Voter to Consider Business Tax Exemptions on November Ballot

[Gwen Break]

Recently, the Walton County Board of County Commissioners approved a resolution which authorizes a referendum to be placed on the November 6, 2012 General Election ballot. The voters will decide whether or not the County Commission should have the authority to abate ad valorem taxes for new and/or expanding businesses. Prior to its expiration in 2010, the BCC had this authority or over 20 years. During that time, no more than 3 companies received the exemption.

The language to be placed on the November 6, 2012 ballot will be as follows:

Shall the board of county commissioners of this county be authorized to grant, pursuant to s. 3, Art. VII of the State Constitution, property tax exemptions for new businesses and expansions of existing businesses that are expected to create new, full-time jobs in the county?
Yes-For authority to grant exemptions.
No-Against authority to grant exemptions.

Florida Statute 196.1995 governs the program. It states that new or expanding businesses that would be eligible for this abatement would have to meet the following criteria.
For new businesses:

• A business must be establishing 10 or more new full time employees, paying wages above the local average, and they must be engaged in manufacturing or be a qualified targeted industry business. Or
• They must be creating 25 or more new full time jobs, and selling more than 50 % of their product outside of the state, so they have to be exporting. Or
• They must be a new business to the state on a site clearly separate from any other operation that they may own, and have 50 or more full time employees. Or
• Any business or organization located in an enterprise zone or brownfield area that begins operation on a site clearly separate from any other operation that they own.

For expanding businesses:

• A business must be creating 10 or more new full time jobs at wages above the local average and they must be engaged in manufacturing. Or
• They must be establishing 25 or more new full time jobs, and selling more than 50% of their product outside of the state, and they must be increasing operations on a site located within the County or collocating with another branch of their same business and increasing jobs or productivity by at least 10%. Or
• Any business located in an enterprise zone or brownfield area that increases operations at their site located in these areas.

Ad valorem abatement authority expires 10 years after the election in which it was approved, and can be extended for subsequent 10 year periods by referendum. The statute states that the abatement would only be available for the improvements made to real property by or for the use of a new or expanding business, and on the new tangible personal property of the business. This example shows that even with an abatement, a business will still be paying more taxes than before any improvements were made and the abatement granted.

Why should the BCC be authorized to grant tax exemptions for businesses? Ad valorem tax exemptions are viewed as a way of offering local incentives to companies that are considering relocating and expanding. The types of companies that are targeted through the eligibility criteria above are typically creating more than 10 new jobs at wages above the local average, and assist in diversifying the local economy. Any lost revenue that might be incurred by the County could be offset by new employees becoming area residents and paying ad valorem taxes on homes, and increased sales and gas tax revenues.

If a majority of the voters approve this referendum, a process would be instituted in order for the exemptions to be approved. A prospective company would be required to submit an application and provide information regarding their project including the number of new full time jobs, wages, capital investment and any other information that may be required. Once an application is received, the property appraiser will issue a report with additional information regarding property tax revenues, and a determination of whether or not the application meets the statutory criteria.

Following the receipt of the property appraiser's report, the economic benefits of the project would be weighed by the BCC, so they may calculate their expected return on investment. Only after this work is done could the County Commissioners consider an ordinance to grant the exemption, and determine the specified time period for the exemption which could be up to 10 years.
Upon passing an ordinance, the BCC would enter into a written tax exemption agreement with the company, which could include performance measures for the business to meet. Should the company fail to live up to the terms of the agreement; the County could then revoke, in whole or in part, the exemption.
If you have any questions regarding this referendum, please contact Scarlett Phaneuf, Executive Director of the Walton County Economic Development Alliance at 850-892-4859 or scarlett@wcedafl.com.

[graytonbeachguy]

I oppose this sort of giveaway. I do not think these exemptions work to attract new business nor do they motivate existing businesses to expand.

All of the exemptions I have seen have been boondoggles. For reference, see North Okaloosa Medical Center. Also see BoSox pitcher Curt Schilling's failed video game company.