The importance of a diversified tax base

Karen Schexnayder

June 17, 2016

Karen Schexnayder Director of Marketing Nassau County Economic Dev Board

As part of my job as the director of marketing for the Nassau County Economic Development Board, I follow social media to be in tune with what people’s reactions, comments and thoughts are in regards to economic development, both locally and on a broader scale. Local comments often include “we’re a tourist town”, “we’re a mill town”, “we don’t want the mills” and “why do we need the port?”

Here’s the thing. Nassau County is a tourist town, home to two thriving mills and so much more. The Gilded Age saw an influx of tourists and vacationers from the North to the beautiful beaches of Amelia Island, and we continue to welcome hundreds of thousands of visitors from around the world each year.

We are a mill town in large part due to the long-standing history of Rayonier Advanced Materials and WestRock, and we have played a role in Florida’s logistics since David Yulee started construction of the rail line in 1855. We are an example of how industry and tourism have coexisted for decades.

In my office hangs a picture of the Pittsburgh, Pennsylvania skyline and when I get a visitor, he or she invariably asks why there’s a picture of Pittsburgh hanging in my office instead of a beach scene. First of all, I was born and raised in Pittsburgh, so it will always hold a special place in my heart. Second, it serves as inspiration. As a child growing up in Pittsburgh, I saw the city that I love become decimated as the steel industry moved their operations to the South.

Sadly, Pittsburgh was too dependent on one economy – the steel industry – and it took years for the city to recover. They did not have a diversified economy.

So what is a diversified economy or what is often referred to as a diversified tax base? It simply means that a community or state has a mix of industries or sources from which it receives revenue (taxes). Those sources include local businesses and residents, however, the more industry a community has, the better for residents. A community wants the ratio of industry to residents to favor that of industry.

Industry or businesses typically pay more in taxes than residential, thus keeping taxes low for homeowners. One of the biggest misconceptions is that a diversified tax base means more (or higher) taxes to the residents. A diversified tax base is not an increase in a resident’s property or ad valorem tax or a separate tax.

Why do communities want a diversified tax base? Essentially, communities want to have a diverse tax base, just as individuals want a diversified investment portfolio. Being too reliant on one industry leaves the entire community in jeopardy and susceptible to economic downtowns or shifts, similar to what Pittsburgh experienced with the steel industry.

We can look to our neighbors just north of us, Camden County, Georgia, as an example of a community who experienced hardships when the Durango-Georgia Paper Company mill closed in 2002 and nine hundred workers lost their jobs. When the mill shut down many small businesses were also negatively affected. The devastation experienced by one business ripples through the community.

Communities that have only one major employer or industry, seek more variety. The community (or state) wants to have a healthy mix of retail, commercial and industrial businesses. Communities with diverse industries or economies fare better than those who are reliant upon one core industry, such as construction or tourism. Florida felt the ramifications when both the construction and tourism industries took significant hits during the Great Recession.

Pittsburgh was recently ranked as the “Most Livable City in the Continental United States” by The Economist magazine, something that would have been unheard of back when steel mills and their smoke penetrated the city. City and community leaders realized they needed to expand their horizons and diversify their economy. Today, Pittsburgh is home to a mix thriving manufacturing companies, yet has become known as a hub for health care, information technology and world-class health care.

I see some similarities between Nassau County and Pittsburgh, other than the fact that Pittsburgh doesn’t have a beach. When I cross the Shave Bridge from Yulee onto Amelia Island and see our two mills rising out of the Intracoastal Waterway, I think of Pittsburgh. Just as the mills of Fernandina grace our beautiful waterfront, the steel mills of Pittsburgh laced the three rivers of my hometown.

I think of the countless generations of families who have raised their families because those mills have provided them with a good life and for that, we as a county are fortunate. I see opportunity, too.

Nassau County is a blank slate. We are attracting attention from a myriad of industries who will hopefully one day call Nassau County home.