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Rutherford County has added more pop-ulation in the past two years than havefour states;1school enrollment contin-ues to increase rapidly with future annualincreases expected in the range of 4 per-cent to 5 percent; additional capital expen-ditures required by schools are large; state-shared taxes were cut this year with morecuts likely in the future; the costs of pro-viding existing levels of service are rising;taxes that grow most rapidly flow to thestate instead of to the county; propertyowners are increasingly unhappy aboutlarger property tax bills; and developersfeel that the benefits of growth are under-appreciated. You might say RutherfordCounty is between a rock and a hard place.This study identifies and evaluatespotential sources of new revenue forRutherford County, providing options inresponse to the question, “How can wediversify our sources of revenue and at thesame time generate funds sufficient to meetthe rapidly growing demand for public ser-vices?” The study first briefly outlines thedemand for public services in RutherfordCounty with overviews of expenditure pat-terns and current sources of revenue. Thestudy then turns to an analysis of severalpotential sources of new revenue.The study examines the following rev-enue options:■ expanding the local option sales taxbase,■ a local gasoline tax,■ local realty transfer tax and mortgagetax,■ expanding the business tax, ■ raising the development tax, ■ an adequate facilities tax, and ■ impact fees.Summary of Findings■ Approximately 63 percent of countygovernment expenditures are for publicschools. Spending for debt service andpublic safety are the next largestspending categories.■ Local taxes constitute about 51 percentof county revenue. The share of rev-enue provided by the state is falling. ■ Property taxes make up 63 percent oflocal tax revenue, but other taxes(including local option sales tax, wheeltax, and development tax) grew muchfaster from 1997 to 2002.■ The current stream of revenue isunlikely to keep up with trend spend-ing growth over the next five years. ■ Diversity of revenue sources isdesirable because sales tax revenuesfluctuate, requiring periodic spendingcuts, property tax increases, or both.■ Substantial revenues can be generatedby many of the options analyzed in thereport. ■ All of the options will raise costs forbusinesses and reduce disposableincomes for households. ■ Few of the options are easy toimplement.The full report can be accessed onlineat ■1Rutherford County added more populationthan did Vermont, Montana, South Dakota, andWyoming from 2000 to 2002.In an effort to inform readers about new research efforts at the Business and Economic ResearchCenter, we offer in this issue of Midstate Economic Indicatorsbrief summaries of four of our mostrecent studies. The complete reports of all four are online at 13 No.4 Spring 2004IndicatorsMidstatePotential RutherfordRevenue Sources David A. Penn, BERC director Special Issue: Summary of Recent StudiesBusiness and Economic Research Center • Jennings A. Jones College of Business • Middle Tennessee State UniversityEconomic sponsored in part by Rutherford County addedmore population than didVermont, Montana, SouthDakota, and Wyoming from2000 to 2002.“How can we diversify oursources of revenue and atthe same time generatefunds sufficient to meet therapidly growing demand forpublic services?”This study documents the currenteconomic structure of the northwestTennessee area, analyzes its preparedness to grow, and reports itsstrengths and weaknesses. The study relieson a variety of data sources includingpublished data, a survey of employers, asurvey of workforce professionals, andfocus group interviews.The northwest Tennessee study areaconsists of seven counties: CrockettCounty, Dyer County, Gibson County,Lake County, Lauderdale County, ObionCounty, and Tipton County. These countiesrepresent 3.8 percent of the state’spopulation and about 3.0 percent of thestate’s payroll employment. Population andemployment growth lag considerablybehind Tennessee and the United States.Local Preparedness to Grow Developing the region’s preparednessto grow has to do with using localresources as effectively as possible. Humanresources are a region’s most importantasset. Education and skills provide thecompetitive edge for a local workforce, andcontinuing education helps to keep thecompetitive edge sharp over time. Northwest Tennessee, along with manyother local economies in the nation, cannotcompete effectively with China or thePacific Rim on the basis of labor cost. Theregion can compete, however, in terms ofproductivity, or output per hour worked. Ifour labor costs more but we produce muchmore per hour worked, our averageproduction costs can be competitive.Productivity depends on the availability ofa well-educated and trained workforce. Onthis account, the northwest Tennesseeworkforce is largely unprepared for futuregrowth.Many of the occupations currently inshortest supply in the study area, such asregistered nurses, machinists, tool and diemakers, and computer operators, requireformal education beyond high school andrequire workers to master particularoccupational skills. On average, only about13 percent of these jobs are available toworkers with less than a high schooleducation. Since 31 percent of the studyarea workforce has less than a high schooleducation, many in the workforce do notqualify for jobs that are available today.Demand for employees with less than ahigh school education will shrinkconsiderably during the next 10 years infavor of employees with technical training,college experience, or a bachelor’s degree.Local employers are concerned aboutmath skills, writing skills, and soft skills inthe local workforce. Employers are alsoconcerned about rising health careinsurance costs and worker’s compensationcosts. More than half of employers citedhealth care costs as one of the top threeconstraints to growth as did 70 percent oflarge employers. Worker’s compensationcosts were identified as an importantconstraint on growth for more than 60percent of large employers and 30 percentof small employers. Perceptions of Local Strengths and Weaknesses Important weaknesses includeeducational attainment of the workforce,apparent lack of regional cooperation, andlack of industrial diversity:Education. The low educationalattainment level of

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