Sorry, We Can't Afford You

One of the great epiphanies in the civic life of many homeowners comes the day they realize that they aren't financial assets to their community, but rather financial liabilities. That is, they consume more in government services (schools, police protection, roads, parks and so on) than they contribute in taxes.

Homeowners are hardly alone in their ignorance. A surprising number of elected officials don't know that when they approve a new subdivision, they're creating a drain on the tax base. That's why Jeffrey Dorfman has been so important to the fast-growing suburbs near Atlanta.

A professor at the University of Georgia, Dorfman studies local tax bases and tells officials when they're in danger of saying yes to too many money-draining uses (residential) and not balancing them with enough tax-base enhancing uses (industrial, retail and office). Thanks to his work, elected officials are smartening up. "Five or 10 years ago, if you went and talked to a bunch of county commissioners, you could have asked them, 'If you could take 200 acres of farmland and put 200 houses on it, would that be good for their county?' " Dorfman said. "All of them would have said it would be good." In fact, unbalanced growth is not good, and Dorfman has the numbers to prove it. He estimates that homeowners pay about 70 percent of the costs of services they receive, while industrial and commercial developments pay much in taxes than they consume in services.

For proof that Dorfman's message is sinking in, visit Atlanta's distant suburb of Paulding County, which has exploded with growth in recent years. (Since the 2000 census, the county has grown by 12 percent.) Alas, the growth is overwhelmingly residential, but the county commission is fully alert to the danger and is scrambling to bring in industrial and commercial uses. "We know the (tax base) bomb is ticking, and we have to head it off," said the commission chair. How unbalanced is Paulding's tax base? Seventy-one percent of the county's property tax base is residential and only 12 percent is industrial or commercial. Compare that to Fulton County, where the city of Atlanta is located. Fifty-three percent of Fulton's tax base is residential and 39 percent is industrial or commercial. Posted 12/15/2004

Postscript: The Great Recession and the housing foreclosures and implosion of residential values that followed it have made this message about balanced development even more true than in 2004.