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EDITORIAL

Paying attention to standards for tax abatements

Thursday, July 25, 2013 - 12:01 am

At least try to mae sure companies live up to their promise.

The City Council’s decision to end property tax breaks for companies that don’t live up to the promises they made when getting the breaks may end up being little more than symbolic. There are some requirements in the state law – such as a written notice of the denial and a public hearing scheduled within 30 days of the notice – that may trip the council up.

But hooray for council members even having the vote this week, which was 8-0 in favor of keeping 11 projects from 10 companies off the tax-break list.

The move was unprecedented in the city’s history. The usual move is to grant the tax breaks to companies promising to make investments in building or equipment or hire a certain number of new employees, then completely ignore whether the promises are actually kept. Those who don’t meet their goals keep getting the same tax breaks as those who do.

Without proper oversight, the tax-abatement process becomes a giant game of let’s pretend. If no one’s paying attention, what’s the real point of tax abatement? Some companies that don’t deserve them get abatements because they took the time to ask. Some that probably do deserve them don’t get them because they didn’t think to ask.

Isn’t it time now to ask the big question: Is the whole abatement process worth it? As Councilman John Crawford, R-at large, asked earlier this year when the council toughened the abatement guidelines, to tax breaks really incentivize job creation or just reward it? Is the city really encouraging economic growth or “just being a welcome wagon?” Elissa McGauley, an economic development specialist with the city, answered him, sort of. In some cases, she said, the city may never know the answer because it cannot force a company to admit that it would have invested in a project with or without help from the city.

Local governments can get caught up in an insane bidding process, each one feeling it necessary to over more and bigger incentives than the next one. Wouldn’t it be better to just set a tax rate that is sensible and apply it to everybody? Isn’t the granting of an abatement as an incentive really a tacit admission that the tax rate is too high?

In the meantime, though, the city should at least be serious about the standards that are used to determine if companies actually live up to their promises. Standards that are not enforced are worse than having no standards at all.

While we’re on the subject, how about personal abatements for those of us who promise to be better citizens?