Tax credit power sought as tool in luring businesses 2 years of taxes could be forgiven for new property

June 16, 1996|By Craig Timberg | Craig Timberg,SUN STAFF

To attract new companies and keep the ones already in the county, Howard County officials are seeking the power to offer tax credits to businesses that build properties and bring jobs.

If approved by the County Council, which will hold a public hearing on the topic at 8 p.m. tomorrow, the tax credits could become an important tool in the increasingly competitive world of business recruitment, said County Executive Charles I. Ecker, who has proposed the program.

"The competition for attracting and retaining businesses is very tough," Ecker said. "People target companies to go and recruit and give all sorts of incentives."

Such a program could have come in handy during the fight this year to retain C. R. Daniels, an Ellicott City manufacturer that recruiters from other states and counties tried to lure away.

C. R. Daniels decided to stay after the state offered an incentive package worth more than $800,000. The county paid its share -- about $78,000 -- in cash because it had no tax credits to offer.

Business properties are crucial to the tax base because they usually pay more in taxes than they use in services. Homes -- particularly those with children -- usually cost the county more for schools, parks and police than the owners pay in taxes.

But offering tax relief to businesses could still be thorny for the County Council at a time when homeowners face a $125 annual fee for trash removal that is to go into effect this summer.

Under Ecker's tax credit proposal, county officials would have the power to forgive the first two years of property taxes on newly constructed business property. The tax credit would have no bearing on a business' other property.

In subsequent years, an increasing percentage of the tax bill would come due on the new property. In the 11th year, the business would have to pay full taxes on it.

The county's Economic Development Authority would recommend tax credit packages for eligible companies. The county executive would then decide whether to offer tax credits, and in what amount. The total amount of tax credits in any year would be limited to $2.25 million.

Richard Story, director of the Economic Development Authority, said officials would approve only a few tax credits each year and that the packages would probably be less generous than the law allows.

County officials, he said, would give tax credits selectively to companies that brought high-wage manufacturing, research-and-development or office jobs to the county. And even those companies would get only partial tax relief, and for a few years, not all 10.

In most cases, he said, the county tax credits would be part of a larger package of loans and grants financed by the state.

"Many companies aren't looking for financial incentives," Story said, "but where they are, this gives us a tool."

Baltimore has a similar tax credit program, as does Harford County, and other counties are able to offer tax credits to companies in enterprise zones, Story said.

Pub Date: 6/16/96

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