5-19-05
Economic Research Institute of Erie Unveils Study
on Funding for Regional Asset District
Jim Kurre (l), co-director of ERIE and economics professor at Penn
State Behrend, is interviewed by reporter Laura Gray at today's news
conference.
At a news conference held today, Penn State Erie economics professor James A. Kurre, co-director of the Economic Research Institute of Erie, unveiled the results of a yearlong study estimating the effect of a potential one percent sales tax for an Erie County Regional Asset District (RAD). The study was requested one year ago by Erie County Executive Rick Schenker, and the results of the study will be forwarded to the Civic Coordinating Committee for consideration.
"On behalf of the citizens of Erie County, I thank Penn State Behrend and Dr. Kurre for completing this study," stated Schenker. "In addition, I support the Civic Coordinating Committee as they review the effects of creating a regional asset district for Erie County. I believe a proposal that could lower property taxes and increase funding for our valuable regional assets, and possibly create a pool of funds to develop "ready to go" sites for business attraction is definitely worth considering."
"Our findings address three questions posed by Mr. Schenker when he asked for this study," said Kurre. "He asked us to determine how much revenue would be generated from a one percent sales tax, how much would be available for regional assets, and how much Erie County municipalities would realize. I hope this study proves be a useful tool for the Civic Coordinating Committee in this effort."
The first part of Kurre's study emphasized several points:
. It is a challenge to find data that accurately reflects sales tax paid in Erie County. For example, some companies remit sales taxes in the county where they are headquartered, not where they actually do business, thereby skewing sales tax remittance data both locally and in other counties.
. It appears that sales tax remittance data may underestimate the actual sales tax paid in Erie County by 49 to 91 percent.
. A one percent addition to the sales tax will probably cause prices to rise slightly, but not cause much loss of Erie sales to neighboring counties.
. The estimate of possible revenue from a one percent tax for fiscal year 2005-06 is $26-$28 million.
The second part of the study addressed ways in which the revenue from a one percent sales tax would be divided for use in Erie County. The Allegheny County RAD model used for distribution is 50% for regional assets, 25% for property tax reduction at the County level and 25% for property tax reduction at the local government level across the County.
The points emphasized in the second part:
. Using Allegheny County's formula, Erie County municipalities would get anywhere from 0.03 percent to 61.6 percent shares of the new revenues.
. New municipal tax revenue would amount to 18 percent of property taxes paid to municipalities in 2002.
. Property tax could be reduced by 13 percent to 100 percent in various Erie County municipalities.
. Based on studies done in Pittsburgh and Philadelphia, an estimated 25 percent of the new sales tax may be exported, that is, paid by visitors coming from outside Erie County.
The Regional Assets Task Force, a subcommittee of the Civic Coordinating Committee, will review the study and identify the next steps to address the issue of funding regional assets. The Civic Coordinating Committee is a coalition of the county's top elected officials, economic development experts and community and business leaders responsible for setting a regional agenda to move economic and community development initiatives forward.
"Funding for regional assets is a problem and we need a solution. We cannot continue down the same path," said Schenker.
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"This is a potential avenue to reducing property taxes and increasing funding for our regional assets; it is a way to ensure adequate funding for our zoo, our libraries, the arts and other assets that raise the standard of living for Erie County residents. And, it might also give us some of the extra tools necessary to attract new businesses to Erie County." Kurre's study was developed through the Economic Research Institute of Erie (ERIE), an applied research unit of the Sam and Irene Black School of Business at Penn State Erie, The Behrend College. It was not funded by Erie County. |
The ERIE, established in 1982, collects, analyzes, interprets, and disseminates data on the Erie regional economy. One of its goals is to provide undergraduates in the Black School of Business with relevant experience in applied economic research and data analysis. ERIE's continuing research program helps the local community better understand the regional economy and its links to the national economy. The Institute provides a source of information for local leaders and media who have questions about the local, national, and international economies. With the support of the Erie Regional Chamber and Growth Partnership, ERIE has created www.ERIEdata.org, a free Web site with a wealth of data on the local economy available for downloading.
Kurre's report is available at www.ERIEdata.org and at the Erie County government Web site, http://www.eriecountygov.org/.