Opposition to the proposed lifting of West Valley City's franchise tax cap is growing, with the Valley West Chamber of Commerce siding with Hercules and other big companies in a debate they say could affect the economic development of the city.
The chamber's board of directors Thursday afternoon adopted a resolution asking the city to withdraw the tax proposal."If the cost of doing business goes up for big companies, they will pass the cost along to the small companies and subcontractors they deal with," said chamber spokesperson Kathi Lund. "It tends to have a domino effect on the business economy."
Also, the chamber's directors believe the removal of the tax cap will discourage other large companies from locating in West Valley City. The chamber seldom takes such a strong position on political or governmental issues, but the directors felt the tax proposal warranted the action, Lund said.
Meanwhile, Hercules officials tried but failed Thursday to convince the city's financial staff that the tax plan is unnecessary and unfair. Hercules maintains that it has paid more in taxes than the city expected to receive since 1989.
At issue is the proposed lifting of the $20,000 cap on utility franchise taxes - taxes paid on electric, phone and natural gas bills - that West Valley City enacted as an economic development incentive. The plan would cost Hercules more than $200,000 per year and to a lesser degree affect as many as seven other companies.
City officials said the purpose is to give city bond revenues a boost in the wake of the "downsizing" at Hercules. Two bonds totaling $14 million were issued in 1989 to buy and develop the West Ridge buffer zone around Hercules.
Dave Nicponski, the company's government affairs director, said, "If they have any shortfall, it is not because of anything Hercules has done. It might be wiser to look at the overall economic realities. We shouldn't be made the scapegoat."
Noting that the company's property taxes were raised by 30 percent to help support municipal services, Nicponski said, "Is this (a tax increase) always going to be the answer?"
Janet Trueblood, West Valley City's public affairs director, rejected the suggestion that Hercules was a "scapegoat" for broader budgetary problems. "The city is fiscally sound. And as far as West Ridge is concerned, it is a very complex bond issue that is affected by a lot of different factors."
She also stressed that there is no "battle" between the city and Hercules.
"Hercules is a good corporate neighbor and an important part of our city, and we showed them that when we helped them out of a sticky situation on the buffer zone," she said.
Nicponski said continued financial demands on Hercules threatens the company's future and that company officials will take their case directly to the city council.
Two views on tax cap
"If (West Valley City) has any shortfall, it is not because of anything Hercules has done. It might be wiser to look at the overall economic realities. We shouldn't be made the scapegoat." - Dave Nicponski, Hercules government affairs director.
"The city is fiscally sound. And as far as West Ridge is concerned, it is a very complex bond issue that is affected by a lot of different factors." - Janet Trueblood, West Valley City public affairs director.