Commissioner Calls Out Tax Break: A Race To The Bottom?

As the lone voice of dissent, Commissioner Nathan Boyles gave the lone ‘no’ vote to place a referendum on the November general election ballot to extend a tax exemption to companies who meet specific qualifications.

Boyles, who will end his term on the board in November and retire from the commission, noted that he voted to place this initiative on the ballot at his first opportunity a decade ago but has since changed his mind on the issue. He faults the tax exemption on three points: he believes the tax creates an uneven playing field in favor of out-of-town businesses, that it does not help the businesses that get the tax break that much anyway, and that it costs the county government a pretty penny to ensure the businesses are compliant with the terms of the deals they make with those companies.

It’s a race to the bottom of over-incentivizing to then basically attempt to steal employers from the next region over, the next county over, the next state over. And I think long term, it’s dangerous, especially when you start talking about big, big, big businesses who are in the business of maximizing return to their shareholders, which is absolutely okay,” Boyles said, “But what you’ll see is they’ll extract as much as they can from one community. And then when that cycle’s done, and they have, you know, they’ve paid down the cost of that investment, they’re looking at the next opportunity.

The referendum, which initially passed in 2004 and was renewed in 2014 by 75 percent of voters, allows the property tax exemption to be put in place, provided the company meets and continues to meet requirements set out by the county. One of those requirements mandates the business recieving the tax credit create a certain number of jobs that pay 110% or more of the median county wage.

Over the last ten years, One Okaloosa EDC has claimed that the exemption has helped to draw nine companies to the area. The EDC Report says the program has created 229 jobs with an average wage of about $58,000. The incentive has cost the county $74,555 out of $611,752 that will be owed if the companies keep their end of the bargain. One Okaloosa EDC says the incentive brought some $45 million of initial investment to the county.

Board Chairman Paul Mixon agreed with Boyles’ claim that the incentive is not actually that incentivizing but worried that taking the money off the table would remove Okaloosa County from consideration because other counties do have it. “I also don’t want to take it out of the hands of the folks to be able to make the decision to keep it or not,” he said before calling the vote.

One Okaloosa EDC leader, Nathan Sparks, told the commission he and his team would work to get out the vote in favor of the project through what he termed grassroots education. “The key is, if they’ve committed to create jobs and they don’t do that, they don’t get an exemption for the year in question. That’s what I mean by performance-based, there is no such thing as a free lunch here, and we think that is a very important part of the program,” Sparks told the commission before the vote.