If Ergon Refining Inc. hits its self-set investment benchmark when it expands its current Vicksburg plant and later gets into the ethanol business, tax exemptions already pledged will be worth $2.4 million over 10 years.

District 4 Supervisor Carl Flanders and County Administrator John Smith provided the figures to the Vicksburg Lions Club during a &#8220state-of-the-county” report Wednesday.

Describing the issue of tax exemptions as &#8220the most hot-button issue on our radar screen,” Flanders said he now regrets his vote to grant Ergon a fee-in-lieu amounting to one-third of ad valorem and property taxes for 10 years, including school taxes, depending on the company’s plant expansion reaching $100 million.

Vicksburg Warren School District Superintendent Dr. James Price, before exact figures were calculated, also said normal growth in school expenses will have to be paid by other taxpayers if proposed exemptions persist. Under most past inducement programs for employers, exemptions from school levies have not been allowed. That’s not the case with the fee-in-lieu approach.

Ergon, a Jackson-based company operating in multiple divisions, has a refinery at the E.W. Haining Industrial Center and has informed local officials of a $100 million expansion.

If it doesn’t reach that mark, industrial development bonds may be issued or the tax break will become a &#8220standard” industrial tax exemption, one that would still provide more than $750,000 in revenue to Warren County and the Vicksburg Warren School District.

But if it tops $100 million, tax figures show, the lowered fee-in-lieu kicks in at a tax savings of nearly $1.2 million.

Ergon is also planning an investment of $100 million or more when it and Bunge North American Inc. build an ethanol plant. With the fee-in-lieu break, the loss of tax revenue would reach $2,396,520 over 10 years at current tax rates.

Ergon executives have said the $113 million refinery expansion includes purchasing new equipment and will create 11 jobs, adding $665,000 extra to the company payroll.

Supervisors unanimously approved that exemption Sept. 20 after receiving specifics from the company two days earlier, a time frame Flanders, this year’s board president, said was too short to examine the proposal in detail. He supported it because its passage seemed assured, he said.

As for the ethanol plant, where farm crops will be converted into fuel, Flanders defended his vote against granting Ergon free port warehousing within an exemption on inventory and one on finished goods, citing funding gaps in the 9,200-student school district in which he taught before being elected as a county supervisor in 2003.

&#8220This would be on the raw materials they are using in this process. I think that when we get to exempting inventory, we’re going down a road we don’t need to,” Flanders said.

Company officials plan to build the ethanol plant by late 2007 and within it employ 32 people with an annual payroll of $2 million.

Free port warehousing is figured based on whether a company has shipments inside Mississippi or outside the state, with the latter providing the more generous exemption.

As for coming up with guidelines for granting such inventory exemptions, Flanders indicated he was against the idea in principle. Such a move to direct the Assessor’s Office was approved by supervisors that day.

&#8220I think it’s a slippery slope. We will end up discounting the inventories on all our existing industries,” he said.

Flanders said Warren County remained &#8220poised, geographically” for economic development because of its access to water, rail and interstate transportation, but depicted the choice of promoting those advantages and giving in to corporate demands for escalating tax exemptions as &#8220a constant battle.”

Schools are operating this year on a $73 million budget. Of that, 50.1 percent comes from a state allocation and 34.6 percent from local property taxes. The rest comes from federal sources and 16th Section land.

No local tax increase was included in this year’s VWSD budget. There was an increase of .55 mill to fund the 2005-2006 school year, part of a countywide millage increase.

Before that, there had been no increases for at least 10 years, largely owing to a new revenue stream from casino development.

Mississippi started offering inducements to industrial employers about 60 years ago as a means of attracting industrial jobs to replace those being lost in farm mechanization.

Since then, the programs have grown and diversified greatly. The underlying economic theory is that the public’s interest is better served by the availability of work and that payroll, income and sales taxes and other government revenue generated by jobs offset taxes on property and inventory that industrial employers would normally pay.

Inducements vary widely. The Nissan plant near Canton won a legislative package worth $400 million six years ago to locate in Mississippi and provide 5,000 jobs. The casino industry in the state, by law, may be offered no tax breaks of any kind.

10-YEAR TAX DIFFERENCE.

With no exemptions on an investment of $100 million with an assessed value of $15 million, 10 years of taxes at current rates would be: