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M _ , I-G-- FISCAL-'DISPARITIES G-1 TAX' :BASE SHARING PROGRAM • The - b-asic premise - for the need for a tax, base sharing or tax -.base red'ist.ribution system in this Metropolitan Area , is that much commer.ciaa and industrial (C/I ) development - occurs based on location and%or availability of land or particular , sdr.vices . If the seven county--Metropolitan Area were one political and economic unit, .such' as the Houston or :Omaha areas, the growth of C/'I development in any part would benefit the whole equally and tax base sharing would be unnecessary. However, in this area with 139 cities plus many townships and school districts that is not the case. Thus, there., are many cities that because they are fully developed with no room for expansion, or they are located away from the- center of activity without appropriate services, or have space but are inconvenient from major transportation facilities cannot attract C/I development . Whereas , others , more favorably located or serviced cannot keep C/I development away. This creates a situation, in general, where the tax base value per area, per household, or per capita is higher, and the taxing ability of the governmental unit greater, allowing a lower -tax rate or collection of more dollars . to provide service . This, also, creates a situation where two ident-ical C/I facilities could have a large disparity in their property tax rates. THE AMM SUPPORTS A PROGRAM OR PROGRAMS WHICH CONSTRAIN TAX BASE DISPARITIES IN THE METROPOLITAN . REGION WITHIN' A REASONABLE-. RANGE .WITHOUT STIFLING LOCAL INITIATIVES OR UNIQUE COMMUNITY NEEDS. • G-2 OPPOSE DRASTIC CHANGE To compensate for these disparities, the 1971 legislature passed the Fiscal Disparities Act, with a rather complicated formula, whereby 40% of all C/I development and inflation growth from 1971 on is contributed to a Metropolitan Pot and redistributed based on population and fiscal capacity. After 15 years of operation, the, magnitude of distribution values both in terms of net value decrease and net value increase is significant for many cities. If fiscal disparities were repealed in total with no replacement or adjustments, property taxes in many cities would increase very significantly just as they would decrease in others. BECAUSE THE MAGNITUDE OF FISCAL DISPARITY DISTRIBUTION IN TERMS OF NET VALUE INCREASE AND DECREASE TO MANY CITIES IS SIGNIFICANT, THE AMM SUGGESTS THAT NO CHANGES BE MADE THAT WOULD CAUSE DRASTIC SINGLE YEAR SHIFTS IN PROPERTY- TAXES. G-3. FORMULA MODIFICATIONS The - Assoclation of Metropolitan Municipalities has spent two years of committee work studying the fiscal disparities formula and the affects of 'various modificications to that formula. 'There .are basically , two major policy issues that - need to be dealt with in a package , to accommodate the majority of cities. The first is a fairness or equity question that deals with issues such, as the 1971 Base .value exemption, • equalization of the contribution, ,minimum distribution,. etc . The