EDITORIAL/Katrina hits (again) with tax breaks
Wednesday, March 5, 2014 12:00 AM
A Katrina tax credit intended to meet affordable housing needs has siphoned hundreds of thousands of local tax dollars out of Philadelphia, Neshoba County and other localities where Section 42 housing was constructed after the law was enacted in 2009.
Mississippi legislative politics is still based largely on trust, and that's a dangerous game when it comes to taxation, as many communities are learning the hard way.
The tax loophole is a prime example of a bill being sold in the Legislature without the full effects being known.
Philadelphia and Neshoba County officials this session joined the Mississippi Association of Supervisors, the Mississippi [Tax] Assessors and Collectors Association and the Mississippi Municipal League in asking the Legislature to once again change the law giving owners of multi-million dollar housing developments like Wells Place what amounts to a subsidy on the backs of local governments and public schools.
A Senate bill that would amend the way in which affordable rental housing must be appraised died in the Finance Committee chaired by Sen. Joey Fillingane, a Republican of Sumrall.
A similar House bill died in the powerful Ways and Means Committee chaired by Rep. Jeffrey C. Smith of Columbus.
This session, HB 1077, HB 1080, HB 1364, along with SB 2939, SB 2966, related to Section 42 housing all died.
The law is a huge break that diverts or reduces substantially ad valorem taxes which would normally go to a city, a county or public schools and instead subsidizes developers in the name of economic development and affordable housing.
As is true in most committees, many bills have their roots in lobbyists. For example, the Associated Press reported recently that while Rep. Ed Blackmon, D-Canton, was promoting a tax cut on truck parts meant to induce more truck repair business in Mississippi, a lobbyist was shuttling him notes.
Section 42 isn't outright fraud because it's the law, an example of the crony capitalism practiced in Jackson that so often benefits developers, lobbyists, lawyers, financiers and sometimes the politicians themselves.
Not all developers who receive Section 42 exemptions are cheats. The closer to the Gulf Coast, the more sense these projects make.
Neshoba County is out about $115,500 annually, Tax Assessor/Collector Mike Lewis has estimated.
Without the exemption, Wells Place would be assessed at $6.7 million with a $144,600 tax bill, Lewis said.
Under the exemption, the assessed value of Wells Place is $1.3 million, generating a tax bill of only about $29,000.
Those who need affordable housing aren't to blame, to be sure. Creating affordable housing is part of good community planning, but wealth redistribution isn't the answer.
The Katrina financing is so complex that repealing the law could be disasterous on many fronts.
There can and should be, however, a full accounting with hearings in Jackson. At least locally the properties were not appraised at true value and budgeted.
The Legislature should provide relief to communities like ours, especially since the city is raising taxes it isn't receiving from Wells Place to provide services.