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Councilmen Consider Reducing Tax Abatement

The bill has been temporarily put on hold while city officials re-evaluate the business incentive program.

Including residential properties, the tax abatement program accounts for $13.3 million in potential tax revenue for the fiscal year ending June 30, city officials project. Total real-estate tax revenues for the same period are projected to be $185.2 million, an increase of $5.1 million from the previous fiscal year.

The council members think the tax program is too generous. Wilder (see story on page 11) says the city is past the point of needing drastic incentives such as 15-year abatements to lure business to the city.

"I don't think we can do away with it, but it's definitely something we need to scale back," Graziano says. "These abatement programs are great, but there's a point when areas take off on their own. And that's when you should back off."

The discussion comes as City Council and Mayor Wilder struggle to find enough revenue to pay for basic city services. Last week, City Council voted to restore $18 million to the mayor's proposed budget, creating a $7 million deficit.

It's unclear how much tax revenue would be generated by scaling back the commercial and industrial portions of the abatement program. The proposed bill wouldn't touch the residential tax abatement program, Graziano says.

John Woodward, economic development director for the city, says his office is poring over the proposal, trying to determine what effect it might have on the incentives provided to property owners located in the city's enterprise zones. The state offers additional business incentives, such as job tax credits, within those zones. But it requires localities to provide certain incentives of its own in order to qualify.

"The tax abatement program is just one cog in the wheel," Woodward says, adding that changing the program could affect the status of its enterprise zones. "As with any economic tool, you don't want to look at anything in a vacuum."

By state law, the city can change the incentives offered within those enterprise zones once a year. Any changes would have to be made sometime after September. — Scott Bass

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