New Castle News

December 11, 2013

Our Opinion: Local tax incentive efforts have little in common

By Staff
New Castle News

NEW CASTLE — There’s been a lot of local activity lately in terms of tax abatement.

In New Castle, a proposal surfaced last month to change the existing property tax abatement schedule in the city. Right now, new construction and improvements of all types in the city receive 100 percent abatement for five years. A plan put before council would shorten this time frame to three years, and create a sliding scale of abatement at 100 percent the first year, 50 percent the second and 25 percent the third.

Plus, this proposal would require property owners to make their improvements within a year of the application date. Last week, however, this proposal was defeated by council, although this was done to make changes and allow them to be resubmitted.

Meanwhile, the Lawrence County commissioners last week voted 2-1 to expand abatement on county taxes. The old system of abatement was 75 percent the first year, 50 percent the second and 25 percent the third for industrial properties only. The new system creates a five-year abatement process, starting at 100 percent and decreasing by 20 percent every year after.

Also, the abatement not only covers industrial property, but also commercial development in what is designated as the central business district of every municipality in the county.

Now, it doesn’t take a tax expert to see these two abatement efforts have little in common. In fact, they seem to be going in different directions.

As an economic development incentive, the benefits of tax abatement are unclear. Logically, cutting costs through lower taxes ought to be attractive to business.

But taxes aren’t the only thing that businesses consider when locating, expanding, etc. We note that New Castle’s abatement program has been in place for quite some time, and it’s difficult to document a long-term impact.

Plus, areas such as Millennium Park in Neshannock Township — which is a special tax-free zone — hasn’t attracted development.

Yet if abatement is to have an effect, we presume taxing bodies would want to work together in order to coordinate the benefit. Otherwise, it doesn’t seem to make much sense.

It’s pretty obvious the county and the city are doing nothing of the sort. So it’s hard to be optimistic that any abatement plan will produce any meaningful impact.

Meanwhile, we can’t help but notice the decidedly different methods of dealing with abatement in the city and the county. New Castle’s proposed changes were revealed in advance, giving the public (the folks who eventually subsidize abatement) a chance to review it.

At the county, the abatement changes were presented and approved at a single meeting. You would think the commissioners would at least make the effort to have the public on board with their changes.