Citizens Oak Ridge

Letter to the editor

Alternatives to the Crestpointe project

4/09/2007

To the Editor:

City Crestpointe Estimates

The city’s presentation indicated new Crestpointe sales of $60 million. This level implies an improbable average increase in purchasing of  $2300 for 26,000 households, twice the number of households in Oak Ridge. They also indicated a net annual revenue after the mortgage payment of near $500,000 assuming zero city services costs.  Below, to clarify the consequences of  different sources of revenue,  I provide a comparison of  pure sales and pure property tax sources for raising $500,000 revenue.

Alternative A:  Raise $500000 revenue with only sales tax

Let us determine the personal expenditures that our city government  is counting on to raise an additional  $1 of tax income through sales tax.  We would have to increase our spending in Oak Ridge as follows:

  • $1 for the citys share of sales tax  (1 3/8% of sales) 
  • $6.09 for the states 7% sales tax and the county’s 1 3/8% tax
  • $72.73 for the stores share of our extra sales
  • $79.81 total outlay

Oak Ridge citizens have spent an extra $79.81 for each $1 in city sales tax revenue; and $1 plus some sales clerk wages remains in town, while the majority ( profits and cost of goods sold) is exported to retailer home offices.   

To raise $500,000 more revenue yearly using sales tax we would collectively have to spend nearly $40,000,000 more each year. (For Crestpointe the mortgage cost raises this about 50%.) 

Alternative B: Raise $500,000 revenue with only an increase in property tax.

How much of an increase in our property taxes would be required to achieve a $500,000 gain in revenue?  A $500,000 increase in the presented city’s 2008 property tax of 16,436,000 is 3% so the $2.55  tax rate would have to go up to $2.63.   The property tax on a $100,000 home would increase from  $640 to $659 or a $19 per year.

To raise $500,000 by using property tax, Oak Ridge citizens will spend $500,000. They will have spent $1 for each $1 of city revenue. 

Conclusion: Crestpointe sales tax depletes community wealth

              The total combined wealth of  Oak Ridge city and its citizens is certain to remain higher if we don’t promote higher-than-normal spending, export most of  $78.81 for each city tax dollar to outsiders, and store extra stuff in our homes.   It is clear that our city officials have been focused on the city’s bank account and have failed to consider the financial impacts on Oak Ridge citizens.  

 

Even if half of the sales are made to others, the expenditure of Oak Ridge citizens as a group to raise revenue from Crestpointe sales would still be 39 times what it would be for property tax with most of that money leaving town.   Each of the Oak Ridgers spending are still spending 79 times the tax payment. 

Tim Holt

Oak Ridge