For Wonks Only
There is a lot of deliberate disinformation floating around town, with this past week seeing hitherto unseen lows from troggus bloggus and the hooded cowards who post there.
The brand of Web fantasy dealt there is most akin to arson during a drought. Some people just get their jollies from seeing things burn. More responsible bloggers with a sense of journalistic integrity find it their duty to fight these unceasing firestarters.
Herewith, a little primer on one small bit of sleight-of-hand being used to distract the truly sincere with alphabet soup and tired doggerel from past decades.
EDIT (or CEDIT) stands for economic development income tax. It was created as a source for counties, cities and towns to actually invest in their towns. All residents who earn income, here or elsewhere, pay the EDIT tax. EDIT can be as high as .5% of income. It is distributed twice a year.
CAGIT (county adjusted gross income tax) is intertwined with property taxes and property tax relief. CAGIT is collected by the state and distributed to municipalities twice a year. Most CAGIT revenue replaces property taxes - about 12.5% of CAGIT can be used for other governmental purposes, with the rest going to general fund property tax relief. It is designed to change the mix of tax burden, benefiting property owners at the expense of income earners. By implementing a CAGIT, then, a municipality must reduce property taxes by an amount equal to 87.5% of the CAGIT revenue. In most jurisdictions who use it, the rate is set at either .5%, .75%, or 1%.
A third option, which cannot be used in conjunction with CAGIT, is the COIT, or county option income tax. It is not tied to property tax relief, and thus can be a source of revenue that captures income rises while maintaining the property tax base. COIT is distributed monthly, and can rise to as high as 1% (of income) over time.
The combination of EDIT and CAGIT in Floyd County and New Albany is capped at 1.25% of adjusted gross incomes of the residents of the jurisdiction. If my memory serves, we're slightly under that taxation limit, and some are advocating for a cut, reasoning that we no longer need to invest in the future.
EDIT funds, at least until July of 2005, required a jurisdiction to have a specific state-approved plan for the use of EDIT funds. That is, it was to be used for investments designed to generate a new tax base to help pay operating expenses and keep the property tax burden down. The last session of the legislature removed that restriction, offering the temptation to localities to use EDIT money for operating expenses or any governmental purpose.
The more responsible office-holders are determined to keep the use of EDIT taxes for investment, not operating expenses. In the next few years we'll see who has the discipline to leave those funds intact for economic development, and who will want to raid those funds for short-term gain.
The City of New Albany receives (if my memory serves) about $2.4 million each year from the EDIT (tax). Almost all of that is committed to bond retirement, with two bonds set to expire in 2006 and 2007, respectively. The city is in no danger of over-committing these anticipated funds, particularly with respect to the Scribner Place project. There is more than enough in EDIT to meet those requirements, which could be as little as $140,000 per year.
To restate, EDIT funds committed previously have all been according to a written plan that justified their commitment as economic development. Residents can argue over what constitutes economic development, but as of right now all commitments met with state approval. Neither the city nor the county have "oversubscribed" those funds. In a year or two, there will be greater opportunity to invest in the future.
Where other funds have been used to meet what may have previously been "EDIT" obligations, the state has approved them all.
Nos, if any residents care to make the case that pumping up the investment in city sewer infrastructure (as opposed to capacity) is an economic development activity, and to advocate for an accelerated investment in propping up the main sewer arteries in the inner city...I think the case can be made. Right there with bike paths and sidewalks. I agree that we are spending too little on all three of those.
Hope this helps.
And one last thought: Why is it the people who demand more investment in sewers are the first to don their white hoods and hoist their pitchforks against any investment in economic development? And in any thought of increasing the tax base to support city operations? The anti-tax crowd is, in fact, the anti-community crowd, the anti-New Albany crowd.
But then, you knew that already, didn't you?
The brand of Web fantasy dealt there is most akin to arson during a drought. Some people just get their jollies from seeing things burn. More responsible bloggers with a sense of journalistic integrity find it their duty to fight these unceasing firestarters.
Herewith, a little primer on one small bit of sleight-of-hand being used to distract the truly sincere with alphabet soup and tired doggerel from past decades.
