Property tax: Business pays more

Some Constitutional reformers claim that the Alabama Constitution prohibits citizens from increasing local taxes. How can they make this outlandish claim? Following is Mobile's attempt to raise local property tax. Support Citizens for Responsible Constitution Reform.

Property tax: Business pays more

By ANGIE DROBNIC
Business Reporter

Degussa Corp. pays the fourth-largest tax bill in the county, and yet officials of the south Mobile County plant are leading a push to increase taxes for the benefit of the public schools.

It's not out of altruism, said plant spokesman Charles Story.

"Our company depends on an educated work force," he said. "That labor market simply isn't going to be here if the education system isn't funded."

Story, Degussa's vice president of government and public affairs, is a member of The Committee for Mobile's Children, the group leading the "Vote Yes" campaign on the May 15 school tax referendum. The chemical plant in Theodore that he works for paid $1.32 million in local taxes last year, according to the Mobile County Revenue Department.

But Story said the decision to get involved in the campaign was an easy one for the company to make: "We've spent millions of dollars on these plants, and it doesn't make sense not to staff them with the best people and the best trained people we can find."

Not every business owner agrees with Story's position on the school tax issue, but if property taxes are raised, large industrial plants like Degussa will pay the most.

Business property taxes made up the bulk of the $116 million in property taxes assessed in Mobile County last year, said Mobile County Revenue Commissioner Freda Roberts.

Homeowners collectively paid about 22 percent of that amount, a total of about $25.5 million, and business paid the remaining 78 percent, or about $90.5 million.

Part of the reason that business pays more is because business property is taxed at twice the rate of owner-occupied homes.

The tax assessments work like this:

The county Revenue Department appraises homes and businesses by establishing a fair market value, determined by using the actual sale prices of similar or surrounding property. The appraised value includes the value of the land and what it would cost to construct the buildings today, minus depreciation.

Homeowners and businesses only pay taxes on the assessed value of their property. For owner-occupied homes, the assessed value is 10 percent of the appraised value. For most businesses, the assessed value is 20 percent of the appraised value.

Large factories cost so much to build that they end up being the largest taxpayers, even though many of them receive incentives and tax breaks from the Mobile Area Industrial Development Board.

Those incentives have become a necessary part of recruiting because so many city and states are willing to give them, said Jim Apple, vice president of economic development for the Mobile Area Chamber of Commerce.

"In almost every case, the company is looking to minimize its operating costs as well as its start-up costs at every location it's considering," Apple said.

Thanks to 1992 reforms in the state law that governs industrial development boards, educational taxes cannot be abated and business must contribute to the schools, said Apple. That's why the mills on the May 15 ballot will affect even companies that receive tax breaks.

"The increase in education taxes in Mobile County will raise the cost of doing business in Mobile," he said. "However, most of the existing businesses we deal with in Mobile realize that the raise in property taxes is minuscule compared to the potential increase in the capacity and productivity of the work force."

Apple said he's seen situations where workers taking screening tests for potential employers don't know that there are 360 degrees in a circle.

Because of incidents like that, work force development has been something of a mantra for economic development officials in the city, county and state.

Austal USA, a builder of high-speed aluminum ferries, was recruited to Mobile with the promise of assistance in work-force training from the state-run Alabama Industrial Development Training program.

Simon Thornton, Austal's vice president of operations, said his company is very much in favor of the school tax: "Improving the school system is only going to improve the work force."

Austal has hired about 50 people since November and hopes to hire 100 more in the next 12 to 18 months.

As for the company's costs, Thornton said, "Any raise in taxes is an issue. But if the money is going into the education system, it's a benefit to the community."

© Mobile Register
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	Some Constitutional reformers claim that the Alabama Constitution prohibits citizens from increasing local taxes. How can they make this outlandish claim? Following is Mobile's attempt to raise local property tax. Support Citizens for Responsible Constitution Reform. Property tax: Business pays more By ANGIE DROBNIC Business Reporter Degussa Corp. pays the fourth-largest tax bill in the county, and yet officials of the south Mobile County plant are leading a push to increase taxes for the benefit of the public schools. It's not out of altruism, said plant spokesman Charles Story. "Our company depends on an educated work force," he said. "That labor market simply isn't going to be here if the education system isn't funded." Story, Degussa's vice president of government and public affairs, is a member of The Committee for Mobile's Children, the group leading the "Vote Yes" campaign on the May 15 school tax referendum. The chemical plant in Theodore that he works for paid $1.32 million in local taxes last year, according to the Mobile County Revenue Department. But Story said the decision to get involved in the campaign was an easy one for the company to make: "We've spent millions of dollars on these plants, and it doesn't make sense not to staff them with the best people and the best trained people we can find." Not every business owner agrees with Story's position on the school tax issue, but if property taxes are raised, large industrial plants like Degussa will pay the most. Business property taxes made up the bulk of the $116 million in property taxes assessed in Mobile County last year, said Mobile County Revenue Commissioner Freda Roberts. Homeowners collectively paid about 22 percent of that amount, a total of about $25.5 million, and business paid the remaining 78 percent, or about $90.5 million. Part of the reason that business pays more is because business property is taxed at twice the rate of owner-occupied homes. The tax assessments work like this: The county Revenue Department appraises homes and businesses by establishing a fair market value, determined by using the actual sale prices of similar or surrounding property. The appraised value includes the value of the land and what it would cost to construct the buildings today, minus depreciation. Homeowners and businesses only pay taxes on the assessed value of their property. For owner-occupied homes, the assessed value is 10 percent of the appraised value. For most businesses, the assessed value is 20 percent of the appraised value. Large factories cost so much to build that they end up being the largest taxpayers, even though many of them receive incentives and tax breaks from the Mobile Area Industrial Development Board. Those incentives have become a necessary part of recruiting because so many city and states are willing to give them, said Jim Apple, vice president of economic development for the Mobile Area Chamber of Commerce. "In almost every case, the company is looking to minimize its operating costs as well as its start-up costs at every location it's considering," Apple said. Thanks to 1992 reforms in the state law that governs industrial development boards, educational taxes cannot be abated and business must contribute to the schools, said Apple. That's why the mills on the May 15 ballot will affect even companies that receive tax breaks. "The increase in education taxes in Mobile County will raise the cost of doing business in Mobile," he said. "However, most of the existing businesses we deal with in Mobile realize that the raise in property taxes is minuscule compared to the potential increase in the capacity and productivity of the work force." Apple said he's seen situations where workers taking screening tests for potential employers don't know that there are 360 degrees in a circle. Because of incidents like that, work force development has been something of a mantra for economic development officials in the city, county and state. Austal USA, a builder of high-speed aluminum ferries, was recruited to Mobile with the promise of assistance in work-force training from the state-run Alabama Industrial Development Training program. Simon Thornton, Austal's vice president of operations, said his company is very much in favor of the school tax: "Improving the school system is only going to improve the work force." Austal has hired about 50 people since November and hopes to hire 100 more in the next 12 to 18 months. As for the company's costs, Thornton said, "Any raise in taxes is an issue. But if the money is going into the education system, it's a benefit to the community." © Mobile Register

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