April 10, 2002 at 4:29 PM EST - Updated July 12 at 8:06 AM
AKRON, Ohio (AP) - Ohio businesses get more property tax breaks than religious institutions, charities, private universities or governments, according to an Akron Beacon Journal analysis.
If the growth trend of tax abatements continues, businesses could surpass public schools this year to be the largest tax-exempted group of properties in the state.
Business exemptions now total $3.9 billion, according to Ohio Department of Taxation data.
The state Legislature decades ago allowed communities to cut taxes on business property so businesses would construct factories or install equipment, thus creating jobs. Now, communities use tax abatements to lure businesses from other states or from one Ohio community to another.
Fifteen years ago, about 2 percent of business real estate was covered by tax breaks, compared with 10 percent today.
"This really is a failed economic development policy," said state Sen. Eric Fingerhut, D-Shaker Heights. "Our state has been cannibalizing itself."
Scott Pullins, chairman of the Ohio Taxpayers Association and an advocate for lower taxes, defended the abatements, saying they are needed to offset personal property taxes on machinery and inventory.
Ohio is one of the few states that continues to assess personal property taxes. Pullins said the taxes should be eliminated.
Tax abatements have the biggest effect on schools. If the state's $3.9 billion in exempt business property were taxed at the average rate, schools would receive an additional $115 million in tax revenues.
Howard Fleeter, an independent tax and school funding analyst, said the tax abatement system is unfair to schools because they cannot block counties or municipalities from reducing taxes.
Some superintendents have been able to strike agreements with businesses to receive a charitable contribution in exchange for the tax breaks.
However, the contribution is never as much as schools otherwise would have received in taxes, the Beacon Journal's analysis showed, and wealthy districts were the biggest benefactors of these side deals.
A study released Tuesday by Fleeter and his partners showed that the property tax burden for schools has shifted in the last 10 years from businesses to homeowners. He said that tax abatements could be a contributor to the shift.
Mary Anne Sharkey, a spokeswoman for Gov. Bob Taft, said if homeowners are absorbing more of the tax burden for schools, it could warrant study.
(Copyright 2002 by The Associated Press. All Rights Reserved.)