Councilman Dan Bucci’s Job Growth Incentive Program: Avon Lake, Ohio
It’s always refreshing to meet local elected officials who take their jobs seriously and go the extra mile to come up with fresh ideas for helping their communities and their constituents.
Dan Bucci, a City Councilman At-Large in Avon Lake, is one of those elected officials. I had the pleasure of hearing Councilman Bucci speak yesterday at the Avon Lake Rotary Club’s breakfast meeting, and I was very impressed by his innovative ideas for economic development and his dedication to taxpayers.
Councilman Bucci has spearheaded the creation of an economic development initiative plan that includes some of the most original and visionary ideas that I’ve ever seen presented on the muncipal level.
The most impressive part of Councilman Bucci’s economic development initiative plan is (in my humble opinion) his Job Growth Incentive Program. This program will provide an incentive to each business in the City of Avon Lake, regardless of size, in the amount of 25% of the additional income tax paid as compared to the previous year.
Rather than try to explain the Job Growth Incentive Program myself, I’m going to re-publish Councilman Bucci’s own descripton of the program below. If you want to learn more about Dan Bucci and his economic development plan for Avon Lake, I encourage you to visit his website.
I hope that Avon Lake City Council and Mayor Greg Zilka are able to implement Dan Bucci’s innovative economic development ideas, and I hope that other local elected officials in Lorain County will take a hard look at his proposed Job Growth Incentive Program. With less local government funds coming into our communities from the state, it’s now up to county and municipal governments to come up with fresh ideas to grow their tax base and promote economic development.
Councilman Dan Bucci’s Job Growth Incentive Program
Avon Lake must differentiate itself from all of its surrounding communities if it wants to successfully retain and recruit businesses.
One way the City can stand apart from other municipalities throughout the Nation, incentivize existing businesses to remain and grow in Avon Lake, and persuade others to locate in Avon Lake is to adopt the Job Growth Incentive Program, which is loosely based on the State’s Job Creation Tax Credit (“JCTC”). The JCTC was established in 1993 and provides a refundable tax credit against a company’s corporate franchise or income tax based on the state income tax withheld from new, full-time employees.
Because the City maintains a relatively small finance department, the Job Growth Incentive Program must be easy to understand and even easier to administer. It must provide certainty to business owners. Most importantly, it must provide an incentive to maintain, grow and create jobs.
The Job Growth Incentive Program will use each business’s RITA income tax as its starting point. When a company pays more income tax one of four things has occurred: (1) additional employees have been hired; (2) current employees are working more hours; (3) current employees are earning higher wages; or, (4) a combination of the three. The City must foster that success, and can do so by sharing in the success with the company.
The Job Growth Incentive Program is very simple in its operation. The Program will provide an incentive to each business in the City of Avon Lake, regardless of size, in the amount of 25% of the additional income tax paid as compared to the previous year. For example, assume that in 2010 Company X paid $100,000 in income tax to Avon Lake. Demand skyrocketed and they doubled their workforce. In 2011 they pay $200,000 in income tax, resulting in an additional $100,000 to the City. The City would then return 25% of that amount, or $25,000, as an incentive to remain in Avon Lake and grow even more jobs. Let’s further assume that in 2012, Company X pays $220,000 in income tax, or $20,000 over the previous year (2011). Company X’s incentive would be $5,000 (25% of $20,000). However, should Company X pay $200,000 or less in 2012, no incentive would be provided.
There are a number of positive characteristics of the Job Growth Incentive Program.
–There is minimal cost to the City. The incentive is paid completely out of additional tax revenues that are strictly in amounts above and beyond what a company paid the previous year. For lack of a better term, this is new money.
–Companies of differing size re treated equally. Each company is incentivized in proportion to its ability to make new hires, pay higher wages, or work additional hours.
–Existing and new businesses are treated the same, unlike property tax abatements. Many times existing businesses will lament the fact that the City never offers incentives for them, while rolling out the red carpet for a newly located company. This creates an even playing field.
–The school system is held harmless as the incentive is based on employee income taxes, not property tax abatements.
–Council and the Mayor can take this action immediately on their own without the expense of hiring an economic development professional or consultant.
–Talk is cheap. Every Mayor and City Council will say their City is business-friendly while the incentive truly proves that Avon Lake is “business-friendly.” Not only does it show in a concrete way that the City is willing to work with its businesses giving them a reason to stay in Avon Lake, it gives them resources to grow or potentially create jobs.
–The program is innovative and unique – the Committee, Team Lorain County and economic development professionals surveyed are unaware of any other municipalities that operate a similar Program. Therefore, a substantial “buzz” will be generated if our innovative thinking is marketed correctly to nationwide trade journals. This truly sets Avon Lake as business friendly and will put us in a better position to attract new businesses.