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This report lays out a set of policy and political interventions that cities, regions, and states can make to increase municipal revenue and to make their collections more progressive. Cities have historically suffered enormous budget shortfalls and after the Great Recession, available funds depleted even more drastically. There is a desperate need for more municipal tax revenue and for a more just system for collecting it, instead of the current practice of cities collecting their revenue in regressive ways. Across the United States, there are major political obstacles to raising any kind of revenue. And yet, although different, the obstacles at the municipal level are in some ways even greater than they are at the state and federal levels. Nevertheless, there are meaningful strategies that cities and counties can adopt. And there are political strategies that may be effective at generating state-level reform. This report lays these out in detail, discussing the political and policy strengths and weaknesses of each.
PILOTs are voluntary payments made by tax-exempt nonprofits as a substitute for property taxes. These payments typically result from negotiations between local government officials and individual nonprofits, but the exact arrangements vary widely. PILOTs can be formal, long-term contracts, routine annual payments, or irregular one-time payments. The payments can go into a municipality's general fund, or be directed to a specific project or program. PILOTs are most frequently made by hospitals, colleges, and universities, but also by nonprofit retirement homes, low-income housing facilities, cultural institutions, fitness centers, and churches. Some such payments are not even called PILOTs, but are known as "voluntary contributions" or "service fees."
A list of possible user fee taxes local governments could use to raise revenue prepared by the Illinois Municipal Treasures Asocciation.
The property tax is the oldest major revenue source for state and local governments. At the beginning of the twentieth century, property taxes represented more than eighty percent of state and local tax revenue. While this share has diminished over time as states have introduced sales and income taxes, the property tax remains an important mechanism for funding education and other local services. But property taxes are regressive, and because these taxes are usually collected at the local level, the unequal distribution of wealth between rich and poor school districts can lead to inequitable school funding.
Most U.S. cities and counties do not impose a local income tax, but they are imposed by 4,943 jurisdictions in 17 states, encompassing over 23 million Americans. Varying from minute amounts in several states to an average 1.55 percent in Maryland (see Table 1), these taxes provide a long-standing and significant source of revenue to many cities in \"Rust Belt\" states in the northeastern United States. All counties in Indiana and Maryland impose a local income tax (see Table 2). In Ohio, 593 municipalities and 181 school districts have such a tax. 2,469 municipalities and 469 school districts in Pennsylvania impose local income or wage taxes. Many cities and school districts in Iowa and Michigan also have these taxes.
Sales and excise taxes, or consumption taxes, are an important revenue source, comprising close to half of all state tax revenues in 2010. But these taxes are inevitably regressive, falling far more heavily on low- and middle income taxpayers than on the wealthy. Consumption taxes also face structural problems that threaten their future viability. This chapter looks at how these taxes work, and outlines options for making consumption taxes somewhat less unfair and more sustainable.
Americans are becoming increasingly overweight and obese. During the past four decades, the obesity rate for children ages 6 to 11 has more than quadrupled, and more than tripled for adolescents. The negative consequences of obesity, including diabetes, heart disease, and stroke, make it a major public health problem. Approximately $79 billion is spent each year for over-weight and obesity, with about one-half of these costs paid by Medicare and Medicaid.
We are in an unprecedented moment in U.S. history. It is a time of resurgent racism and inequality, but also of newly energized and ambitious activism. We propose that the most effective way to take advantage of that momentum and reclaim American democracy is through investment in progressive organizing in the nation’s cities. Throughout the country, cities provide the diversity, social bonds, union strength, coalitional relationships and experience necessary to achieve governing power in the interest of the common good. Despite deep investments by right-wing interests to diminish government and promote a radically pro-corporate agenda, city-based organizations continue to win an extraordinary range of policies that improve people’s lives, from wage increases and public school improvements, to affordable housing funding and climate resiliency solutions, to immigrant protections and criminal justice reform. Support to expand organizing in cities can drive and implement a new forward-looking vision for the country as a whole.
Demand for housing in urban areas is growing in the United States. Cities are increasingly safe, making them attractive places to live. Property values are rising in dense, walkable areas with access to public transportation. These trends combine to make possible an innovative funding practice called value capture: when some of the ascending property values can be directed toward public transit improvements. Land is more valuable when located near high?quality public transit infrastructure. Recent APTA research shows that, during the Great Recession, properties near public transit were more financially stable than properties located further away. Areas near public transit outperformed their regions as a whole by 41.6 percent. Research by public transit agencies and planning departments confirms that proximity to public transportation can increase property values. Around public transit infrastructure there is an opportunity for more value capture, and those revenues from public transportation?accessible locations will be more stable than general property tax revenues. Value capture instruments allow jurisdictions to collect revenue in specific areas and direct that revenue towards specific improvements. Value capture is being used for a wide spectrum of projects, from targeted neighborhood street improvements to new public transit infrastructure.
As vehicles become more fuel-efficient and overall levels of travel stagnate in response to increases in fuel prices, conventional sources of revenue for transportation finance such as taxes on motor fuels have been put under increasing pressure. One potential alternative as a source of revenue is a set of policies collectively referred to as value capture policies. In contrast to fuel taxes and other instruments that impose charges on users of transportation networks, value capture policies seek to generate revenue by extracting a portion of the gains in the value of land that result from improvements to transportation networks. In this report we identify a set of eight policies that contain elements of the value capture approach. These policies include land value taxes, tax increment financing, special assessments, transportation utility fees, development impact fees, negotiated exactions, joint development, and air rights. We evaluate each of the policies according to four criteria: 1) efficiency, which relates to how well the policies allocate scarce resources, 2) equity, which describes the fairness of resource allocation among different strata of society, 3) sustainability, which refers to the ability of the policy to serve as an adequate, reliable source of transportation revenue, and 4) feasibility, which refers to the degree of political and administrative difficulty associated with each policy. Since these policies are targeted toward use at the state and local level in Minnesota, we conclude by examining some legal and administrative issues related to the implementation of each policy with special reference to Minnesota.