A Fulton alderman is questioning the necessity of granting local industries nearly $21-million in tax exemptions.
Last week, Ward IV Alderman Brad Chatham told his fellow aldermen he would vote against a series of tax breaks for five local industries. The exemptions ranged from $59,618 to $18.4 million.
The companies requesting the tax exemptions and the amounts requested included
F.L. Crane & Sons – $1.835-million
Homan Wood Products, Inc. – $59,618
Homan Forest Products, Inc. – $233,049
Tri-State Lumber Company, Inc. – $417,258
Mueller Copper Tube Company – $18.406-million
The exemptions included purchases of machinery and equipment, raw materials and various improvements. Prior to being taken up by the city board, the Itawamba County Board of Supervisors had approved the exemptions.
Although Fulton aldermen generally follow the city’s lead when deciding whether to grant tax exemptions, Chatham has consistently voted against during his term of office, arguing that the exemptions represent valuable tax revenue for the city.
“It’s right at $21-million of tax breaks, and the City of Fulton is in a tremendous amount of debt,” Chatham told the board.
He told his fellow aldermen the tax breaks represented around $100,000 in revenue for the city. Following the meeting, city clerk Ceburn Gray confirmed Chatham’s estimate, putting the actual amount of tax revenue the city would collect from these particular exemptions at approximately $97,500.
“That’s $100,000 in money we don’t have,” Chatham said, then questioned the fairness of such tax breaks. “[We] let the big cooperations have the tax breaks and put the taxes on the hardworking individuals.”
Chatham motioned to deny the tax exemptions, but didn’t receive a second. Instead, the board approved an alternate motion to table discussion of the tax exemptions until the next meeting, when Ward I Alderman Hayward Wilson, absent that night, could weigh in.
Businesses apply for tax exemptions through both the county and city boards. The countywide board of supervisors typically votes on them first. If the exemptions are approved by supervisors, city aldermen usually follow suit.
Exempting certain taxes for large businesses is nothing new. In an effort to attract companies and, later, encourage their growth, municipal leaders often exempt the companies from paying real and personal property taxes for at least 10 years, frequently with the ability to keep receiving exemptions on new equipment, materials or expansions in hopes that said companies will continue to expand.
These tax exemptions are only open to manufacturers that employ many people and don’t apply to school taxes. Exemptions also aren’t guaranteed; local leaders reserve the right to deny an exemption for any reason.
According to Futon Mayor Barry Childers, offering tax breaks to big employers is a good way to encourage them to expand operations in the city or county in which they’re currently located.
Because other municipalities also offer tax breaks to incentivize large companies to locate within their borders, Childers said it only makes sense to do the same.
“They can move out anytime they want,” Childers told The Times following last week’s board meeting. “They could move to a different county if they got a better deal, [and] we need all the industry we can get.”
The argument is, big industries like Mueller Brass and Tri-State Lumber provide more than just tax dollars to the counties and cities in which they’re located; they employ people, who then turn around and spend their money in those communities, which in turn fuels sales tax revenue.
“Yeah, they get tax breaks, but look at all the people they employ,” Childers said. “Nobody’s trying to do anything special for anybody.”
The mayor dismissed the idea that tax breaks represent what he described as “good old boy politics.”
“It’s just the way the state of Mississippi operates,” he said.
Although tax breaks represent sizeable chunks of lost revenue for the municipalities that give them, these industries still pay a great deal in taxes. In 2019, for example, Mueller Copper Tube paid the City of Fulton $230,198 in taxes, even with the exemptions they were granted. The company’s current requested tax exemption would equal approximately $85,587 in lost revenue. Together, Homan Wood and Homan Forest paid just over $9,000 in city taxes, last year. Their combined exemption requests equal $1,361 in lost revenue.
Although Chatham has historically voted against granting tax breaks to the city’s industrial businesses, the gesture has been largely symbolic. His fellow aldermen have almost uniformly voted in favor of granting industrial tax breaks, with the notable exception of a July 2019 vote which saw Alderman at Large Liz Beasley joining Chatham to vote against a $3.15-million exemption from Mueller Copper Tube.
Because alderman Joey Steele was absent that night, Mayor Childers was left to break the tie. He voted in favor of granting Mueller the tax exemption.