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GREENSBORO — A plan meant to help small businesses in Guilford County could become a landmark policy in the state or be ruled illegal.

Steve Arnold, vice chairman of the Board of Commissioners, revealed this week the details of a plan that would give tax money back to nearly any commercial business that adds value to its property in the county.

Business supporters back the idea. But some commissioners are wary or ambivalent of the plan .

“If you want to give people a tax break, then lower the tax rate and lower it on everybody,” Commissioner Paul Gibson said Friday.

Local tax breaks for specific groups — abatements — are illegal in North Carolina, according to Jonathan Morgan, assistant professor of government at the UNC School of Government.

“Legally, what a jurisdiction needs to be careful about is doing something that closely mimics tax abatement,” Morgan said. “A safer way to go would be to provide a grant as an economic development incentive grant and not treat it as a rebate in taxes.”

If the program spurs a business to grow when it otherwise wouldn’t, Morgan said, then the policy could be legal. If it’s a tax rebate for development that a business would do anyway, then it could be legally questionable.

Arnold is promoting the plan as an incentive similar to others that the county gives to large businesses that bring jobs.

There are a few stipulations to the proposal: The business must be in the county and not on residential-zoned property. If those and other conditions are met, the incentive would be granted.

The business adding value to its property would have the difference of the related increase in property taxes returned to the business for three years. Whether that is illegal is unclear.

Commissioners will discuss the proposal Thursday.

No job-growth stipulation is included in the current policy draft, which Commissioner Carolyn Coleman would like to see added. But she said she would still support the policy.

“If the size of your facility grows,” she said, “then the size of your employees will generally follow.”

When the budget was created for 2009-10, $1.3 million was set aside for economic incentives that Arnold supported. The money would be handed out as grants to expanding businesses, Arnold said.

That could fit into the state law.

The figure was based on the expected regular growth of businesses in the county and compiled from existing tax valuation records.

In future years, businesses would pay taxes and then receive the difference in property tax connected to the expansion. The county’s tax department would handle the paperwork, as well.

That could run afoul of the law.

Morgan said he’s unaware of a similar policy elsewhere in the state.

As such issues go, supporters are calling it a pro-business incentive.

Opponents call it a tax abatement benefiting a certain segment of the county’s taxpayers.

“The legal problem is, potentially, you’re treating different taxpayers differently,” Morgan said.

It appears likely Arnold has the support to pass the proposal, said Commissioners Chairman Melvin “Skip” Alston.

Arnold has met with some commissioners lately, including Coleman and Gibson, to talk about the plan.

Some commissioners have yet to process the plan.

“I don’t know yet what I’m going to do on it,” Commissioner Billy Yow said.

Arnold did not return a phone message.

Contact Gerald Witt at 373-7008 or gerald.witt@news-record.com