Archive for Thursday, August 29, 2002

Official seeks review for firms failing to provide estimated jobs, salaries

August 29, 2002


More than half the companies operating with tax abatements from the city aren't living up to promises they made to get the tax breaks.

Seven of 13 companies that received tax abatements in exchange for creating jobs in the city fell short of their employment projections in 2001, according to a draft report reviewed Wednesday by the city's Public Incentives Review Committee. And 10 of the companies may be paying below-average wages.

Committee member Kirk McClure, a Kansas University professor, said the numbers were reason enough to crack down on the poorly performing companies by reducing or eliminating tax breaks.

"One, it means the city is not getting the benefits it thought it was deriving" from abatements, McClure said. "Second, if we attempt to negotiate abatements with firms in the future, word's out that this is a town that doesn't enforce its abatements. It's time we crack down."

Mayor Sue Hack, another member of the committee, said it might be unfair to judge the companies' performance in a weak economy.

"If they're not producing the jobs, well, not many businesses have in the last year," she said.

One company, E and E Specialties Inc., created 101 fewer full-time jobs than the 337 it projected when it was granted an abatement in 1993. It created 312 more part-time jobs than it anticipated.

But Dave Corliss, the assistant city manager, said the city's tax-abatement policy focuses on full-time jobs. Leni Salkind, a Lawrence school board member on the committee, said there's a reason for that.

"These 312 employees may not have the benefits we expect employees to receive" when abatements are granted, Salkind said.

McClure said his review of the report indicated 10 of the 13 companies pay wages below the average Lawrence manufacturing rate of $34,060 a year, as determined by the Kansas Department of Human Resources.

McClure acknowledged, however, there is nothing in the abatement policy establishing the KDHR number as a benchmark for companies.

Lynn Parman, vice president of economic development for the Lawrence Chamber of Commerce, said she didn't know if the companies used the same criteria as the state in reporting their wages. If not, she said, the comparison wasn't valid.

"I question that number," she said.

Committee members agreed they would need more information before they can make a report and recommendations to the Lawrence City Commission. One key item: A comparison of how much the companies have spent on buildings and equipment compared with what was promised.

"I feel we're in the process of making this whole thing mesh accurately for each of these companies," Hack said.

The report covers the companies that have received abatements from the city since March of 1989. One of the 14 companies that have received abatements from the city  Davol  no longer is in business.

The committee is scheduled to next meet at 4 p.m. Sept. 19.

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