over time,” said Remy. “This will allow residents to see the actual impacts based on real property values and jobs created while also examining active incentives and those that matured and already made an impact.”
One example of this type of impact is DSW Inc. The company created 549 new full-time permanent positions and invested more than $88 million in capital improvements. Based on the job creation associated with the DSW Inc. project, the City of Columbus revenue shared $2,993,616.79 with Columbus City Schools over the term of the abatement, an estimated $2 million more than if the project went ahead unabated. Columbus City Schools received an additional $2,061,219.11 over the ten-year term because of the abatement.
DSW, INC.Revenue Sharing Totals to Columbus City Schools
“Because of the agreement, Columbus City Schools received a 320% increase in revenue over what they would have seen without an agreement. That is the reality, and it shows our mission to create jobs and support local companies can have a profound effect on the economy and our schools.”
Remy asked his fellow councilmembers for their support of this research project with the goal of completing it this summer to “help us and all Columbus Citizens clearly understand the impact on schools, property taxes, income taxes, property values and the local job market.”
A countywide economic study in 2017 showed abatements are protecting homeowners by lowering property taxes:
- Higher use of property tax abatements is correlated with lower tax rates and higher property values in Franklin County.
- The study showed that a one percentage point increase in a school district’s abatement would result in an $11 reduction in the annual tax bill for a $100,000 residential property
- While these tax savings are small, any reduction is arguably a positive outcome since that means tax incentives have generated enough growth in property values to offset the immediate drop in the tax base from an abatement and thus avoid a tax shift to non-abated properties.
- This research demonstrates that the Department of Development’s activities are actually reducing resident’s income tax payments, not increasing them OR shifting real property tax burdens from corporations to resident’s which is often misstated.
The City of Columbus and City Council are constantly working to make our City the best place to live, work and raise a family, and when necessary, offer incentives to achieve those goals. However, when offered, they are at a lower rate and for fewer years than our suburban communities.
About the City of Columbus, Ohio The City of Columbus is the 14th largest city in the United States with a population of 879,170 residents. The Columbus economy is balanced with a combination of education, technology, government, research, insurance and health care entities as major employers within the City. Columbus is gaining nationwide recognition for its booming downtown, historic neighborhoods, arts and sporting districts, open attitude and a noticeably affordable quality of life. Learn more about the City of Columbus at columbus.gov/development/Economic-Development.