In the 1990s, pioneering economic development agreements between Akron and its suburbs ended bitter annexation wars, the city extending services into its suburbs in exchange for a share of income tax revenues from new development. The legislature expanded the concept statewide, encouraging regional cooperation and helping to spur growth.
Some fine-tuning now is needed. Thankfully, it can be accomplished by revisiting state law, the legislature holding hearings to examine the problem, then crafting the right solutions. Worth noting is the sharp contrast to how things must be done when constitutional amendments are used to address complicated matters. Even a simple fix requires an amendment ó and another statewide vote.
What state Rep. Kirk Schuring, a Canton Republican, has in mind is stopping excesses that have come to light since 1996, when the legislature further expanded the idea of joint economic development districts, allowing for the creation of joint economic development zones between municipalities and townships.
The trouble is, loose language in the law has encouraged some townships in central and southwestern Ohio to stray far from first intentions, seeking deals that amount to tax revenue grabs. Rather than promoting new development, the deals with municipalities are merely a way for townships (which lack income taxes) to gain revenue from existing businesses.
With joint economic development districts (which Schuring himself promoted for use across Ohio), a majority of property owners or businesses in the district must approve. That is not so with joint economic development zones, where an entire township votes. Cherry-picking a small number of already developed properties (which donít have to be contiguous) to be in a zone means that a majority of township voters can impose an income tax, and reap the benefits, without paying the tax themselves.
The Schuring bill would end the authority of municipalities and townships to form economic development zones as of Jan. 1, 2015. Economic development districts would not be affected. An updated version of the legislation would leave municipalities with the opportunity to form agreements with each other.
In addition, from the effective date of the bill (which already has passed the House) until Dec. 31, any new or substantially changed municipal-township economic development zone would require the adoption of a development plan and spending of at least 50 percent of income taxes generated in the zone to implement the plan. A special council would be appointed to make sure the plan is followed.
The Schuring bill is carefully designed to curb the potential for abuse of a sound concept that has in other versions served the state well. It does nothing to stop local governments from working together, as long as their goal is truly to promote new development. The legislation deserves prompt consideration in the Senate.