Regional Abatement Policy Sensible

July 21, 2008
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Tax policy regarding exemptions or tax capture by tax increment authority districts have been the source of growing consternation in West Michigan, as counties and cities battle through budgets of dwindling revenue resources. Nearly all, however, accept that such policies have been influenced as much by those in Indiana, North Carolina or Texas.

The economic development arguments to lure businesses to Michigan or help them expand in Kent County are always fear-laced, based on the deals those companies have been offered to move out. The most blatant example was in the posting of billboards at the Indiana state line encouraging and welcoming Michigan businesses to cross the border.

The extent of dissatisfaction has been measured in the words exchanged during policy debates at Grand Rapids City Commission meetings, during which former commissioner Jim Jendrasiak referred to it as “corporate welfare,” and last year extended to a decision by the Kent County Board of Commissioners to limit its participation in extending credits.

The Plainfield Township Board is taking the discussion to another level. As the board considers upcoming requests for Industrial Facilities Tax breaks, Township Manager Robert Homan last week suggested that standards should be set across the region for property tax abatement policies. He took the suggestion to Grand Valley Metropolitan Council where it is agreed that, at least, such discussion holds merit.

This is not to suggest that all forms of tax credits would or should be eliminated; such avoidance is not possible in this economy. The Plainfield Township leaders are studying the possibilities of at least regional uniformity, which apparently holds merit for The Right Place Inc., a regional economic development agency. President Birgit Klohs noted that individual communities all have adopted varied policies and procedures for granting abatements, leaving the business recruiting agency to sort it out. Klohs famously often notes that a company coming into the region really doesn’t care where the city limit signs are placed; they want the best options for the best price, including incentives.

Inasmuch as the state has left decisions regarding such policy to individual governmental units, the opportunity appears open to study a regional concept.

Grand Rapids Business Journal supports such an effort, even on the state level. Homan noted the state legislation is now 34 years old and “times have changed,” suggesting the state begin to update the policy.

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