Itawamba County Supervisors question tax exemption request

Supervisors are trying to decide whether or not to grant a local industry an infrequently-given tax exemption that could cost the county thousands in tax revenue.

Late last month, Mueller Industries officially submitted a request for a Free Port Warehouse Property Tax Exemption, which would keep the company from paying property taxes on finished goods inventory in transit to a destination outside Mississippi. This is the first time the company has ever requested the exemption.

Whether or not to give the exemption is up to the Itawamba County Board of Supervisors. Currently, they’re not sure what to do. During this week’s regular meeting, the board questioned the entire situation. Mueller’s never asked for the exemption before and supervisors are wondering what’s changed.

“Mueller’s been here so long,” said Itawamba County Development Council Executive Director Greg Deakle. “Why did it take them this long or what’s changed to make them apply for it?”

He added that free port warehousing is typically given as a bargaining chip — a two-way back-scratching kind of deal to either entice a company to open in the area or expand its current operations in some way. In exchange for free port warehousing, an industry might agree to expand or add new equipment or hire more people … something that would benefit the area.

Deakle questioned what Mueller was bringing to the table in exchange for the tax-exempt status.

“I don’t know what, if anything, is being offered in return,” Deakle said.

Tax exemptions are a tricky business. When negotiating with a new potential business, most every local government will toss the standard 10-year property tax exemption on the table. This allows a company to not pay a portion of its property taxes for a decade (although school taxes cannot be exempted). Obviously, this takes money away from the county or city, but in return the new business will hopefully provide new jobs for the area, generate more sales tax revenue and increase the assessed value of the area.

But Free Port Warehouse Property Tax Exemptions are a rarer beast, at least in Itawamba County. Currently, Itawamba County has only one industry receiving the Free Port Warehouse Property Tax Exemption: Ferguson Enterprises. In order to keep it, the company has to maintain certain financial criteria — $5 million worth of inventory and $30 million in sales. The company exceeds these numbers significantly.

Mueller Industries, on the other hand, does not. Supervisors are naturally reluctant to break this precedent; like a kid who brings a bag of potato chips to school, if he shares with one, he’ll have to share with all.

“I don’t want to start something and then the next thing you know … you’ve opened the door for a lot of people to go through,” said Supervisor Eric “Tiny” Hughes.

County administrator Gary Franks questioned the advantage of granting the exemption.

“Why should we lower your taxes?” Franks asked, adding that if the company is asking to forego paying taxes on products being moved out of state, it implies that it must be doing more business out of state. “Are they putting more into the community or are they taking more out?”

“It sounds like they’re taking more out,” Supervisor Ike Johnson replied.

In the end, the board decided to hold off on granting the exemption until Deakle could speak with company representatives about the origin of the request. According to Deakle, Mueller should be given the benefit of the doubt for the time being.

“Mueller is a flagship company that’s been here a long time and has been a huge supporter of this community; if you want, I’ll get in contact with them and ask them some of these questions,” Deakle said.

The board seemed to think it was a good idea. The issue has been put on hold until the next board meeting, scheduled for June 19.

adam.armour@journalinc.com