Business tax abatements sought Five-year program for new and expanding businesses

Pike County Courrier
Published Jul 19, 2012 at 6:01 am (Updated Jul 19, 2012)
MILFORD — A tax abatement incentive plan, to bring in new business and help existing businesses grow, was presented to Pike County Commissioners Wednesday by Michael Sullivan, executive director of Pike County Economic Development Authority.

The five year plan proposed would: reduce the real estate taxes on new or existing businesses that build a new construction and perform major restoration to existing real estate (that would normally result in an increased tax assessment). Specifically, if a business wants to move into the county, or an existing business wants to expand, the proposal offers a five year tax abatement. In the first year, it would receive a 90% reduction in taxes, 80% in the next year, 60% in the third year, 40% in the fourth year and 20% in the fifth year. Thereafter, they would pay their full assessment.

According to the plan, municipalities would be responsible for designating areas within their boundaries where the tax abatement would apply. The plan will require a buy-in by the school districts and municipalities, before whom Sullivan will be appearing and explaining both the plan and why it would be beneficial. Each school district and municipality could opt in or out of the plan anytime. Sullivan hopes he can convince them of the benefits.

“The big benefit is to make Pike County competitive with our neighbors,” says Sullivan. “It’s very difficult for us to attract businesses in Pike County, when across the river on both sides [New York and New Jersey] are offering incentives.” The obvious benefit of bringing new business or expanding existing businesses is the growth in jobs. The long term benefit is that once the abatement ends, it will grow the tax rolls. “Inherently, the way we do business [in Pennsylvania]” is more attractive, according to The Tax Foundation 2012 Business Climate Report. “The state of Pennsylvania is in a very strong position,” says Sullivan. “We don’t have to do as big a tax abatement as they do in New York.” According to the report, Pennsylvania is at number 19 on the list compared to other states’ tax systems, and is often a gauge businesses use in considering location. “I don’t want to give away the farm,” explains Sullivan of the modesty of the plan. “Nothing of what I am proposing here is radical. It is very understated. I am tying this proposal to our superior rating [according to the Climate Report].”

The growth of new jobs is important as Pike County at 9.8% unemployment, has the third highest unemployment rate in the state, close behind Cameron and Philadelphia Counties, as of May 2012. Also, the proposed plan shows how far current residents in Pike County have to go in order to be employed – west to Columbia County, south to Philadelphia and Ocean County, N.J., east to Suffolk County, N.Y. and north to Utica County, N.Y. According to the 2000 Census figures large portions of Pike residents often must travel to Monroe, Wayne, Sussex and Orange Counties to find jobs. The commissioners were supportive of the idea. Commissioner Matt Osterberg called the idea, “a very important program that will help with economic revitalization of the county.” The commissioners would pass a county-wide resolution if and when the school districts and municipalities accept the idea of the plan and pass resolutions making the abatement available. Sullivan brought up a case in point for the incentive programs. There was an area in Greer, S.C. which was an “economic wasteland.” But after instituting a business incentive program , a BMW plant moved in, bringing with it jobs and eventually an addition to the tax rolls. Since 1992, the plant has invested over $6 billion in the Spartanburg County area. At the time of original investment, BMW expected to bring in about $1 billion and 4,000 jobs. Recently BMW has announced another $900 million investment over the next several years and another 300 jobs to be added.

— Charles Reynolds