Dale Fowler: A talk about tax base
July 20, 2010 at 2:20 a.m.
Editor's note: This is the first column of a monthly series by Dale Fowler, president of the Victoria Economic Development Corp. His column will appear the third Wednesday of each month.
The best definition of economic development that I know is when the quality of life is improved for all residents through improved job opportunities and increased tax base.
Whenever I use the term "tax base," I feel it necessary to explain. Tax base refers to all of the property and its associated value, which is reflected on the property tax rolls of a particular community or local government. This tax base multiplied by the tax rate equals the revenue the taxing body operates with.
If more revenue is needed, the only options are to increase the tax rate or, more preferably, increase the tax base by adding new businesses, homes and residents who pay taxes. Sales tax also plays a significant role in funding a community's operating budget.
We can increase sales tax revenues most effectively by adding new jobs that provide significant incomes, thus creating more spending. When economic development efforts are fully successful, the community's tax rates are stabilized or even reduced. At the same time, these efforts provide new revenue for the community to provide more and improved services. In this way, every resident benefits.
At the Victoria Economic Development Corp., we focus our efforts squarely on initiatives that will further one or both of these goals - more jobs and increased tax base. The VEDC was formed in 1982 when local business and community leaders decided Victoria needed to become more proactive in our efforts to shape our future.
In 2000, the VEDC board of directors doubled their efforts through a comprehensive strategic planning process that involved many people and organizations from around the community. The plan covers many areas of economic development and identifies various organizations that play a role in these efforts.
The plan focuses VEDC's efforts on attracting primary jobs and increasing the tax base through attracting new business and helping existing business to expand. Our targets are those companies that are considered as "primary," or that provide a service or make a product that is substantially marketed outside the area. These companies ship products or services outside our area and bring the money back to the community through their employee payroll and investments in the community.
Today, we have a professional staff of only four people to carry the flag for Victoria across the globe. We are governed by a board of 17 community and business leaders, including representatives from the city and county government, as well as private business leaders who choose to invest in VEDC.
While many communities across Texas fund all their economic development efforts through the 1/2 cent economic development sales tax, there are some like VEDC that were formed as a public-private partnership.
VEDC is funded by private business and through contractual arrangements with local governments.
Now that you know a little more about VEDC, in future articles I hope to discuss the competitive environment and methods of marketing to and incentivizing business investments in general - and specifically those used by our community.
D. Dale Fowler is president of the Victoria Economic Development Corp.