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Editorial

Tax breaks receive welcome scrutiny

Fort Wayne City Council members took a satisfying step toward fairness Tuesday when they voted not to renew tax breaks for a slew of companies failing to meet their end of the bargain. The move to hold companies receiving the tax breaks more accountable is a victory for those critical of the lenient oversight of the program and for all taxpayers.

The council grants companies property tax phase-ins – formerly known as tax abatements – ostensibly as an economic development tool to encourage businesses to invest in projects that will bring jobs and economic growth to the community. The phase-ins allow the company to defer some of the property taxes they would pay for several years. In return, the companies make specific investment or job-creation commitments.

The city has approved hundreds of these tax breaks over the years and rarely declines a tax break request. And until Tuesday, the council had never made a move to rescind a tax phase-in despite an abundance of companies that failed to keep their promises.

“If the facts are there that they are not meeting the rules we’ve set and they are not in compliance, I don’t have any problem with the vote I initially cast last Tuesday to rescind,” said Councilman Geoff Paddock, D-5th. “And you’re going to see more of this with the steps we took earlier this year when we tightened up the ordinance.”

Paddock served on the Joint City-County Tax Abatement Committee that reviewed the program and recommended several improvements, including ensuring the city and county policies were aligned.

But the Tuesday vote was only a preliminary rejection for those projects found not in compliance. It rarely happens, but there is always the chance that a council member could change his final vote – especially if a company is able to fix the lapse.

“If it was just a technical error, then it’s something we need to work through and maybe make sure our procedures and rules are clearer, but if it’s a situation where someone is just blatantly not following the rules, we need to hold them accountable,” Paddock said. “We may need to tighten up the rules a bit further and make sure we have someone looking at that compliance on a regular basis.”

It’s likely that Radiology Oncology Associates, the company Councilman John Crawford, R-at large, co-founded, will have corrected the paperwork problem that led city officials to put the company on the list.

“It may have been correct, but I’m not going to vote for it anyway,” said Crawford. “The purpose of a tax phase-in is only if the project would go elsewhere or would not happen if it wasn’t approved.”

He was not on council when the abatement was originally granted, but he said he opposed giving tax phase-ins to businesses providing professional services as opposed to manufacturing businesses.

“John Crawford raises an excellent point. Are we giving these to people who need them to get the project done, or is it just an extra bonus?” Paddock said. “We want to encourage businesses to invest, and I believe tax phase-ins are one tool to do that, but we need to make sure companies are following the rules.”

Local government leaders have made some improvements to the tax break program. Now city leaders need to prove they are committed to enforcing the rules by standing firm against renewing tax phase-ins for any company that fails to keep its promises.

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