Hancock County officials have a $440 million decision on their hands.
That is how much money Walmart, the largest company in the world by revenue, is seeking for tax abatements related to its e-commerce fulfillment center near Mt. Comfort.
The company filed an application for tax abatement Monday with Hancock County Auditor Debra Carnes. Randy Sorrell, executive director of Hancock Economic Development Council, made an introductory presentation Wednesday to the Hancock County budget committee. The Budget, Efficiency and Revenue Committee includes all seven Hancock County Council members.
Tax abatements are a tax exemption municipal and county governments can use to attract new industry into their area. This is done by exempting all or a portion of the new assessed value resulting from investment from the property tax roll. Tax abatements can range from one to 10 years.
The filing shows $430 million is to be put into logistic distribution equipment, while the remaining $10 million is slated to go to information technology equipment. The equipment is marked as personal property on the application.
According to the Indiana Department of Local Government Finance, personal property abatement is “a property tax deduction from the assessed valuation granted by a designating body for the installation of qualifying abatable equipment in an economic revitalization area.”
For comparison, the United States national debt grows by $203 million per hour, according to the United States Congressional Joint Economic Committee.
Sorrell said in his preliminary presentation Walmart leaders considered the Mt. Comfort property a tremendous success and wanted to invest more in it.
“It has exceeded all their projections and is highly profitable,” Sorrell said. “They want to put more equipment in the facility.”
This is not Walmart’s first time seeking a tax abatement for its Mt. Comfort facility. In 2020, when plans for the facility were finalized, Hancock County Council approved tax abatements for Walmart’s investments of $150 million in real estate and $456 million in personal property equipment for 10 years.
For the first year of a tax abatement, the total dollar amount of new assessed value is exempt from paying property tax. In Year 2, 90 percent of the value is exempt from paying property tax, and so on until the 11th year — the first year of paying full property taxes.
2024 was the first year Walmart had all the equipment in its facility, and its tax abatement for that year was $123,398,580.
Sorrell said he does not expect Walmart to hire any more employees at the fulfillment center. According to Monday’s filing, Walmart has 1,198 permanent hourly employees and 100 salaried employees at the Mt. Comfort location.
County council member Keely Butrum said personal property tax abatements are significantly smaller and usually not discussed, but the distribution center is an exception.
“This is coming up mostly because it is a very substantial amount of millions of dollars in equipment,” she said.
Sorrell said as the abatement falls off according to the schedule, the county gets more property tax from the companies. With personal property tax, however, since the equipment depreciates, the county receives less tax money.
“It’s like you’re going in the opposite direction,” he said.
Council member Mary Noe said the county did not ever consider 10-year abatement schedules on personal property until Walmart came to the county with its fulfillment center project. She’s concerned the county would not see any money if the council approves a 10-year abatement schedule.
“If we abate this (with the 10-year schedule), there will be no money going into our TIF district,” Noe said. “There is going to be no money since we abated it.”
Other committee members had reservations about approving a 10-year abatement plan for personal property, suggesting alternatives such as a three-year or a five-year plan. Butrum believes a three-year or five-year abatement plan would be more beneficial to the county. With a five-year abatement schedule, the amount exempt would decrease by 20 percent with each passing year.
“By penciling out something closer to three and five years, it would still provide an initial incentive for adding the equipment, but it would not prolong (postpone) the ability for us to collect some tax on that equipment well into its depreciation schedule,” she said.
Senate Bill 1 is still in consideration in the Indiana Statehouse as well, which means it may not be until the end of this month that the future of property taxes in Indiana is decided by the state legislature. Any significant change to the property tax structure in Indiana could mean a reworking of an abatement agreement.
This is the beginning of a multi-month process. The budget committee asked for more data about the Mt. Comfort fulfillment center, including how much property tax Walmart has paid since arriving in Hancock County, projections on how much property tax Walmart will pay in the future, and what percentage of the fulfillment center employees live in Hancock County. There will be another presentation at the next Hancock County Council meeting April 9, where the council may decide to go forward with the abatement with a presented declaratory resolution or to continue discussions.