What if the MOU renewal date were June 30, 2026?
Dear reader you're likely first response would be "But it isn't!"
Yes. True. There likely would be no blog if that were true. Folks would still be writing articles about Cornell needing to contribute more. And likely no one would say let's end this MOU as no one has done in twenty years.
Why not? Because ending it would mean having to find $1,600,000 for the revenue part of the budget from somewhere else for 2024. And it's hard for someone in the hot seat to let go of a bird in the hand. Even harder for that person who needs to project how much sales tax revenue will we really collect next year? At least in projecting property tax the number is for all practical purposes a certainty. For sales tax the plus/minus error gap is always greater.
"I'd rather be safe than sorry" "A bird in the hand is worth two in the bush" is part of all of us in being human. And for twenty years that Cornell bird in the hand could be relied on for at least $1,600,000 to begin to fill the City's revenue bucket. In the meantime, the other property owners, not exempt from paying taxes, filled the bucket up to about thirty percent of its capacity with their property taxes - in 2023 to the tune of $30,000,000.
City staff most likely thinks about the Cornell dollars as money in lieu of taxes. Cornell likely thinks about the money as a voluntary contribution - a sort of philanthropic gift to the community.
So together Cornell's voluntary contribution and the City property tax add up to $31,600,000. The rest: $58,400,000 come from other sources. If Cornell's contribution is thought of as property tax, then one could easily say:
"Wow" how much more property tax would we need to collect to make up for $1,600,000? Or what is 1.6/30 as a percent: Wow 5.3% and so does that mean every tax bill will need to go up 5.3%?
If one thinks of the $1,600,000 as part of the $58,400,000 and that there is no yearly contribution from Cornell next year, It certainly would make sense to ask: What would it take to increase the more than $58 million revenue stream by 2.7%?
Of course, this would lead to other questions, e.g.: What is best-case worst-case scenarios for sales tax revenue in 2024? What can we expect for both existing businesses and new businesses coming online? What are the hotels forecasting in their budget as year-to-year increase in revenue because of the Conference Center coming online? Aside from sales tax, what would it take to add to the Departmental Revenue stream?
And another question: What about a mix of all revenue sources including property tax to see how to cover not getting Cornell's contribution?
Then questions such as: What is forecast as coming on-line in 2024 in terms of abatement? In terms of housing stock sales that could drive property tax income? How will the value of property grow as new assessments come online and therefore increase the tax base? Will the $2.4 billion of taxable property assessment have grown in value for the 2024 tax year? If it had grown, e.g., to $2.8 billion and taxed at the same rate then it would add $5 million to the $30 million collected in 2023. How much will city properties that have received tax abatement be adding to tax revenue next year. The good news is that year after year abated properties' tax bills grow and at end of term the full amount is paid in taxes based on assessed value.
Food for thought, and likely to generate more questions needing answers...
Ref: 2.4 billion
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