VOL. 130 | NO. 26 | Monday, February 9, 2015
More Tax Incentive Changes Likely
By Bill Dries
Shelby County Mayor Mark Luttrell made the argument last week in his State of the County speech that local economic development and economic recovery is not the singular pursuit of jobs.
“We’ve got the jobs,” Luttrell told a group of 100 Wednesday, Feb. 4, at the Memphis Kiwanis Club meeting. “It has not solved our problem.”
He pointed to almost 20,000 unfilled jobs in Shelby County in 2013, according to the Greater Memphis Chamber, against the backdrop of an eight percent unemployment rate at the time.
“Getting our workforce up to standards is vitally important,” Luttrell added.
Two years after its creation, Luttrell said later, there will probably be more changes to the Economic Development Growth Engine – or EDGE – agency created by Luttrell and Memphis Mayor A C Wharton Jr.
EDGE leaders have already outlined proposed changes around tax abatements it issues.
The changes include a more streamlined process of getting tax breaks as well as tax abatements for smaller businesses and expansion and retention projects.
The changes are the latest fuel for the political fire that has burned bright in recent years over whether local leaders rely too much on and give too much in tax incentives, specifically payments in lieu of taxes – or PILOTs.
“I don’t think we are too reliant on PILOTs,” Luttrell said later. “Now what I do think is that the changes that have been submitted – we need to start with that and see where it leads. … I think there will be some other changes that will come forward.”
Meanwhile, Shelby County commissioners are already considering more dramatic changes to EDGE. Two years ago, EDGE replaced multiple economic development entities and checkpoints on the path to tax incentives.
“We can get rid of EDGE with seven votes,” commissioner Terry Roland said in committee sessions Wednesday, Feb. 4. “We just traded one bureaucracy for another. ... Right now EDGE is not work the way it should.”
Roland points to the EDGE president reporting directly to the city mayor and county mayor who appoint him or her and not to the EDGE board.
Commissioner David Reaves reacted to EDGE’s PILOT for the Ikea furniture store to come in Cordova.
“We need to talk about what that means to us,” Reaves said of the move to tax breaks for retail storefronts. “The Ikea deal opened our eyes. It was very shocking for a lot of us.”
Reaves also has concerns about some Memphis City Council members expressing a desire last month to require council approval of all tax abatements granted by EDGE.
“Once we begin to dissolve the body we have in place and begin to politicize it, I think we lose,” Reaves said.
Commissioner Heidi Shafer also warned against a return to council and commission approval of such tax breaks before EDGE was created, particularly the public question and answer sessions with executives of companies seeking the PILOTs that came with the votes.
“Things that are not bad questions to be asked are, though, the things that don’t need to be asked in a headline in the newspaper,” she said. “It was very damaging to us. … We don’t want to go back to the environment we had before.”
Commissioners are planning a committee session for March with EDGE leaders at the table with commissioners.
The commission meets Monday, Feb. 9, at 3 p.m. at the Vasco Smith County Administration Building, 160 N. Main St. Follow the meeting at @tdnpols, www.twitter.com/tdnpols.
In other action, the commission votes on a resolution that rearranges $990,000 in county capital funding that went to the Lakeland Schools System last May for a new roof and replacing HVAC units at Lakeland Elementary School.
The school system wants to use the capital funding instead to buy 94 acres of land for the new Lakeland Prep 6-12 school that would open several grades at a time starting in August 2017.
In committee sessions last week, commissioners indicated they want to be consulted and vote on such changes in capital spending.
So the commission took out a part of the resolution in committee that would allow the county administration to reallocate such funding without getting the commission’s approval.
The site of the new school is north of U.S. 70 and east of Canada Road.
The Lakeland Schools System is one of six suburban school systems that began operation last August at the start of the current school year. The Lakeland system currently consists of only the elementary school with middle and high school-aged students living in Lakeland attending middle and high schools in the Arlington and Bartlett Schools systems by agreement among the school systems.