Op-Ed: Regional Development and Higher Taxes
by Jason Arp
In the committee chambers of my council recently we heard something that could significantly affect the future of my city and the surrounding 11-county area. A veteran councilman announced there would be a discussion in January of a new tax to be collected by way of an increase in the Community Economic Development Income Tax.
To the untrained ear, this is gobbledygook, another tax, blah, blah, blah. However, this will have so much more impact than an ordinary tax increase. This tax will be for the specific purpose of funding and perpetuating a Regional Development Authority (RDA). Here is what you should know about this authority:
- Its board is appointed by the Indiana Economic Development Corporation (IEDC).
- It was created by the Regional Cities legislation of 2014 at the behest of the IEDC.
- There are four regional development authorities in the state.
- Each funds public/private economic development projects.
- Each has eminent-domain authority.
- The RDA board reviews government-proposed economic development projects and funds those deemed to meet their requirements, which are given the highest priority.
All of this was kicked off with fanfare last year when Greater Fort Wayne and the Northeast Indiana Regional Partnership began promoting the “Road to One Million.” The campaign included a 200-page application to the IEDC to win $42 million of economic-development matching grants for projects in our region.
Our region and two others “won” a grant, the state pledging $126 million recouped from an amnesty program conducted to retrieve back taxes. Much of this money should have been returned to county auditors to be distributed to local governmental entities. Also, a portion of these funds were from back county income taxes collected by the state.
But the competition lured county governments with the promise of “free” money. To be eligible, each passed an ordinance that put them in an RDA. Now, even though the $42 million is spent or spoken for, state statute allows the RDAs to perpetuate themselves with a new income tax.
It works like this: Each county’s County Option Income Tax Council (COIT)l has the authority to raise income taxes and designate them to fund its RDA. In my particular county, as we discussed in a council debate earlier this year over a new business personal property tax exemption, the COIT council is dominated by the city council.
That means if the new RDA tax is to be a reality, the council members would be the ones to enact it. By the way, a dedicated income tax revenue stream will enable an RDA to bond for large capital projects such as an arena or a theme park.
All of which begs three questions that city council members and Indiana residents should be asking:
1. Why do we need a Regional Development Authority to direct our local projects?
2. Should we be taxing people to fund an organization whose sole purpose is to arbitrarily pick winners and losers and distribute grants to the winners while taxing the losers?
3. Do we really want to empower with taxing authority an unaccountable board appointed by Indianapolis bureaucrats?
Jason Arp represents the 4th district on the Fort Wayne City Council. A version of this essay was published in the Nov. 20 Fort Wane Journal Gazette.