DALTON, Ga. – Whitfield County Commissioner Harold Brooker has proposed that the county fast-track freeport exemptions to make the area more attractive to business.
“We’re doing economic development and trying to get more industry in, and we need to entice them (new businesses) a little bit and the local businesses, too,” Mr. Brooker said.
But other officials say putting the tax break in place faster than planned would strain budgets.
Freeport exempts manufacturers from taxes on certain inventories. Whitfield voters in 2008 approved three classes of freeport exemption that take effect this year. Twenty percent of qualifying inventories now are exempt from taxes.
Officials had planned to raise the exemption by 20 percent a year to reach 100 percent, said County Commission Chairman Mike Babb.
Mr. Brooker wants to push that to three years, starting by increasing the exemption to 60 percent in 2011.
His colleagues have agreed to consider the idea, but Mr. Babb raised cautions.
“The other side is: How complicated does it get and how does it affect the school systems – not just the county, but also the city?” he said.
In the first year of freeport, local taxing districts can only estimate how much inventory will qualify and how much their revenues will drop.
The county budgeted a loss of $320,000 at 20 percent and would lose more than $1 million at 100 percent freeport, according to Finance Director Ron Hale.
City and county schools together stand to lose $800,000 at 20 percent exemption, officials say.
Freeport exemption classes:Class 1: Raw materials and goods in process of manufactureClass 2: Finished goods in the hands of the manufacturer; held less than 12 monthsClass 3: Finished goods in the hands of a distributor; held less than 12 months and destined for out-of-state shipment.Sources: Georgia Department of Revenue, Georgia Code
Supporters say freeport is an essential tool for recruiting and retaining businesses. Commissioner Randy Waskul said other counties, such as Catoosa, offer 100 percent exemptions already.
“We’ve got to do something to make sure that we continue to refresh businesses in this community by bringing in new opportunities,” he said.
County officials said they want input from others, but also want to weigh the budget impact from fast-tracking freeport. The county is using about $6.5 million in reserves to balance the budget this year, according to records.
“It’d be hard for the county to lose over $1 million of revenue stream and not make it up (with property tax increases) unless we do some cuts,” said Mr. Babb.
But he said the impact could also be offset if sales tax revenues increase or if businesses grow in response to the exemption.
Dalton Mayor David Pennington said the city also is examining whether to advance freeport faster. The city has estimated a loss of about $430,000 for the initial 20 percent exemption, he said. City officials will take a look at freeport once they have a clearer picture of its budget impact, he said.