JUDGE: How do tax abatements and county government work?
One of the many issues your Commissioners Court is required to handle is that of tax abatements.
Tax abatements are simply a reduction in taxes given to a person or entity who makes a substantial business investment and/or provides new employment. The idea is to reduce the tax burden for a specified period of time to incentivize business to come to the County. However, the entire tax abatement process is governed by State law, specifically, Chapter 312 of the Texas Tax Code.
Chapter 312 of the Tax Code generally provides that the court should strongly consider approval of an abatement if the abatement will contribute to the retention or expansion of primary employment or will attract major investment and contribute to the economic development of Milam County. Therefore, when considering whether to grant an abatement the court looks to see if the proposed business will expand primary employment and/or provide a major investment that will contribute economic development of the county.
Applicants are required to provide the estimated amount of the momentary investment and the number of primary jobs the investment will create. In addition, the court is often given recommendations from the Milam County Industrial Development Corporation (MCIDC) as to the amount of the investment and the amount of new primary jobs.
Recently the court granted an abatement to Nortel Oven Works after its application was favorably approved by the MCIDC. Nortel plans to invest over $500,000 to establish a new operation in the county. The court also granted an abatement to Charlotte Pipe as it plans to spend $21,750,000 to expand its existing operation in the County. Lastly the Court approved abatements for several large solar operations who will invest over $1.6 billion dollars in the county.
Each of these decisions were made pursuant to Chapter 312 of the Tax Code as each application is clearly a major investment, providing primary employment that will contribute to economic development in the county.
The court does not decide which new business will come to the county nor the amount of the investment. For example, in the case of solar, these decisions are those of the landowner and the solar providers. The court does not and should not interfere with the decision of a landowner to lease or not lease their land for any particular use. Once the land is leased for solar and the lessor agrees to make a substantial investment and/or provide primary jobs, the tax abatement request is brought before the court.
Tax abatements have been around for a long time and generally a good idea. Abatements are important incentives available by law to help county government attack new investment, new jobs, new business and thus and economic development, not to mention the needed tax revenue.