The Goshen City Council’s adoption of a tax phase-in policy for local governments will help bring uniformity to a competitive process that has pitted local governments against each other.
The new ordinance requires industries seeking property tax breaks for locating in the city to fill out a standardized application; pay a $750 application fee; limits tax breaks on equipment to five years; disallows appeals of tax assessments unless very specific conditions are met; pay 15 percent of the tax savings to the Goshen Redevelopment Commission; allows the council to make exceptions to ordinance requirements if a project diversifies the local economy, encourages entrepreneurial activity or produces jobs when the local unemployment rate is above 10 percent.
One more requirement is included, which we think is long overdue. Now any job-producing project put up for a tax phase-in must have 70 percent of those jobs paying above the median wage for the county. That wage, as of May 2012, is $14.42 per hour, according to the Indiana Department of Workforce Development.
The Goshen City Council is the first local government to adopt these standards and we urge all others to get on the same page. It makes no sense for local towns and cities to compete for new industries and expansions based on who is willing to offer more for a tax phase-in. County residents are sharp enough to understand that jobs created in Elkhart or New Paris may be filled by people living in Wakarusa or Goshen.
We also like the exemption for companies that would diversify our economy. Right now 39 percent of the county’s economy is based on the RV industry. We love and embrace the RV companies for the jobs they offer and the good they do, but as we saw during the last recession, when demand for the luxury items plummet, the impact on local lives is severe. That’s why everyone involved in economic development should continue to strive to diversify our manufacturing base.
We understand that town and city council members want to boost their local tax bases with new industries, but we think tax phase-ins should be equalized countywide and then local governments can concentrate on competing by providing the infrastructure manufacturers are looking for.
Overall, this ordinance is short, clear and effective. Goshen will always need to offer tax phase-ins as part of the mix of incentives to help lure more manufacturing. But, we should play that game with the same rule book used in all other local communities. That’s a fair and smart way to do business.