TAX BREAK END: NO BONANZA

The first of the businesses benefiting from Cape Girardeau County's enterprise zone are due to rejoin the normal tax rolls at the end of the year. Almost all the rest will do the same in 1998.

But the city of Cape Girardeau and the local school district aren't expecting sudden windfalls of cash. The figures show the enterprise zone is costing both relatively little.

An incentive to attract new business, the zone was established on Dec. 4, 1986, and expanded in 1987 and 1988. All businesses located inside the zone receive a 50 percent property tax abatement on improvements.

At first, any kind of business in the zone qualified for the abatement. A law passed in 1992 ruled out everything but manufacturing, wholesale and warehousing businesses. Retail businesses still get their abatements, but that will end 10 years after they first received enterprise zone benefits.

With both the Cape Girardeau School District and the city looking for ways to finance big projects, the return of enterprise zone businesses to normal taxation may seem timely.

Steve DelVecchio, the district's business manager, calculated the increase using enterprise zone figures from July 1995. The district's tax levy is $2.88 per $100 assessed valuation. Considering that commercial property is assessed at 32 percent of its appraised value, DelVecchio found that the district is losing about $200,000 a year from enterprise zone properties.

"That will come in over the next two years or longer," he said. "In terms of building schools, that amount is very little."

However, school officials have said they want to build new schools as soon as possible. There are tentative plans to put a bond issue before district voters in April 1997.

The city stands to gain even less when enterprise zone businesses leave their tax abatements behind. The general fund property tax levy is only 33 cents per $100 assessed valuation. According to January 1996 figures, the general fund loses about $27,500 a year due to the enterprise zone.

In November, city voters will decide on a $26.5 million water system bond issue and whether the debt service should be paid with a quarter-cent sales tax. An extra $27,500 a year in the general fund has little impact on financing huge water system improvements, City Manager Michael Miller said.

"The amount of money that we will get back from the enterprise zone is only a small portion of the tax," he said. "Our main source of income is our sales tax, and that is not affected by the enterprise zone."

Manufacturing, warehousing and wholesale businesses in the zone are allowed to request an abatement extension from the city council. Miller said there has been no indication that the council plans to extend benefits.

The county has a role in deciding zone benefits, too, but that role hasn't been defined clearly. Presiding Commissioner Gerald Jones said the prosecuting attorney is looking into pertinent legislation.

Although the zone has cost school districts and the city some money, it is a good economic development tool, Jones said.

"It encourages development, and that means more property taxes," Jones said. "The businesses in the enterprise zone will be paying full taxes for a long time."