PAnews.com, Port Arthur, Texas

Opinion

June 13, 2014

To abate or not to abate?

PORT ARTHUR — Before we get into whether a tax abatement is good or bad for a community, everyone may not know exactly what it is.

Tax abatement is a reduction of or exemption from taxes granted by a government for a specified period, usually to encourage certain activities such as investment in capital equipment. A tax incentive is a form of tax abatement.

In this day and age, tax abatements are common practice, especially in communities looking to grow. Companies look for the communities that one, fit their needed geographic profile and two, will work with them on these tax breaks to get them the best deal. And most will surely go to the community that will work with them over ones that won’t.

Over the past few years, I have had the great opportunity to work at newspapers in many different states and cities. Through that time, I have seen those communities use tax breaks to entice companies such as movie theaters, gas companies, wind energy companies and private electric companies to build, add jobs, pay for utilities, ultimately pay taxes and help those communities to grow their local economy.  Each one had a 10 year 100 percent tax abatement. Ask any of those community leaders if they would do it again, and they would adamantly say “Hell yes! Over and over!”

Why would they do that if they are not going to get full benefit from the companies for 10 years? They understand that it is better to get the benefits of additional local jobs, the generation of economic dollars thrust into the community during construction, sales tax revenue that would be generated and then an increase in tax dollars after the abatement is up, rather than see all that go to another community that is willing to give the company what it wants. Which in-turn will let other companies know that they can come to those communities, work with those community leaders, creating a cycle of growth. Hmmmm, growth? Wonder what that would be like?  

ZeoGas is a company that wants to come to Port Arthur. ZeoGas is a company that will bring 300 to 600 jobs to our community. ZeoGas is a company that is will pump $2.2 billion, during construction, into our local economy. ZeoGas is a company that will generate $2.5 million in sales tax revenue for the city. ZeoGas is a company that could spend $5 million dollars a year for water from our city. And they wanted a 100 percent tax abatement for 10 years, an offer that Jefferson County had already made to the company. As did Corpus Christi and locations in Louisiana.

This past Tuesday, The Port Arthur City Council re-extended their initial offer of a 10-year agreement with a 75 percent tax abatement during construction, and a 90 percent tax abatement once the plant is operational that would decrease to 50 percent over the 10 years. Are you kidding? We have a company that wants to come to Port Arthur and we are fussing over 25 percent and 10 percent differences as compared to the millions of dollars this company will bring? Clearly, future growth is something that will not happen in Port Arthur, but I hear Louisiana is getting ready to BOOM!

Rich Macke is publisher of The Port Arthur News.

 

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