Council offers credits for jobs Tax abatements aim to stimulate hiring by businesses

'A good little incentive'

Package targets manufacturers, high-tech employers

July 02, 1996|By Craig Timberg | Craig Timberg,SUN STAFF

Howard County last night added a new weapon in its fight to create high-paying jobs, approving a tax-credit package that would benefit new and growing businesses.

As the County Council unanimously approved the tax credits last night, members said the credits might help reverse the erosion in the county's commercial property base.

"I think it's a very modest help to businesses that want to come to the county, or are here and want to expand," said Councilman Charles C. Feaga, a west county Republican.

Businesses that invest $2 million, or create 10 jobs paying more than the county average of $30,000 a year, will be eligible for the tax credits.

Richard Story, director of the Economic Development Authority, which proposed the tax credits and would screen interested businesses, said the county plans to target credits to manufacturing, high-technology and research and development companies.

Companies that win the tax credits -- the county executive will have the power to approve them -- could get all of their new taxes forgiven in the first two years after moving or expanding in Howard.

The law stipulates that the percentage must shrink steadily on a set schedule after that. In the 11th year, the tax credits would disappear altogether.

The County Council and the county executive also would monitor the companies as they grow and add jobs. Those that don't meet their targets could see tax credits revoked.

Story said he expects a half-dozen companies might get tax credits in any given year. He predicted the typical package would last just three to five years, and in most cases the county would offer it in conjunction with a state incentive package.

"We have a good little incentive that's going to make us slightly more effective than we are now," he said.

A model tax credit case might resemble one that kept C. R. Daniels, an Ellicott City manufacturer, from moving to Carroll County or out of state because the state offered an incentive package worth more than $800,000. The company did not move and agreed to add 70 jobs by next year.

For that incentive package, the state required Howard to pay $78,000, nearly 10 percent. In similar situations in the future, the county might offer tax credits instead of cash, Story said.

The tax incentive proposal grew out of a report by the county's Incentives Task Force. Last winter, it recommended several incentives that might reverse the erosion of the county's commercial base.

Since 1990, the commercial portion of the tax base has shrunk from 23 percent to 19 percent.

That's a problem because commercial properties typically pay more in taxes than they cost in services. In contrast, residential properties, with their need for schools, parks and police, usually cost more in services than the owners pay in taxes.

As the commercial base has shrunk, high-paying manufacturing jobs have disappeared.

Since 1990, the number of county manufacturing jobs -- which pay an average of $693 a week -- declined from 7,430 to 6,437 by fall 1995. By contrast, the number of retail jobs, paying an average of $305 a week, increased from 16,000 to more than 19,145.

Also last night, the council unanimously rejected efforts to weaken the county's Adequate Public Facilities Law, which restricts housing development to limits set in the 1990 General Plan.

Pub Date: 7/02/96

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