Job-creating tax exemptions go on Hillsborough ballot

An already crowded Nov. 2 ballot now will include a measure asking Hillsborough County residents to approve property tax exemptions for new or expanding businesses.

County commissioners unanimously approved the ballot referendum Wednesday. Though details have not been worked out, preliminary plans are to exempt some or all property taxes for up to 10 years, depending on how many jobs a new or expanding business creates.

It was the second ballot measure the commission has approved this year and may not be the last. Earlier this year, the commission approved a referendum on a 1-cent sales tax for transportation projects, including light rail. And on Aug. 18, commissioners will hold a public hearing on a ballot measure to change operations at the county internal performance auditor's office.

Commission Chairman Ken Hagan, who came up with the idea for the tax exemptions, urged his colleagues to approve the measure so economic development officials will have another tool to create jobs.

"In my opinion, there is no doubt this is a critical step toward recovery and another arrow in our quiver toward the target of greater economic development," Hagan said.

In preparation for Wednesday's discussion, Hagan had the county's Economic Development department survey other Florida counties that have used a state law to grant property tax exemptions to businesses. Most of the counties that passed the exemptions are rural and lightly populated. But the four urban counties that responded to the survey -- Bay, Flagler, Palm Beach and St. Lucie -- used the exemptions for an average of 9.25 projects. The number of jobs created by the projects averaged 1,653.

Though all the commissioners said they favored the tax breaks, several leveled tough questions at economic development director Gene Gray regarding businesses taking the exemptions, then leaving the county for cheaper labor markets.

Gray assured the board final rules for exemptions will include tough performance criteria and a "claw-back" provision to exact a financial penalty if a company leaves.

"We'll either get the money back or we'll limit the amount of exemption funding that does go to them," Gray said.

Each project being considered for exemptions will be thoroughly vetted by county economic development officials, Gray said, and each must be approved separately by county commissioners. Though the ballot measure would allow a 100 percent exemption of property taxes for up to 10 years, the commission could approve lower exemptions for a shorter duration. The variables would be how many jobs the business creates and how much they pay.

Commissioner Kevin Beckner questioned the lack of details and the rush to approve the measure. Beckner said information he received from the property appraiser's office shows that the exemptions will hurt county revenue collections in future years. The only question, he said, is whether the increased tax collections from newly employed workers balance out the money lost through exemptions.

The exemptions were also criticized by Jim Hosler, an independent candidate for the same county commission seat Hagan is seeking in November. Hosler, who formerly worked for the city-county Planning Commission, said tax exemptions are a "dinosaur" economic development tool that went out of vogue in the 1980s. Hosler said the county cannot compete with Third World countries for "big-box" financial and communications businesses like call centers.

"Selling us on the cheap is gone," Hosler said. "Those days have been gone for 10 or 15 years."

Hosler said the county should concentrate on easing land-use and code regulations on small businesses.

The changes to the auditor's office were recommended by Richard Tarr, an internal auditor from Orlando. Commissioners hired Tarr to help straighten out an office beset by cost over-runs and sub-par performance under former internal performance auditor Jim Barnes.

Tarr recommended commissioners better define the internal auditor's duties and responsibilities and create an audit committee to buffer the office from commission politics. Tarr also wants to relieve the auditor of his duties as a budget analyst.

The county's Charter Review Board, which can approve ballot measures without county commission approval, could not muster the 10 votes necessary to put Tarr's recommendations before voters. So the nine charter board members who favored the changes asked the county commission to put them on the ballot.