Tax abatement asked to develop business.

By Peter Becker The News Eagle September 13. 2012 4:02PM
In an effort to counter a loss of Pike County businesses and attract more jobs, Pike County Chamber of Commerce and Pike County Economic Development Authority is seeking a tax abatement for new or expanding business. He is asking for cooperation from the county, school districts and municipalities to offer companies a tax break. Michael J. Sullivan, Executive Director for both organizations, approached the Wallenpaupack Area School Board Monday night with the proposal. He said he would be talking with the Delaware Valley School Board the following week, and already has the support of the Pike County Commissioners.

Businesses leaving Pike

Striking an urgent note, Sullivan stressed that Pike County has high unemployment and increasing number of companies departing for other areas where it costs less to do business. Currently he said there is no site in Pike County to offer new companies that is already served by water, sewer and gas utilities. “It doesn’t exist,” he said. He cited an example of a company in Shohola Township that is doing so well, they are about to double in size. They have been offered, however, a 20-year tax abatement in New York State to encourage the business to move there.?The proposal being offered in Pike County, he said, was more modest. This is a five year program, where only the improvements on the land would get a tax break, less with each successive year. “You will gain money, not lose,” Sullivan told the School Board. “I need this in order to attract business” he said. “It’s very difficult.” sharing Census statistics, he noted that in 2008 Pike County has 917 businesses. In 2009 there were only 887. He noted how people in Pike County are willing to commute long distances for a job- as far as eastern Long Island- because the jobs aren’t here. Unemployment in Pike County is the second highest of the 67 counties statewide. The US Bureau of Labor Statistics set the rate at 11.2% in July. The rate was 10.7% a year before. Philadelphia County was on top in July, at 11.6%. By contrast, Wayne County’s jobless rate was 6.8%; Monroe County, 10.%. The average in Pennsylvania was 7.9%; nationally, 8.3.%.

How the program works

The incentive program would apply to existing as well as new business activity in Pike County, PA. Sullivan described it as a modest tax abatement designed to keep Pike competitive with neighboring states and counties in order to attract new business activity. “This program is designed to work with Pennsylvania’s competitive situation as desirable place to do business,” the written summary states. Taxing authorities such as townships or school districts can choose to participate or not. The proposed program offer a five year tax abatement. Real estate taxes would be reduced on three conditions: 1. On new building construction and/or, 2. Major restoration to existing real estate and 3. Municipalities must designate the area where tax abatement applies.?Application must be made before the Pike County Commissioners and the participating municipality and school district for each individual development project. Initial contact would be through the Pike County Economic Development Authority. The proposed abatement apples to following percentages on real estate improvements only. The tax on the land would not be affected. Year 1, 90% reduction of taxes. 10% collected. Year 2, 80% reduction of taxes. 20% collected. Year 3, 60% reduction of taxes. 40% collected. Year 4, 40% reduction of taxes. 60% collected. Year 5, 20% reduction of taxes. 80% collected. Year 6, Full real estate assessment; 100% collected.

School districts’ help critical

Participation by the school districts is critical, Sullivan said, as school taxes represent about 60 percent of the tax bill.?Sullivan noted that a generous tax abatement program is not needed in Pennsylvania. The Tax Foundation ranked the state 19th in the country for how favorable a state’s tax system is for business. New Jersey was the worst, with a rank of 50; New York was in 49th place. “With a modest tax abatement program in Pennsylvania, we can do wonders,” Sullivan said.?The School Board did not take any action. Sullivan offered to come back next month to discuss the plan further.