Whitfield County is one of just 15 of Georgia’s 159 counties that doesn’t have some sort of exemption on inventory taxes. And it is the only county north of Atlanta on I-75 that doesn’t exempt at least some taxes on inventories.

Some local officials say that makes it hard to bring in new investment. On Tuesday, the Dalton City Council and the Dalton Board of Education announced a move they say will help make the city more competitive.

Mayor David Pennington said the City Council will vote on Monday to place a referendum on the November ballot asking voters to approve a 20 percent exemption for all classes of inventory. The exemption tax would take effect on Jan. 1, 2010.

“We are here to support them. We think it is good for the community,” said school board chairman Steve Williams. “We recognize that Dalton is not the same as it was 10, 15 or 20 years ago. We’ve got to do business differently.”

Pennington noted that most of the cities and counties that surround Dalton have some type of inventory tax exemption.

Citizen Troy Smith asked if the exemption would generate business.

“That’s why we are doing this,” said Pennington.

A report prepared earlier this year for the Dalton-Whitfield Joint Economic Development Authority found the area’s inventory tax is a major impediment to attracting certain types of business.

“It is an issue, particularly with those (businesses) that have any type of substantial inventory,” said authority chairman Chuck Dobbins. “It definitely comes up. It definitely puts us at a competitive disadvantage.”

But officials said the exemption should help level the playing field.

“One of the first things that industry asks if they are going to come into the area is ‘Do you have an exemption, a freeport exemption?’ and we have to say no,” said City Council member George Sadosuk. “Now, we can say we have an exemption (if the referendum passes).”

But the exemption will reduce revenues to the city and the school system, at least in the short run.

Pennington said the city would lose about $360,000 annually and the recreation department, which currently has its own dedicated 1 mill tax, would lose about $156,000. Dalton voters will decide in November whether to continue to have a dedicated property tax for the recreation department or to allow the City Council to decide its budget as it does other city departments.

Williams said the impact on the school system from a freeport exemption would be more substantial, with the school system losing about $1.3 million annually.

Can the school system absorb that loss without increasing taxes or cutting services unduly?