The Terre Haute City Council is taking a closer look at tax abatements after many years of approving them without reviewing them.
When a business is developing or expanding, a city may grant the business relief from taxes in the form of an abatement for a set amount of time – usually 10 years. In turn, the business promises the city it will maintain a projected level of employment.
After the city clerk’s office as well as council members noticed many companies were not in substantial compliance with their abatement renewal applications this year, clerk’s office officials say they decided to reinstate a review process.
Councilman John Mullican says many of the companies in question were guilty only of filing incorrect or late paperwork.
“Abatements are a wonderful tool to try and grow jobs in the community, but just giving away tax dollars without having companies actually engaging in the process of doing what they say in growing jobs or maintaining jobs – that’s not the point of an abatement,” Mullican says.
The council held a hearing Thursday night to question major Terre Haute employers like Bemis and Sony DADC about why their employment numbers were lower than projected.
Clerk’s office officials say this was the first time in many years the council has held a hearing on the approval of the millions of dollars worth of abatements the city grants each year.
Bemis representative Sam Weatherford said while their headcounts were not what they would like them to be, the company was able to add 47 employees in 2012 after many years of reducing their workforce.
Several construction companies like Lenex Steel said they were not maintaining projected employment levels because of the impact of the economic recession.
None of the companies present at the hearing that were actively seeking a renewal were denied.
One company, Ivy Hill Packaging, was found to be non-compliant, had not made any efforts to contact the Clerk or the Council and no one came to speak on their behalf at the hearing. Nevertheless, the council voted 5-1 with Mullican the only no vote to approve Ivy Hill’s abatements.
Councilman Jim Chalos said that even though the business was not in compliance, taking tax abatements away from companies was not a way to create jobs.