Beech-Nut penalty money needed, but jobs more welcome
FLORIDA Several Montgomery County public institutions got a windfall of tax money from Beech-Nut last month, but none of them seem all that happy about it.
“It’s good for the county, but it’s not good for the county,” said Montgomery County Treasurer Shawn Bowerman.
In 2012, Beech-Nut Nutrition missed its job creation goals by more than 100 full-time-equivalent employees. Under the long-term payment-in-lieu-of-taxes agreement it signed with the Montgomery County Industrial Development Agency in 2008, Switzerland-based Hero Group, Beech-Nut’s parent company, is exempt from regular property taxes on its $125 million baby food factory through 2020 as long as it maintains its workforce at certain levels each year.
But because Beech-Nut was below those levels in 2012, it has to pay a total of more than $1 million in property taxes to the four municipal entities that tax its site. Nearly $400,000 went to Montgomery County itself. Bowerman was conflicted on the subject Wednesday afternoon.
“We put it in our fund balance,” he said.
A recent state audit reported that Montgomery County is on the road to financial stress. In such circumstances, Bowerman said, a few hundred thousand dollars is welcome, but the tax penalty bodes poorly for the county.
“We got the money because Beech-Nut is missing jobs,” he said. “The county would be better off with the jobs.”
Bowerman’s sentiments were echoed by town of Florida Supervisor William Strevy. The town received $24,000, “and we needed it,” he said.
Earlier this year, Florida embarked on a large-scale renovation of the old Town Hall and DPW garage. It’s just about done, sheathed in a new facade at a cost of roughly $400,000.
“The Beech-Nut money went right into the building,” he said. “It’s already spent.”
Even so, he said his town is worse off. Many of the people Beech-Nut failed to employ could have come from his town, he said.
The largest chunk of the Beech-Nut penalty went to the Greater Amsterdam School District — $585,600. According to district business manager Kim Brumley, the district will sock the money away.
She marked it as revenue, and provided that the year’s budget rolls out as planned, more than half a million dollars will go into the district’s fund balance next year.
Currently, the district has a fund balance of about $2 million. For a district with an annual $62 million budget, that’s on the small side, Brumley said.
The unexpected money would bring the rainy day fund up to the state-recommended level.
“Every little bit helps,” she said, but she pointed out a downside to the funds: While the money is nice, she said finding jobs upon graduation would be better for students than having a very small amount of extra resources during school.
The PILOT agreement with Beech-Nut was an incentive for the company to build the new baby food factory in the Florida Business Park. It was designed to keep the company in Montgomery County after it decided to leave its longtime home in Canajoharie.
In 2012, the company was required under that agreement to employ the hourly equivalent of 371 full-time workers. It hired nearly that many, according to Montgomery County Economic Development Director Ken Rose, but it also laid many off, so the company’s full-time-equivalent numbers fell to just 260.
The shrinking job numbers triggered an automatic PILOT hold-back mechanism, which forced Beech-Nut to pay more than $1 million in property taxes.
Beech-Nut’s PILOT agreement was the first one given out by the county IDA with such hold-back mechanisms in place. Previously, Rose said Tuesday, there wasn’t much to stop companies from forgetting about their job commitments.
“People always complained about these companies getting tax breaks while not hitting their job goals,” he said. “This is the PILOT agreement working.”
For 2013, Beech-Nut is required to maintain 471 employees. Rose said Tuesday that it’s likely the company will miss that mark as well.
Beech-Nut officials did not return calls for comment Tuesday or Wednesday.