INCENTIVES COST TAX DOLLARS, BRING JOBS

Industrial recruitment used to be a hit-and-miss sort of proposition.

Businesses looked at a community, checking on its property costs, labor force, highways, schools and parks. After weighing the benefits and drawbacks, owners made a decision to establish there or move down the road.

Not any more.

With most communities looking for jobs with higher pay and good benefits, industries offering such things can ask for incentives. Cities across the nation are willing to give them.

Among the choice incentives are free land, free buildings, discounted utilities, job training money and tax abatements in enterprise zones.

A customer-service business currently considering a move to Cape Girardeau has been offered money from the city and county for job training. The city council is considering other incentives too, including 100 percent tax abatement on improvements for 10 years and possibly expanding the enterprise zone to take in the new business.

It is all just part of industrial recruitment, Mayor Al Spradling III said.

"All the communities are out there bidding for them," he said. "The competition between various communities within the state and outside the state is very keen. You have to give something to get something."

But local government must weigh the cost of offering such things to new businesses. Each year, the city, the Cape Girardeau School District and the Cape Girardeau Public Library lose a combined $1 million in tax revenue due to abatements.

Although school officials don't get a vote, the city usually asks their opinion on allowing special tax incentives.

Dr. Dan Tallent, Cape Girardeau superintendent, said the district wants to be a "good citizen." However, being a good citizen doesn't mean ignoring obvious needs in a school system.

"We are not going to oppose something that looks like it will be good for the community," Tallent said. "But it's up to the taxing entities to provide quality services, and that hasn't happened. Look at the condition of some of our buildings."

Some businesses that receive tax abatements make payments in lieu of taxes to the local school district. In Poplar Bluff, for example, Wal-Mart Supercenter donated the money for a high school track.

Wal-Mart receives a tax abatement in Cape Girardeau too, but no payments in lieu of taxes have been forthcoming. School district records show no sizable donations from any business in the enterprise zone over the past few years.

The district may benefit in other ways if a large business comes to town, said John Mehner, chamber of commerce president. The rollover on payroll is three to seven times, generating money in different sectors.

For example, a person may get a good job at a new industry and choose to trade in his old car for a current model. The property taxes are higher on the new car, and the school district gets a portion. If the person buys a house, the school district gets even more money.

The key fact to remember, Mehner said, is that there wouldn't be more money generated for anyone if the business didn't come.

"People say we 'lost' so much money because of a tax abatement," he said. "If the business located somewhere else, we would have never had the dollars at all. We didn't lose anything.

"Would a new company come if you didn't have tax abatements? You are competing against other people offering them."

Jerry Reynolds, Cape Girardeau County assessor, pointed out another key fact. An enterprise-zone tax abatement doesn't make a successful business. Central Hardware was in the enterprise zone, and now it is gone. "So it's more than just taxes."