Tax abatements for two Lyon County industries - commissioners not happy with process

YERINGTON - County officials want more say in the state's property and sales tax incentive program.

Informed last week by Nevada Commission of Economic Development officials that two Lyon County businesses have applied to the state for tax breaks on new equipment, commissioners expressed dismay at not having more time to review the requests.

They also asked why they were even being informed, because they have no official say in the decision-making process.

Commissioner Bob Milz asked Economic Development Director Bob Shriver "Why when you come to us is it already a done deal? You are not giving us enough time to analyze the packet. The process stinks."

The Economic Development Commission will hear the applications on April 12.

Shriver said governing regulations require the state agency only to notify local governments, not to receive approval. The schedule, also set by state statute, makes it difficult to inform local governments in a timely manner.

"If commissioners object, we will take it into consideration during the hearing. I don't think we would impose the abatements if they are not well received," Shriver said. "Our commission does not take lightly the issue of tax abatements."

In order to qualify for Nevada's tax assistance programs, businesses must meet stringent guidelines. For cities and counties with populations under 50,000, conditions include:

-- Pay 100 percent of the statewide hourly wage (currently $14.12).

-- Have 25 full time employees when opening; if expanding, new employees must increase by 10 percent.

-- Must have a capital investment in the county of at least $250,000 for sales and use tax/business tax abatement and five year commitment to stay; $5 million for personal property tax abatement ($500,000 if technology oriented) and a 10-year commitment to stay.

Commissioner David Fulstone expressed strong opposition to giving property tax abatements to any business.

"I am absolutely against this. I do not believe in abatement of taxes and will vote against this even if our vote doesn't mean a thing," he said.

"What is this an incentive for? They will expand regardless. This is a gift to a Fortune 500 company (Quebecor).

"We try and tax everyone in the county equally for services. This is taking money out of local districts. They are asking for something I don't get and the businesses down the street don't get."

According to Lyon County Economic Development Director John Sanderson, the tax incentives were initiated to help diversify Nevada's economy and improve the balance between gaming and other business interests.

Referring to helping current companies with expansion efforts, Sanderson said, "This does help attract new companies by showing we will help them after they are here."

Quebecor Printing, located in Fernley, is asking for a 50 percent personal property tax relief on $12.6 million in new equipment for a plant expansion. Total benefits over the ten-year period of the abatement would total between $261,000 and $339,000. They will be hiring 75 new employees with the expansion.

Medallic Art, a Dayton firm, will save approximately $27,000 per year for two years with a 4.5 per cent sales tax break on $615,000 of new equipment.

The board voted 4-1 against giving a recommendation of support for Quebecor's request.

Registering the lone vote for assistance, Commissioner LeRoy Goodman, also a member of the State Economic Development Board, said, "This abatement is a hit, but not a major hit. I understand Commissioner Milz' motion, but if we go along with this we will not be seeing new business in Lyon County."

While no vote was taken, the Medallic Art request met with a more favorable response from the board.

Fulstone said, "A few years ago we tried to convince the Legislature to end the sales and use tax on equipment. This is different than the property tax. I have less heartache with this, but I still feel it is discriminatory to other businesses in the state."