11/14/2024
The VDC applauds the decision by City Council to vote down (4-3) the proposed tax abatement for G. E. Marshall. The abatement was a bad deal for the city, and the council was correct to reject it. There were many valid reasons for voting against the tax abatement that are specific to this abatement, first and foremost that a demonstration of a compelling need for the abatement be made. The failure to make an adequate case rests with G. E. Marshall, not with Council.
Specific reasons to vote against this proposed tax abatement include:
1. Not enough jobs created per dollar of tax relief granted. G. E. Marshall stated that it needs this $85,000 abatement to support an additional $250,000 in payroll for 3 jobs, one of them being to replace an employee. That seems like a poor use of city taxpayer money, particularly given the admission that at least one of the positions may be filled by family members.
2. The return on investment is poor. According to G. E. Marshall, there’s only an incremental increase in the assessed value of its property for such an investment by the city.
3. Is this worthy of taxpayer money? G. E. Marshall argues that it requires adding an office with a break room and outdoor dining, and ‘possibly’ a training room, and that this requires a tax break. Again, the return on investment seems poor.
4. Infrastructure impact done by the business. G. E. Marshall’s trucks are heavy users of Joliet Road and Lincolnway, causing disproportionate impacts to local infrastructure. To a degree, Valparaiso is already subsidizing G. E. Marshall’s operations through its road maintenance program and by granting it a number of city contracts.
In general, this tax abatement represents a poor investment choice for the city of Valparaiso. The one other unspoken qualifying criteria that we can think of is that G. E. Marshall has been a major donor to the Costas mayoral campaign. That’s an insufficient reason to give away the tax break.
To call this City Council anti-business on the basis of this rejection is ludicrous. This is the only tax abatement to be rejected by City Council to date. All others have been passed after having had their merits examined or were sent back for review. Rather than trumpet that he’s found proof of an anti-business plot, Council member Peter Anderson ought to do his homework and evaluate projects on their merits instead of complaining that Council is showing Valparaiso as closed for business. That’s ridiculous hyperbole and that kind of hyperbole, if anything, is going to create a stain on the Valparaiso brand, not the vote to deny this abatement. The Council does not exist to ratify every whim that comes the administration’s way: it’s not a rubber stamp. Nor should a council member stamp his feet in frustration and decry opposition to administration initiatives as anti-business activity: it’s democracy in action.
Ultimately that’s the proper role of City Council: not a rubber stamp, but a co-equal branch of government existing as a check and balance to the executive. It has its own responsibilities to the tax-paying public that are independent of but equally important to those of the mayor’s office. It seems to us that much of the hue and cry over this tax abatement’s rejection are really not about the tax abatement at all, but are instead protests against the regular workings of democracy.
Beyond the specifics of G. E. Marshall’s proposal, there are broader questions regarding the whys and wherefores of tax abatements that need to be considered. We believe it’s crucial for us to start moving away from handing out tax abatements, especially given the growing challenges we face in maintaining our infrastructure and funding essential public services. Tax incentives, while often used to attract businesses, can significantly reduce the revenue that local governments rely on to maintain roads, bridges, schools, and emergency services.
As our population grows and our infrastructure ages, the demand for reliable public services only increases. Yet, when we continually offer tax breaks, we limit our ability to invest in the long-term needs of the community. Our roads, water systems, and public safety services are already strained, and relying too heavily on abatements risks leaving us with insufficient funds to maintain or improve them.
It’s important that we strike a balance between fostering business growth and ensuring we have the resources to support our residents and the infrastructure they depend on. By carefully considering each tax abatement, we can help ensure a stable financial foundation for our community and meet the increasing demands for well-maintained public services.
