Tax Increment Financing Proposed for State Firms
Wolfe, Lou Anne, THE JOURNAL RECORD
House Joint Resolution 1036, authored by State Rep. Bill Brewster, D-Marietta, would put to voters a constitutional amendment that would give new manufacturing businesses the option for tax increment financing, a method supporters say has been adopted by 30 states.
Monday was the second interim study meeting to be held on the measure by the House Committee on Industry and Labor Relations.
New manufacturing locations are already eligible for a five-year exemption on ad valorem, or property, taxes.
If it became law, House Joint Resolution 1036 would give them another alternative, but a company could not use both incentives simultaneously.
The proposal was advanced to Brewster by developers of the $65 million Tinker Business and Industrial Park in Midwest City. But, tax increment financing was also cited as a goal in House Bill 1444, a massive economic development measure passed in 1987.
Under tax increment financing, capital improvements for manufacturers in a specified geographical area are financed by bonds issued through a city council or county commission.
The bond debt is retired from increasing ad valorem tax revenues generated by the new development. In other words, the ad valorem taxes paid by the manufacturer would go toward the debt and not into the ad valorem kitty.
Ad valorem taxes go to fund school districts. Brewster said his resolution provides for schools to be reimbursed for lost ad valorem revenues from an account established for that purpose which is equal to 1 percent of all state income tax collections.
Schools are currently reimbursed from the fund for the ad valorem taxes they are losing from businesses eligible for the five-year exemption.
Brewster said the fund is now under-utilized, so he does not foresee it running short with the advent of tax increment financing. However, State Rep. Cal Hobson, D-Lexington and chairman of the House Appropriations Committee, said the reimbursement fund might need to be increased to 2 percent of income tax collections.
Warren Thomas, managing partner of the Tinker industrial park, said that reimbursement to school districts would be predicated on the availability of funds, and that reimbursement would not be mandated.
Dr. John Folks, superintendent of the Mid-Del School District where the industrial park is located, said he was initially concerned about the loss of revenues, but that he was reassured when he learned that the resolution calls for reimbursement to the school district of the amount of ad valorem revenues used in the tax increment financing.
Folks said he has not heard complaints from other districts on the proposal.
"The theory is, if the revenues do not exist today, they are not negatively impacting those who would receive them," said Thomas.
"But the job creation and revenue-generating potential will create revenue to pay off the bonds" and build the community, he said. …