(WMC-TV) - Some Memphis City Council members say corporate tax incentives have ballooned to a point that caused the city's budget to burst. They say the burden is now falling on the backs of taxpayers.
Three council committees are reviewing the city's tax incentives program.
PILOTS or Payments In Lieu Of Taxes are one of the hottest topics on the Memphis City Council agenda these days. A PILOT is a property tax waiver for coveted corporations.
"They've been given a free ride for a long time," said Councilwoman Janis Fullilove
Tuesday, council members said they had a rude awakening during a meeting with the Economic Development Growth Engine (EDGE) board that oversees PILOTS.
"We learned they really only audit 10 companies of the 70 to 75 companies per year," said Councilman Jim Strickland.
A council document named the top five corporations getting tax breaks: Cargill, FedEx, International Paper, Nike and Valero.
"We lost $41.1 million last year in tax abatements," said Fullilove.
That is about how much the city is in debt.
With that, the city council is launching a series of actions:
They are forming an ad-hoc committee to see if the city is benefiting from the PILOTS.
"When companies come in and say we're going to create X number of jobs and X number of dollars in payroll, we need to make sure they're actually doing that," said Strickland.
They are also considering a program to ask corporations and non-profits, like hospitals and schools, to opt into paying up to 5 percent of what they would have paid for property taxes.
"Some of these companies make billions of dollars and for them to give 5 percent of what they would normally have to pay for property taxes is a drop in the bucket," explained Fullilove.
The council may also hire an outside auditor to look at the books of the 75 corporations to make sure the city is getting a return on the investment.
"They utilize the same city services that you and I use and we have to pay for those services," said Fullilove.
The ad-hoc committee will come back with a list of recommendations in six months.
Council members say future deals with corporations could look very different.