Monday, April 10, 2006

Tax Abatements Continue Unabated in North Canton While Schools Seek More Funding From Taxpayers at the Polls

Prepared Comments Made to
April 10, 2006

On the agenda this evening, are two pieces of legislation that I would like to address. The first is Ordinance No. 59-06 which is legislation from the Community & Economic Development Committee.

Tonight’s agenda for this piece of legislation reads: “An ordinance authorizing an agreement with Patrick J. & Georgeann Palonder for a project and real property tax exemption pursuant to the Ohio Community Reinvestment Area program, and declaring the same to be an emergency.”

First of all, I have to ask why is this on emergency? Emergency legislation according to Section 2.05 of the North Canton City Charter is legislation necessary for the immediate preservation of public peace, health or safety. Where is the emergency?

Fast-tracking legislation limits public comment. Corporate charity in the name of tax abatements is a topic that the public should be allowed to address.

Three readings would allow taxpayers notice of this legislation and give them a chance to comment.

The abatement of taxes for businesses that in exchange merely offer the businesses presence in the community might be a topic of interest to the taxpayers of this city who must continue to pay taxes without benefit of personal abatements.

The business requesting the abatement of taxes is the Pat Joyce Insurance Agency which has operated in North Canton since 1980. Mr. Palonder states on the application [that] “… without the tax incentive we will sell the property and build in Jackson Township.” The operative word here is incentive.

The property, according to the Stark County Auditor’s Web site was purchased September 9, 2005.

The purchase of this property on North Main Street, next to the former Bank One building evidently did not require an incentive so how can this be termed an incentive. The decision to purchase the property was made with plans to build on the property.

Since that purchase decision was made over seven months ago, any abatement of taxes is no longer an incentive but simply a handout at the expense of the North Canton City Schools.

An incentive by definition is “something that encourages someone to action.” The purchase of property on North Main Street has already happened. Seven months in the past.

Investment in Main Street properties is happening. It is happening without handouts that come at the expense of the taxpayers of the city and at the expense of the North Canton City Schools. Free-market forces are alive and well on Main Street and those free-market forces will continue to work unless disturbed with demands for more corporate welfare.

The application by the Pat Joyce Insurance Agency states that it will add two full-time jobs within one year. I do not want to play down any job creation in North Canton by any business but with the small numbers of businesses in North Canton, the abatement of taxes reduces the tax base. Furthermore, it places more of the tax burden on homeowners and directly impacts the North Canton City Schools.

City services can be supported best when tax revenue is derived from a broad tax base of residential, retail, commercial, and industrial properties. The tax base for North Canton is being whittled down with the loss of manufacturing and industrial property tax base from the Hoover Company and now ever so slowly, from the abatement of taxes on the few commercial properties that make up North Canton’s commercial tax base.

What remains are residential property owners supporting both the rising costs of city government and the increasing costs of the North Canton City Schools.

To quote Repository columnist, Michael Hanke, in today’s paper, “Do economic development supporters really believe real-estate tax abatement is more important than a good school system to prospective employers?”

To paraphrase Mr. Hanke, does this council believe that approving revenue cuts to the strongest asset that the City of North Canton has going for it, its city schools, is a good idea? I hope in my heart that you do not believe that!

And that brings to mind the timing of this requested abatement. I do hope that this council is aware that the North Canton City Schools do have a levy on the ballot for next month.

How can you stand up here one week and tell the public that you support the school levy and then the very next week give away revenue desperately needed to support the great school system that residents proudly enjoy.

In light of the plight of the city’s financial picture revealed in Mayor David Held’s state of the city speech just last week and in consideration of the voters who are being asked to vote for the North Canton City School levy in just a few weeks, I ask that this council seriously reconsider any plans to approve this tax abatement request.

The second piece of legislation I want to speak to is Ordinance No. 60-06 which is legislation from the Finance & Property Committee.

This legislation reads “An ordinance accepting the recommendations of the City of North Canton Tax Incentive Review Council (“TIRC”), concerning the agreements granting exemptions from property taxation, to continue the existing eight (8) Community Reinvestment Area (”CRA”) agreements.”

This piece of legislation is not scheduled for passage on emergency, but for everyone in this room tonight, we all know that this will be amended to pass on an emergency. How sad that legislation such as this will be fast-tracked before interested taxpayers can comment publicly.

I attended the meeting of the North Canton Tax Incentive Review Council (TIRC) on March 22, 2006, and I must say that the name of this group should be changed to the North Canton Corporate Welfare Review Council.

Three of the eight tax abatements that were reviewed have not met their promise of new or retained jobs as contracted when the abatement was granted

A member of that TIRC and also a member of city council, Mr. Jon Snyder appropriately described several of the troubling tax abatements that were reviewed at last week’s Council of the Whole meeting.

The tax abatements that Mr. Snyder described last week were indeed, troubling, and yet they were continued.

And to make a mockery of the review process, it was made clear by the representatives from each of the three companies that there was a high probability that they would not achieve their promised goals in the foreseeable future.

Why were the abatements of these companies not cancelled outright? At the very least three companies should have been put on probation?

The other companies reviewed only marginally met the requirements for their abatements as well.

As I sat and listened to each of the three companies explain their plight, I could only think that this process of so-called tax incentives had degenerated further from corporate charity to corporate welfare.

My last comment on the TIRC is in regards to the membership of the committee. The practice of appointing council members to serve on the TIRC undermines the system of checks and balances so important in our system of government.

When a council member also serves on the TIRC, that council member is quite possibly reviewing tax abatements that he or she approved as a council member. This runs counter to the checks and balances so vital to the process of government.

The practice of individuals’ serving as both council members and as members of the TIRC should end.

In the same Repository column today that I referred to earlier, Michael Hanke states that “It seems that the only greater anti-schoolchildren group is the City of Green, which never met a tax abatement it didn’t like….” I fear North Canton is running a close second.

I urge you not to seek to earn that sort of reputation. It will only harm our schools and our city.

Thank you
Chuck Osborne
City of North Canton