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Tuesday, October 21, 2014 |  Madison, WI: 47.0° F  Overcast
The Daily
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Citizen Dave: Idea of the Week... regional tax base sharing
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There's been quite of bit of commentary about Spectrum Brands' decision to move its corporate headquarters out of Madison for the first time in the company's hundred-year history. While that's an interesting debate, there are underlying factors that need to be addressed if we're going to be successful as a city and as a region.

The first important thing to recognize is that Spectrum ultimately stayed in the region. The real competition wasn't between Madison and Middleton but between the Madison region and Florida, where Spectrum also had a foothold and where they might have gone.

The city of Madison itself appears to be the loser, but on closer examination it's not all that bad for the city. The problem is that we're stuck in an outdated paradigm that forces us to compete internally with neighbors instead of focusing on the national and even international regional competition that is the real name of the game.

While there may be literally fewer jobs within the municipal boundaries of the city of Madison after Spectrum moves, that's more symbolic than anything. Because there's no local payroll tax in Wisconsin, cities don't really lose revenue when jobs move to other communities. And in this case, we're not even likely to lose many residents. The shift from Madison's west side to Middleton is only a few miles. None of Spectrum's employees who currently live in Madison are going to pack up for Middleton just because of that change of address.

It's not so much a question of greenness either. If Spectrum was moving from the central city where most of its employees walked, biked or bussed to work that would be one thing. But Spectrum was already in a car-centric single-use office park, and it appears to be moving to another one a few miles away. That's no improvement, but it's not that much of a step back either. The real win for the region would have been if Spectrum could have been induced to move to the Capital East District along East Wash.

So jobs and green urbanism are not so much in play on this one. What does matter is the tax base. But even here, it's a little muddy. Spectrum doesn't own its building on Rayovac Drive. So, technically, their departure wouldn't reduce the city's tax base unless the building remains vacant and becomes assessed at a lower rate. What's likely to happen instead is that the building will be leveled and replaced or substantially renovated, resulting in a higher assessment at some point in the future.

But here's the problem. Our system encourages Wisconsin communities to fight with one another for tax base. We talk in general terms about needing to work together and compete as a region against other regions nationally, and yet we have a system that makes it rational for local officials to spar over who gets the property tax revenues from a given project.

More relevant than Spectrum in this regard is Epic, whose move to Verona was induced in some part by a huge tax incremental financing subsidy. (TIF was intended for the redevelopment of blighted central cities. There may have been corn blight on the Epic campus, but that's about it.)

Minneapolis has a better idea. Since 1975, that region shares commercial and industrial tax base growth among communities in the region. The way it works is that 40% of the tax base for new commercial and industrial growth is put into a regional tax base pool that all of the municipalities in the region can draw from.

In a report from the Metropolitan Council in the Twin Cities, the Brookings Institute's Bruce Katz, one of the nation's leading urban policy experts, says that regional tax-base sharing "...is not only socially and politically healthy for a region; it also discourages wasteful public subsidies to lure businesses from cities to suburbs and vice versa."

And that is exactly what we need. Less competition among ourselves so that we can focus on the real national and even international competition that is our real challenge.

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