April 30, 2000

Abatement plan gives benefits all around

Tax abatement, a tool used to encourage businesses to invest in the community, has grown to have a friendlier face.

From the start, abatements have affected only new property taxes that resulted from a company's investment. They have not reduced existing taxes.

But at one time, the granting of an abatement meant that all taxing entities received no increase in revenue from a company's expansion or new facility until the abatement period passed. The exceptions were instances in which over 10 years a company was allowed to pay 10 percent of its taxes the second year, 20 percent the third year, etc., until 100 percent was reached.

In the past few years, a different approach has been used.

In the talks leading to abatement agreements with local government, companies have agreed to donate to the local school district the amount of added taxes the district would have received without the abatement.

As a result:

* The schools get 100 percent of increase in taxes from the investment from the start.

* The company gets its tax abatement for 10 years, minus the money donated to the schools, and,

* The company gets tax credit for contribution to the schools.

* The community gets the added jobs and local spending of a new or expanded company.

We see no losers in this process.