The Futility of Tax Abatements

Two local events have brought attention to the ineffectiveness of certain types of business property tax abatements.

In the case of the Air Park, millions of dollars worth of seven year, 100% real property tax abatements were extended to Airborne Express by Clinton County taxpayers. Most of the abatements began in the late nineties and have recently expired. Wilmington Schools and the county treasury bore the brunt of that tax giveaway. Even with these expensive breaks Airborne felt that they needed to sell out to DHL in order to protect their shareholders in a declining airfreight market.

Enter DHL with their fatally flawed business plan. The county offered the newcomers a seven-year, 100%, real property tax abatement on new construction projects as an incentive to locate at the Air Park. As a result of the tax abatements on 42 million dollars worth of projects, I estimate that the property tax revenue losses for the following local treasuries will be: Clinton county, $2,100,000; Wilmington schools, $2,400,000; Wilmington city, $700,000; Laurel Oaks, $280,000 and Union Township, $115,000.

As a reward for these revenue losses coupled with the departure of DHL, ASTAR and ABX the city will not receive the expected income tax windfall, the schools will have to drastically scale back their budget expectations for the coming years and the county will see sales tax and property tax fall far short of expectations, There is faint hope that some other use can be found for a 15 million dollar package sort building,

I conclude from the above example and from related research, that if a commercial enterprise cannot stay in business without tax giveaways they cannot make it anyway. The long departed Crysteco and Micro-Warehouse both received 100% property tax abatements.

Another example of the rewards, or the lack thereof, from tax abatement is the case of R&L trucking. The taxpayers of the county subsidized the construction of the depot at I-71 and Rt.68 with a million dollar real property tax abatement. In another gift, the county taxpayers took a $100,000 hit when R&L cut a deal with Wilmington Schools so that the schools would not oppose a property valuation appeal.

How did R&L repay the people of Clinton County for their generosity? As most of you know the company recently took almost two million dollars per year from local, street and road budgets by registering their fleet of trucks in Indiana. instead of Ohio. The reason for this example of corporate citizenship is unclear other than an unsupported claim of significant savings in time and money or rumors of political intrigue. In any case the taxpayer took it on the chin.

Did the past sacrifice of millions of dollars of tax revenues change anything? Will the current abatement at the Air Park, which ends in 2014, that totals millions more alter the eventual outcome?

Paul Hunter