Transparency or accountability for local property tax cuts or pilot agreements, including revenues that the state or local governments lose each year, is very low for transparency or accountability. In the Executive Budget, which is published annually, there is a section on the estimated shortfall in tax expenditures for economic development (page 75), but according to the budget report, “there is no precise estimate of the payment imposed by the county instead of the tax regimes (PILOT). However, based on available PILOT payment data, PILOT`s net tax expenditures should be the value associated with certified capital inflows. If true, these agreements cost the state more than $40 million a year. With respect to the pilot agreements in West Virginia, not only is there very little transparency, but there is also no evaluation of these property tax cuts at the national or local level. Unlike some government professional tax credits, which have capital investments and job creation requirements, and clawback or recovery rules, these requirements do not exist for local property tax reductions. While governments and local governments do not disclose the shortfall in these agreements, it is possible to estimate the value of tax expenditures by looking at what Longview would pay if it paid the same tax rate as most businesses in Mon County. The graph below shows the value of pilot payments from the first PILOTE (Longview #1) agreement and the second proposal for a PILOTE (Longview #2) agreement over the duration of the agreement. These estimates are based on capital investment in each project ($2.2 billion, or $1.1 billion), an average annual amortization rate of 2.76% on public energy suppliers in West Virginia and Class 3 Mon County property tax rates (2.08% in the GJ20). Sean Sikora, commissioner for Monongalia County, said the county was using lessons from the 2003 agreement with Longview to make it fairer for the citizens of the county. The new agreements were written to allow the county to retain more than $58.2 million over the next 30 years as the first PILOT agreement,” Sikora said.

In recent years, pilot agreements have been concluded as part of a package of incentives for business economic development. For example, a proposed pilot agreement between Jefferson County and Rockwool County government officials (a controversial insulator manufacturer) in Ranson, WV, contained an agreement in which the local economic development agency would purchase $150 million of real estate to build the facility by selling tax bonds on which Rockwool would then pay payments so as not to have to pay property taxes (although the terms of this case have changed). The neighbouring county of Berkeley has signed several PILOTES agreements with companies, including Quad Graphics (acquisition printers), Macy`s (storage and distribution center), Procter and Gamble (product manufacturer), Knauf Insulation (insulator manufacturer) and Argos (cement plant). For most of these pilot agreements, the WV Economic Development Authority has issued billions of tax obligations to acquire real estate that will be leased back to these companies so that they do not have to pay property taxes. The property tax breaks contained in the pilot agreements have a significant impact on public and local budgets and often occur behind closed doors. They can also be very controversial (see Rockwool). It is the responsibility of our local and public administration to ensure that pilot agreements and local tax breaks are a good investment for our communities. And they need to make sure that we don`t just spend the cost of the investments that businesses would have made on workers and taxpayers anyway.

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