Bonham -- A dialogue regarding the impact of Triple Freeport began last week at Bonham City Hall and will likely reverberate throughout the county in weeks to come.
Texas prides itself as a business-friendly state, however in areas such as Fannin County that haven't approved Triple Freeport, Texas is one of only a dozen states that tax business inventory.
Freeport Exemption provides property tax exemption on inventory that is detained in Texas for 175 days or less.
Local school, city and county administrations have the option of approving Freeport either singularly or as a group. Areas where the school district, city and county have all three decided not to tax inventory being shipped out of state within 175 days are designated as "Triple Freeport" locations.
Freeport could be beneficial for manufacturers who export significant amounts of product out of Texas.
"Areas that adopt Freeport status are betting on a better future," explained Bonham Economic Development Corporation Executive Director Steve Filipowicz. "They have decided that lifting the tax on inventory bound for out of state within 175 days will encourage existing businesses to expand, attract new business and the increase in real property tax will exceed the value loss of taxes collected on inventory going out of state."
Currently, the City of Bonham and all of Fannin County are at a distinct disadvantage to attract manufacturers because practically all the outlying areas have enacted the Freeport Exemption. Oklahoma has a statewide 280-day Freeport Exemption, while Grayson, Collin, Lamar and Delta counties also have Freeport.
While Freeport Exemption is a complex issue that deserves careful scrutiny by school, city and county administrators, it could be argued that, due to a low ebb in manufacturing throughout the county, this would be the most advantageous time to exempt inventory headed out of state.
It is also unlikely that any location in Fannin County could make the "short list" of sites being considered by a major manufacturer as long as surrounding counties have the considerable advantage of offering Freeport Exemption.
While the Triple Freeport designation is desirable for potential businesses, having a school district approve the concept is most important because local school districts collect approximately 2/3 of the inventory tax on goods being shipped out of state within 175 days. The state funding formula should hold harmless school districts that opt in. A local business could also encourage a school district to enact Freeport Exemption by voluntarily agreeing to temporarily continue paying its share of the tax.
Bonham Economic Development Corporation (BEDCo) hosted a presentation on Freeport Exemption last week featuring Lauren McKinney, Manager for Small Business, Economic Development Division, Texas Governor's Office in Austin. McKinney practiced tax law for six years before joining the Governor's Office.
BEDCo Executive Director Steve Filipowicz became acquainted with McKinney while attending TEDC-sponsored Texas Rural Challenge Conference in San Marcos and invited her to speak in Bonham.