EDIT (or CEDIT) stands for economic development income tax. It was created as a source for counties, cities and towns to actually invest in their towns. All residents who earn income, here or elsewhere, pay the EDIT tax. EDIT can be as high as .5% of income. It is distributed twice a year.
CAGIT (county adjusted gross income tax) is intertwined with property taxes and property tax relief. CAGIT is collected by the state and distributed to municipalities twice a year. Most CAGIT revenue replaces property taxes - about 12.5% of CAGIT can be used for other governmental purposes, with the rest going to general fund property tax relief. It is designed to change the mix of tax burden, benefiting property owners at the expense of income earners. By implementing a CAGIT, then, a municipality must reduce property taxes by an amount equal to 87.5% of the CAGIT revenue. In most jurisdictions who use it, the rate is set at either .5%, .75%, or 1%.
A third option, which cannot be used in conjunction with CAGIT, is the COIT, or county option income tax. It is not tied to property tax relief, and thus can be a source of revenue that captures income rises while maintaining the property tax base. COIT is distributed monthly, and can rise to as high as 1% (of income) over time.
The combination of EDIT and CAGIT in Floyd County and New Albany is capped at 1.25% of adjusted gross incomes of the residents of the jurisdiction. If my memory serves, we're slightly under that taxation limit, and some are advocating for a cut, reasoning that we no longer need to invest in the future.
EDIT funds, at least until July of 2005, required a jurisdiction to have a specific state-approved plan for the use of EDIT funds. That is, it was to be used for investments designed to generate a new tax base to help pay operating expenses and keep the property tax burden down. The last session of the legislature removed that restriction, offering the temptation to localities to use EDIT money for operating expenses or any governmental purpose.
The more responsible office-holders are determined to keep the use of EDIT taxes for investment, not operating expenses. In the next few years we'll see who has the discipline to leave those funds intact for economic development, and who will want to raid those funds for short-term gain.
The City of New Albany receives (if my memory serves) about $2.4 million each year from the EDIT (tax). Almost all of that is committed to bond retirement, with two bonds set to expire in 2006 and 2007, respectively. The city is in no danger of over-committing these anticipated funds, particularly with respect to the Scribner Place project. There is more than enough in EDIT to meet those requirements, which could be as little as $140,000 per year.
To restate, EDIT funds committed previously have all been according to a written plan that justified their commitment as economic development. Residents can argue over what constitutes economic development, but as of right now all commitments met with state approval. Neither the city nor the county have "oversubscribed" those funds. In a year or two, there will be greater opportunity to invest in the future.
Where other funds have been used to meet what may have previously been "EDIT" obligations, the state has approved them all.
Nos, if any residents care to make the case that pumping up the investment in city sewer infrastructure (as opposed to capacity) is an economic development activity, and to advocate for an accelerated investment in propping up the main sewer arteries in the inner city...I think the case can be made. Right there with bike paths and sidewalks. I agree that we are spending too little on all three of those.
Hope this helps.
And one last thought: Why is it the people who demand more investment in sewers are the first to don their white hoods and hoist their pitchforks against any investment in economic development? And in any thought of increasing the tax base to support city operations? The anti-tax crowd is, in fact, the anti-community crowd, the anti-New Albany crowd.
But then, you knew that already, didn't you?
posted by All4Word at 7:04 PM
2 Comments:
I don't know, exactly. It was an issue earlier this year when I researched it. Someone out there knows, though.
As I recall it's 600 or 700K for the city parking garage and maybe 1.2-1.3 million for sewers??? That doesn't sound right, but maybe it's in the minutes from this summer.
If anybody knows the numbers (and you've proved yourself to be truthful), why don't you post the answer for Ceece?
If you believe that a county jail expansion is economic development, that will be the next biggie they raid City EDIT for.
Yep, Scribner Place will be funded by EDIT money. The obligation is $400,000, but as the county has committed $130K, and the current estimate is annual obligations of $270K, it's a fairly safe investment.
Of course, if Americans suddenly cease to love gambling, Harrah's could just walk away from its commitment of $1 million per year. Right.
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