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County’s Largest Employer Questions Tax Burden

Alderman Sherry Martin explained to BorgWarner officials the predicament the city is currently facing with a tight budget. Martin did much of the talking on the city’s behalf during the hour long meeting in which BorgWarner plant manager Bill Liacone pleaded for tax relief.

By Jack Gurner

WATER VALLEY – BorgWarner officials made a second plea last Thursday to the Board of Aldermen for help to control a soaring city-county tax bill that that has gone from $250,000 in 2001 to almost $900,000 this year.

    During the noon meeting at City Hall, BorgWarner Plant Manager Bill Liacone described for city officials the highly competitive North American auto market and difficulties faced by the local plant in competing with foreign sources located in China, Korea and Mexico.

    “We have a couple of years to get our cost in line to be successful so we can bring business in and perpetuate the plant,” Liacone said.

    This tax structure “is one of the major pieces that is causing us to be not competitive,” Liacone explained. In a six-year-period our taxes have gone up by 340 percent,” Liacone told Mayor Bill Norris and the Board.

    “Is that because taxes have gone up are because you have increased in value?” Alderman Sherry Martin asked, referring to a $4 million expansion to the plant in 2001. She added that the city had not raised taxes in 14 years.

    Alderman Martin also asked what portion of the $900,000 is city taxes “because that is the only thing that we can do anything about.”

    “The (city) taxes we paid in 2000 were $65,000. I think we are going to being paying close to $250,000 this year,” Liacone said.

    Aldermen voted unanimously during their Sept. 4 board meeting to deny a tax exemption for the 2001 expansion which would have cut about $129,000 from BorgWarner’s city tax bill. A similar request made to County Supervisors by BorgWarner officials was granted in August for the county taxes paid on the 2001 expansion.

    Alderman Martin said, “We’ve looked at the petition (for the tax exemption) long and hard.  The city is in the same position that BorgWarner is in right now. We feel your pain with your budget. We just could not do it.”

    There are three places where the city could get additional revenue, Alderman Martin said. The Board could raise taxes, lay off city workers or charge more for services.

    The meeting took a brief detour when the topic of electrical power to the plant was discussed. Electric Department Manager Joe Newman quoted figures from TVA which showed that BorgWarner was paying less per kilowatt hour here than at their other plants. In one example – BorgWarner’s Dixon, Illinois, operation – the rate is more than double.

    City officials had cited the recent $110,000 project to run a new power line to the local plant as one of the items considered when denying BorgWarner’s tax exemption.

    Larry Smith, North American equipment contracting agent for BorgWarner, said that the new line was supposed to stop power surges which have damaged tooling and parts and cost the company “thousands and thousands and thousands of dollars.”

    He pointed to a tool he had placed on the Board’s conference table. “That one in the middle is five grand,” Smith said, referring to the cost to replace the tool after a power interruption.

    Newman said that there is no sure fix for every power interruption or flash. The electric department manager added that BorgWarner is the only customer on the new line. But, there is no way to stop the surges completely.

    Returning to the original topic, Liacone said, “At the end of the day, what we are here to talk about is property taxes and how much ours has gone up over the last six years. What we pay has nothing to do with electricity. It is to cover the expenses of running the county and the city.”

    “We want to pay our fair share of taxes,” he emphasized, “My question to you is what is going to stop this upward movement in our property taxes. What economic development programs are we working on that are going to make Yalobusha County a more attractive base.”

    “It comes down to if there isn’t more economic development in this county our problems are going to continue,” Liacone added. “Either you’re not going to have enough money or we are going to have to pay more”

    Alderman Lance Clement said, “All of us know how important BorgWarner is to the community, to the county, to the city. We looked hard and we regret that we weren’t able to do the exemption this year. We’ll look at it just as hard and hope that we can do it next year.”

    “We need to work together,” Alderman Martin added, “So, we promise to do everything we can for next year’s taxes. We’ve got to have each other. We can’t make it without y’all and y’all can’t make it without us.”

    “We’re not here other than to lay out the issue as we see it. We certainly appreciate the time on your agenda,” Liacone concluded.

    Alderman Martin motioned to adjourn which was seconded by Alderman Charlie Harris. Alderman Tommy Swearengen also attended the meeting.

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