I’m going to tell you my thoughts on the important issues facing Dayton. #1 on that list is taxes. Here is my two cents.
People have told me that we can’t really lower taxes in Dayton right now. You might be surprised. It has been my #1 priority for the past two years. The tax rate is going to go down this budget. If we continue to grow at a moderate rate (not to fast….because that actually can cause taxes to rise), we can lower taxes over time. Right now our budget is just over $4 million. About 25% of that is debt service. If we paid off those debts and didn’t have to borrow more, we could lower our taxes (city taxes) by roughly 25% by doing that alone. It takes time to do.
I liken the process to buying a car. If you have lived most of your life with a car payment (as well as mortgage/rent) you understand how debt payments can eat up all your disposable cash. That is how Dayton has lived for decades. It may have made sense at the time, but you can never have lower taxes if that’s how you manage your budget. We realized this in 2013 when I became Mayor. Right now taxes are high because we are in the “still paying for the old car, while saving for the new car” phase. Our current budget has almost 25% of the revenue being spent on debt service. Taxes are still high despite three years of great growth, because we are paying off old debt, and creating “savings accounts” for future needs. Our ten year document (CIP) shows how we pay for future projects with very little, or no, borrowing. Over the next few years, as we pay off old debt, our rates will come down. Five years ago our rate was 65% while our neighbors averaged about 45%. 2019 our tax rate will be 55%. My goal is to be at parody with our neighbors within ten years, and our CIP indicates that we can achieve that goal…..IF we stick to the plan. Any council could reverse our strategy. We could borrow money today to lower our taxes tomorrow…but then we would be right back on the treadmill.
2018 is the last year we are paying for short term debt that was issued before I was Mayor. It will be about 10 years before the Water Tower debt is paid off. Massive road debt will be paid off in less than ten years.
In 2014 we began a policy of saving for projects, instead of issuing debt. It takes time for that savings to add up, but it’s doing it right now. Yes, there are MANY things that we will need in time. A new City Hall, a new Fire Station, and expansion to Public Works, and more water towers and water treatment. BUT, our Capital Improvement Plan shows those being possible WITHOUT increasing property taxes because we will be paying for much of them out of savings. Even the Interchange doesn’t add to our property taxes.
All of this could be changed with a simple vote….so keeping to the plan is never guaranteed, BUT, if we DO keep to the plan we should be at a tax rate very similar to our neighbors, and MUCH lower than our current rate, within the next ten years…and it will happen little by little each year. Our Capital Improvement Plan is a complex document. It’s over 35 pages long, but it outlines where all the money can be spent, and where it can come from.
I would also add that this plan doesn’t include large changes in our Commercial/Industrial base. If we were to get large new development (which we could potentially attract with a new Interchange), we could see taxes lowering even faster. RDO and an expansion to King Solutions will be helpful in 2020 and beyond.
And that’s my two cents.