Tax abatement deserves approval

There’s been more heat than light in the debate over a potential tax abatement for Scout Clean Energy’s proposed Bitter Ridge Wind Farm.

So let’s see if we can sort this out without getting too bogged down in the numbers.

First, it’s important to stipulate that tax abatements — the phasing in of property taxes over a period of years as a way of encouraging investment in buildings and equipment — have morphed over the years.

Once upon a time, they were directly tied to the creation of jobs. These days, they’re just as likely to be tied to any financial commitment that will, over time, increase the county’s total assessed valuation.

The thinking is, the larger the total assessed valuation the lower the tax rate for all property taxpayers.

The abatement is essentially an incentive to make an investment that otherwise would not happen.

Give us a break on property taxes up front, a developer argues, and you’ll end up with higher assessed valuation in the long run.

In Scout Clean Energy’s case — and in the case of NextEra Energy Resources before it — the developer is also offering a sweetener: A chunk of cash for local government and the community to use like a lottery windfall.

As a result, several seemingly contradictory things can be true at the same time:

•If a tax abatement is granted, Scout Energy would pay less in property taxes over the next 10 years.

•Even by handing over a large initial payment, Scout Energy ends up in a net plus situation, because the size of that initial payment is smaller than the amount the company would otherwise pay in property taxes.

•Without the incentive of a tax abatement, Scout Energy quite likely would not make its multi-million dollar investment at all.

•If Scout Energy doesn’t go forward, the county is out not only the “sweetener” but also any future property tax revenues that would be paid after the abatement period.

•If Scout Energy doesn’t go forward, there is no comparable investment on the horizon that would boost total assessed valuation in a way that would lower the property tax rate.

The key seems to be in that phase “an investment that otherwise would not happen.”

Opponents of Bitter Ridge Wind Farm — sincere and dedicated folks — view this week’s vote on Scout’s second request for a tax abatement as a tool to kill the project.

That’s a smart strategic move on their part.

But their opposition has nothing to do with the merits of the abatement itself.

On its merits, the abatement makes good sense: An incentive is offered on an investment that otherwise would not happen, total assessed valuation is increased, tax rates go down over time and the county gets a boost from Scout’s “sweetener.”

Bitter Ridge opponents have labeled that upfront payment from Scout “bribery,” a particularly nasty word when they fling it at individual county officials.

But the label does not fit. The abatement should be approved. — J.R.