Local government has a long-running love affair with growing business enterprises, for good reason. Commercial ventures that prosper pay more taxes – among them property and occupational levies – and enrich the city and county treasuries so politicians can fund more projects and get re-elected.
Sometimes you have to feed the goose that lays the golden egg. That’s what Franklin County Fiscal Court did Tuesday in deciding to reward Jim Beam for a $28 million, 120-job expansion the company announced in 2009 at its local distillery. To show its appreciation, the county is granting a 10-year tax holiday to the company’s new hires, meaning they’ll surrender just 0.5 percent of their paychecks in occupational taxes, half the usual rate. The move is also expected to increase the incentives Beam receives from state government.
This is a pretty generous thank-you gift county government is handing out. Magistrate Jill Robinson wondered if it was really necessary.
“We’ll never know if they would have (expanded) anyway,” she said, “if we just keep giving stuff away.”
It’s not the first time local politicians have grappled with the question of when to give and when to take in the delicate game of industrial development. City leaders of four decades ago, much like today’s, decided they needed more money to do the things they wanted to do. Their gaze fell on the Industrial Park, just over the city line, where companies made money and their workers made money without paying a penny in city occupational taxes. City Hall worked up a plan to give the industrial community an opportunity to enjoy the benefits of urban life through annexation. But (surprise!) those factories couldn’t warm up to the idea. They were happy just going to work and pocketing the cash for themselves.
The annexation plan eventually failed to win the necessary votes from the City Commission and life went on, inside and outside of Frankfort.
In the course of the debate, some people observed that the city, fixated on the east-side industrial complex, chose not to consider a nearby county industry, Schenley Distillery (now Buffalo Trace), just over the corporate limits and therefore exempt from city taxation. Voters subsequently elected Jim Burch, a Schenley executive, to the commission and then to the mayor’s office. The distillery wasn’t annexed, but the county eventually levied its own occupational tax.
Annexation again became an issue six years ago when commissioners voted to take in the site of Parkside, a commercial/residential development alongside Interstate 64 in eastern Franklin County, and pay the developer $150,000 for consenting. Fiscal Court, which had hoped to collect its occupational tax from Parkside, was livid, but tempers cooled when the two governments agreed to split revenue in such cases henceforth.
The county’s 1 percent tax rate is the same as the city was collecting at the time of the Industrial Park affair. The city’s recent rate of 1.75 percent is going up to 1.95 percent.
A crippling recession followed by a tepid recovery makes government more willing to grant concessions in hopes that growth will pay off in the long run. Maybe it will, but don’t count those golden goslings before they hatch.