A prosecutor in the economically battered western Illinois town where Maytag Corp. plans to close a major factory is hoping to sue the company to recoup property tax breaks.
Knox County State’s Attorney Paul Mangieri is seeking municipalities’ permission to sue Maytag, alleging the nation’s third-largest appliance maker owes more than $1.1 million in property taxes on its soon-to-be-closed Galesburg refrigerator plant.
The plant’s closing will leave 1,600 people out of work.
Mangieri said the company was allowed no more than $1 million in tax abatements on new buildings or improvements over 10 years but deducted more than $2 million during the 1990s for warehouse renovations.
Mangieri said he began probing the company’s tax payments after it announced it was closing the Galesburg plant.
“Maytag’s announcement of its closure was a lightning bolt that struck this community out of the blue,” Mangieri said Tuesday. “I was shocked and surprised, like I think all the members of the community, and one of the first things that popped into my head was, ‘What about all those incentives and tax breaks given to Maytag to help retain and maintain that business in our community?'”
Maytag spokeswoman Lynne Dragomier said Tuesday she couldn’t comment on specifics of the allegations until the Newton, Iowa-based company received more information from Mangieri’s office.
“When we announced in October 2002 the planned closing of the Galesburg refrigeration plant we repaid immediately, in full, all loans from the state and city well before the loans matured,” Dragomier said. “This is the first we have heard of an issue about repayment of abated taxes, and we are eager to hear from the state’s attorney to understand the situation.”
Mangieri said he won’t file the lawsuit until the city and township of Galesburg, Knox County, the Galesburg Sanitary District, the Galesburg School District or Carl Sandburg College gives him authority to sue Maytag on their behalves. He plans to meet with those groups over the next six weeks, seeking support for such a suit.
Dave Bevard, president of the International Association of Machinists Union Local 2063, said the lawsuit is one way to hold Maytag to the same standards it publicly embraces.
“Maytag talks about accountability – they talk a lot about accountability. They weren’t very accountable when they announced plans to close our facility,” Bevard said. “They said the workers weren’t accountable, it was management. Yet it was the workers that took the hit.”
About 380 of the plant’s 1,600 employees have been laid off, and 875 full-time production workers received two months’ notice in July that they were losing their jobs. About 200 employees will continue working until February 2005.
Company officials have said production will move to Amana, Iowa, and a plant will open this fall in Reynosa, Mexico.
From Mercury News