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Labor group skeptical of new city tax-incentive rules

Saturday, February 9, 2013 - 8:29 am

A Fort Wayne labor group says a proposed revision of the city's tax-incentive policy only pays lip-service to the real issue – how to make sure companies live up to their job-creation pledges.

City officials are expected Tuesday to introduce a revised ordinance governing how Fort Wayne awards property tax breaks for companies. While the new policy calls for at least one new compliance measure, it still relies on self-reporting by the companies that benefit from the tax breaks.

“We put taxpayer money on the table, and we expect a return in exchange for that,” said Tom Lewandowski, president of the Northeast Indiana Central Labor Council, adding that it's often difficult to tell whether companies that get tax breaks create all the jobs they promise.

Companies that get tax abatement already must file an annual compliance form that lists the new jobs and wages that have been created as a result of the deductions. Under the revised ordinance, each company that gets the tax breaks would also need to provide a form that lists the company's employment using exact job classifications.

The new layer of oversight would still rely on self-reported information from the companies and would not require businesses to hand over specific payroll tax data, but it would improve the information available to local officials, said City Councilman Russ Jehl, R-2nd.

“It improves transparency, it improves information,” said Jehl, who was part of a committee that spent several months updating the policy. “Before, you didn't have to break into so much detail the categories of jobs.”

Jehl said the local government simply would not have the resources and personnel to comb through state or federal payroll tax information. Requiring that level of information also would strain local businesses, which the updated policy avoids, he said.

“It's designed to not be an undo burden on the business, but it is designed to make them detail enough information where if they're not in compliance, there's enough information to raise red flags,” Jehl said.

But Lewandowski, a frequent critic of tax-incentive policy, said that because the system relies on self reporting, it leaves local officials with little real evidence that companies are living up to their promises.

“The dilemma is, the way they approach it now leaves it unmeasurable and unenforceable,” Lewandowski said.

Elissa McGauley, an economic development specialist with the city, could not immediately be reached for comment Friday afternoon.

Councilman Geoff Paddock, D-5th, called the updated compliance form “a logical next step” toward gathering more information without overburdening businesses and city personnel. But in the future, Paddock said, the city may look into boosting the economic development staff to allow for greater oversight of tax incentives.

“There may be an effort at some point to beef up the staff to check into those things,” he said.

Council is scheduled to debate the revised ordinance Feb. 26.