Sunday, January 22, 2006

PILOT Recommendations Deserve Real Presentation

The primary question these days about the consultants’ study about tax freezes isn’t what changes will ultimately be made in the program, but if the recommendations will ever get a fair hearing.

Last week, there was the meeting of the PILOT committee of the Memphis City Council where Council Attorney Alan Wade – who also happens to represent firms asking for the tax freezes – told his public clients what the consultants’ report said.

Meanwhile, city and county moved ahead with yet another committee, a government purgatory that keeps a politically charged decision at bay for awhile. It has the political benefit of sounding like something is being done, while dragging out a decision past its immediate burst of media coverage and controversy.

Strangely, the City Council committee convened a meeting to discuss the study about the controversial Memphis and Shelby County PILOT program, but did it without the consultants who wrote the recommendations. In fact, to this point, the consultants have never made a presentation to either the Memphis City Council or the Shelby County Board of Commissioners.

Rather than the consultants, Alan Wade took the role of telling Council members what the report said, and while he conceded that his legal work includes applying for PILOT’s for his private clients, he had no hesitancy in pointing out what he (and presumably his private clients) thinks are problems with the recommendations.

It seems obvious that Mr. Wade, a lawyer who ably represents the interests of City Council, would have better responded to the committee’s interests if he had called in the consultants to make the presentation. Several comments that he made did not precisely represent the findings of the report or the process that produced it.

Like most public studies, we assumed that the contract with the consultants included a firsthand presentation, and a check with local government confirmed that this is the case. Hopefully, sometime soon, someone will invite them to Memphis to explain their well thought out recommendations to correct the serious flaws in the current incentives program.

In recent weeks, Memphis Mayor Willie W. Herenton has made a point of defending the incentives program in his speeches. So far, he hasn't even agreed that the present program deserves fine tuning, something even a Memphis Regional Chamber vice-president has acknowledged.

Mayor Herenton leaves the impression that there is nothing wrong with the current PILOT program, and that anyway, he says decisions on PILOT’s are an executive branch function, rather than falling within the power of the legislative body. Actually, the state law on tax freezes gives this power to the City Council, which has delegated it to the Memphis and Shelby County Industrial Development Board, not the mayors.

To his credit, Mayor Wharton says that changes to the PILOT program are needed, and another committee not withstanding, he promises that the consultants’ report will form the basis for its work, which is unclear at this point.

The PILOT report featured some long overdue recommendations, including the need to target incentives to high-priority industries, tighten up reporting requirements for the companies receiving tax freezes and require companies to prove that the incentive is necessary for its project to take place.

It's a thorough report, and hopefully, its recommendations could end the days when the IDB gives tax freezes to firms that pay salaries to employees who are still eligible for food stamps. Is it really in the public interest to waive taxes for these kinds of low-skill, low-wage jobs that perpetuate the image of Memphis as a blue-collar workforce.

While the city and county budget crises are reason enough to tighten up the PILOT program, the more compelling reasons for doing so are connected to public policy.
Surely, it’s time to weigh more carefully the public policy implications of every single tax freeze, because in effect, every time a tax freeze is approved, taxpayers are investing in the business that receives it.

It’s a change in approach that is needed in all parts of local government these days. Too often, there is a disconnect between what public actions are taken and where the public funding for those actions are coming from. A good place to start the attitude adjustment is with the PILOT program.


MidsouthGambler said...

Even though I am normally in favor of any tax break or tax cut, I completely agree the PILOT program needs to be reduced, or at least redefined. I work for a large corporation that employs thousands of people in multiple locations in Shelby County. Despite providing all these jobs and redeveloping many pieces of property in low-income areas, my company has never asked for a single tax break. It irks me that other companies that don't provide near the opportunities or services that my company does get tax breaks that my company doesn't. I think the PILOTs should only be given for businesses with jobs that require highly skilled and highly educated employees. This creates incentives for our children to study math and science and know that there is a great job in their community in those fields. Just having a warehouse or factory with $9 an hour employees should not justify a PILOT tax break.

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