City needs other actions to complement abatements
The tax-abatement changes that Butler City Council tentatively approved on Thursday with the goal of attracting new businesses won’t resolve the city’s serious financial problems — in the short run or over the long term.
For the city to fill its deep financial hole, cost-saving changes are needed throughout the city’s operation, one big area of focus being the fire department.
But that the current council acted on tax abatement — with the date for final approval set as Dec. 20 — represents a change from past councils when ideas and issues were extensively explored, discussed — and then forgotten.
The question — and challenge — now becomes whether the returns from the tax abatements will prove the work on the abatements effort was a good investment.
To work for the city, the new abatements schedule will need new businesses moving here or starting up here, then thriving here and remaining here.
It’s estimated that, on average, 20 new businesses open in the city each year. Officials haven’t dwelled on how many close their doors or move elsewhere annually.
Councilwoman Cheri Scott, city finance director, said the new abatements setup is “much more attractive for new businesses.”
“We need to have something that is aggressive,” she said.
However, the city’s 7-mill business-privilege tax — the highest in the state — will continue to work against the city’s attractiveness until local officials find other revenue sources or implement cost savings enabling that millage rate to be reduced significantly.
The business-privilege tax covers gross receipts of such enterprises as restaurants, funeral homes and lawyers. The city’s retail stores and wholesale businesses pay a 1.5-mill mercantile tax.
Said Chelynne Curci, the city’s Main Street manager: “In addition to the Local Economic Revitalization Tax Assistance Act (LERTA) district downtown and our facade-improvement program, the (new) tax-abatement schedule is just another tool in our toolbox allowing us to explain to (potential) new businesses why they want to locate here.”
She’s right.
Allowing all new businesses to be tax-exempt for the first two years — both those covered by the business-privilege tax and those subject to the mercantile tax — to help them to get their feet firmly planted is reasonable. And it also is reasonable for them to become a city tax-paying entity after that, even if initially at a reduced rate.
Indeed, they should feel an obligation toward that end, because a city’s prosperity benefits all those who live within it.
What’s been happening regarding abatements up to now is but a first step in what needs to be an ongoing discussion of the bigger picture of the city’s financial problems.
The question becomes whether this council will continue to be aggressive regarding those needs, new ideas and tough decisions or whether, like so many times in the past, the hard work is kicked down the road to some future council.