Public getting education on tax breaks, 'pure and simple'
January 08, 2014 11:00 PM | 1696 views | 3 3 comments | 14 14 recommendations | email to a friend | print
Tax incentives unfortunately have become the name of the game in most places when it comes to business recruitment and retention, and Cobb residents are getting an education in the oft-unappetizing world of tax incentives these days, courtesy of the controversy over a 10-year property tax abatement approved for developer John Williams and his $103 million “Riverwalk” project in the Cumberland/Galleria area by the Development Authority of Cobb County. It has the quiet backing of Chairman Tim Lee and the county commission, but has hit a roadblock in the form of the Cobb school board.

Critics say the abatement will cost the school board $4.3 million in lost tax revenues. The school board, don’t forget, is already trying to figure out how to deal with a $79 million revenue shortfall for next year’s budget.

The school board met Tuesday to discuss the abatement and a compromise offer from the DACC last week that would provide $139,299 in property taxes to the board during the three-year construction period for Riverwalk. Developers receiving abatements usually do not have to pay property taxes on land while it is being developed. The board also discussed the “communications policy” passed Friday by the Development Authority that specifies it should alert the school board of pending tax abatement applications.

Williams and DACC Chairman Clark Hungerford have warned that Williams will build elsewhere if his abatement request is rejected. As Williams put it bluntly at the board meeting, the project won’t happen without the subsidy, “pure and simple.”

---

Imagine being able to have free, legal access to your neighbor’s wallet and sharing its contents with whomever you please — and without any obligation to tell him you are doing so. And without him being able to do anything about it, even after he finds out about it.

It’s a pretty sweet deal — for you. But for your neighbor, not so much.

And that’s a pretty fair analogy for the current relationship between the Development Authority and the school board. The board filed a formal objection in Cobb Superior Court in December in a last-minute effort to block the Authority from issuing the bonds. It argues that:

- the Authority cannot give away the Board’s right of taxation;

- the tax incentive represents a “gratuitous gift of public funds”;

- the Authority lacks policies; spelling out its review/approval process for such incentives; and

- the Authority lacks any means of ensuring the proposed incentive will in fact result in the benefit to the public promised by the developer.

The Authority had expected the Dec. 17 bond validation hearing before Senior Judge Mike Stoddard to be a formality. But in the wake of the board’s objection the judge continued the case until after Christmas.

The bond validation hearing is expected to resume on Friday, but the school board now is expected to ask the judge for another extension so it can clarify details of the Authority’s “compromise.”

---

In addition to the objections cited by the school board, there is the underlying question of whether the law giving the Authority the power to grant such incentives is constitutional. Should the unelected Authority board be able to issue tax incentives without the explicit approval of its parent board, the Cobb Commission, as is now the case? And should the Authority be able to usurp the tax-collection powers of the school board, as is apparently now the case?

“I believe local school boards are given the authority to collect taxes for the local Board of Education, and I’m not sure an authority that they have no appointment to or no hand in appointing or no input into the process can take over their constitutional authority to collect taxes,” state Sen. (and former Cobb School Board Chair) Lindsey Tippins (R-west Cobb), has said.

Economic development is vital, yes — but not if it comes at the expense of local education. Ten years’ worth of tax abatements translate into 10 years’ worth of local schoolchildren having to do with less — and/or 10 years’ worth of higher taxes for everyone else to make up the difference.

We suspect Lee and other commissioners would strongly object if the school board could hijack a hefty portion of future county tax revenues and steer them instead to school coffers.

---

The school board has no representation at present on the DACC, the members of which are appointed by the county commission. It deserves such representation, although we’re not sure that adding one or two school board members to the Authority would do much to protect the school budget because they would lack the voting strength to fend off the rest of the Authority board.

The best solution would be to improve the law and allow for school board representation on the Authority — and more important, require the Authority to gain the approval of both the county commission and the school board before handing out any tax incentives. In matters involving tax dollars, the buck should stop with elected officials. That way, a majority of the public can hold officials accountable by way of the ballot box. It’s not right that an unelected, unaccountable board like the Authority should have the unchecked power to issue bonds and hand out tax breaks — especially when the tax dollars it’s giving away are not entirely the Authority’s to give away.

The Cobb legislative delegation should make improving that law a priority in the coming legislative session. And there should be a moratorium on considering any further incentive requests until such changes are made.

In the meantime, the public’s education about the good and the bad of tax incentives continues …

Comments
(3)
Comments-icon Post a Comment
Michelle Sollicito
|
January 12, 2014
Very succinct summary of the situation, Joellen.. I cannot believe this was ever possible, and it definitely should be stopped. Also, do not forget that even if Williams decides his little project will not continue if the tax exemption is halted, thanks to the Braves Stadium development we know someone else WILL develop and WILL pay the taxes in Williams' stead.
Cobb Taxpayer
|
January 11, 2014
How can a wealthy businessman like John Williams allow his reputation for "good works for Cobb" be sullied by taking a few million dollars from the school children of Cobb County ? Williams was the man who cleaned-up the embezzlement and misdeeds of the Cobb Chamber many years ago and now he hires a Turnip for public relations ? Go figure ?
rjsnh
|
January 10, 2014
If one person or group is given a tax break then other folks must make up the loss of tax revenue. Tax breaks for some are simply a means of shifting taxes to others and it is not right. Its plain and simple. If we assume it takes X amount of taxes to operate the government, then if someone is not paying their share it stands to reason somebody else must pick up the tab. Stop these give away programs that allow developers to be free loaders whose tax burden is shifted to the backs of TAXPAYERS.
*We welcome your comments on the stories and issues of the day and seek to provide a forum for the community to voice opinions. All comments are subject to moderator approval before being made visible on the website but are not edited. The use of profanity, obscene and vulgar language, hate speech, and racial slurs is strictly prohibited. Advertisements, promotions, and spam will also be rejected. Please read our terms of service for full guides