Riverhead Central Faculty Association President Gregory Wallace speaking at a press conference in the State Capitol Jan. 31 in support of legislation to ban school tax exemptions by industrial development agencies. Image: Screenshot from NY Senate video

Representatives of unions, education associations, school funding advocates and government watchdog groups gathered in the State Capitol today to call for the passage of legislation, pending in both chambers of the State Legislature, that seeks to prohibit industrial development agencies from abating school district taxes. 

The Riverhead Central Faculty Association was among the participants. RCFA President Greg Wallace took the podium to talk about impacts of tax breaks locally.

“Between 2014 and 2021, the Riverhead IDA has awarded more than $23 million in tax breaks for proposed developments throughout the town of Riverhead,” Wallace said. 

“The diversion of these funds has created an extreme fiscal burden on the school district by directly impacting the services we can provide to our students. Last year alone, $2.7 million was diverted from the Riverhead Central School District by the Riverhead IDA, whose members are appointed and not elected,” he said. “These funds are sorely needed to strengthen our educational and academic intervention programs, as well as mental health services…With an additional $2.7 million, our district could add at a minimum of 30 educational professionals, which would have an immediate impact on the students we serve.” 

Unelected IDA boards have the authority to unilaterally change enacted tax policy, while completely ignoring the concerns of elected school boards, Wallace said. “Furthermore, they do this without any accountability to the electorate.”

Riverhead Board of Education President Colin Palmer added his support for the legislation in a written statement.  “The working residents of Riverhead have had no say in whether or not these abatements are given, but we are all aware of the increasing tax burden,” Palmer said. “It’s time to pass this bill and make developers and other business interests pay their fair share.” 

Ron Deutsch of New Yorkers for Fiscal Fairness, speaking at a press conference in the State Capitol Wednesday. Image: Screenshot from NY Senate video

“We really have quite a collection of organizations who are fed up with this notion that we continue to give away school revenue in the name of economic development,” Ron Deutsch of New Yorkers for Fiscal Fairness, one of the rally organizers said. 

“Report after report has clearly shown these programs are not working,” Deutsch said. “We are not getting the desired outcomes. We are not getting the number of jobs promised. These businesses are closing up shop and going away. This is flawed public policy, and it needs to end.”

The pending legislation is sponsored by Sen. Sean Ryan (D-Buffalo) and Assembly Member Harry Bronson (D-Rochester). Both were present at today’s event.

“In Albany, we fight about a lot of things. But there’s one thing we usually don’t fight about. We agree that educating our children is a top priority,” Ryan said. “We pride ourselves on the quality of our schools and that we provide them with enough funding so our children can get a quality education.” New York’s “highly educated” population is the state’s best economic development program, Ryan said. 

“​​While we’re busy making these massive investments in public education, there is a hidden problem exacerbating school budget gaps,” Ryan said. “Year after year, IDAs across the state give corporate handouts that cost New York state school districts millions and millions of dollars,” he said. “When a business is exempted from the property tax, they’re saving money, but they’re saving at the expense of every other taxpayer,” Ryan said. 

“We’re playing a constant game of Whack–a-Mole,” the senator said. “IDAs are taking away money, we’re trying to give it back. That’s not how you want to run things.” 

Bronson said the State Constitution’s mandate to provide public education cannot be met if property tax dollars are taken away from public education and given to businesses and corporations. “That’s not how  you fund public education,” he said. 

“We should not have economic development policies funded on the backs of our children,” Bronson said. “We should not have economic development policies, steal money from our public education system, and give it to businesses and corporations.”

John Kane, executive director of Reinvent Albany, said study after study shows the tax subsidies do not work. He pointed to a report Reinvent Albany published last year, “Debunked: 25 Major Studies Showing Corporate Handouts Do Not Work.” It specifically debunks the idea that corporate subsidies drive job growth and good jobs, he said.

“IDAs have an extraordinary power to give away public money in the form of tax expenditures —without being elected, without going through an appropriate constitutional appropriation process, without going through stakeholder debate… and doing it all off-budget with minimal scrutiny,” Kane said.

Ryan and Bronson introduced their bills last January, but the measures stalled in committee in both chambers. The lawmakers are both pushing for a different outcome in 2024.

State Sen. Anthony Palumbo at the Greater Calverton Civic Association meeting on Jan. 18, confirmed his support for the bill sponsored by Sen. Sean Ryan to prohibit IDAs from exempting school district taxes. Photo: Denise Civiletti

Sen. Anthony Palumbo, who represents eastern Suffolk’s First Senate District, said last year he would vote for the bill if it got to the Senate floor. He repeated that pledge last week at a meeting of the Greater Calverton Civic Association.

MORE COVERAGE: Teachers, school district officials and state lawmakers take a stand against IDA school tax exemptions

Assembly Member Jodi Giglio (R-Baiting Hollow) said in a phone interview today she does not support the legislation. IDAs work, Giglio said. IDAs provide needed incentives for private investment that creates tax base growth over the long term, improves blighted properties and creates new jobs, she said.

Giglio suggested that when IDAs grant property tax abatements to residential projects, the developers should be required to represent how many students their projects will put in local schools. 

“The school district will do an annual audit and report it to the IDA. If there are more kids registered in the school district than what the applicant was proposing, then the applicant would pay the school district taxes for each child above and beyond,” Giglio said.

Riverhead Industrial Development Agency’s executive director and board chairman did not respond to emails requesting comment this afternoon.

Last fall, New York State Economic Development Council, an organization whose 900 members include industrial development agencies, local development corporations, investment banks, chambers of commerce, utilities and private corporations, according to its website, issued a report pushing back against legislative efforts underway to curtail IDA activity.

The report, prepared for the NYS EDC by Camoin Associates, an economic development consulting firm, concluded that in 2021, IDAs statewide helped create and retain 1.3 million jobs representing $141 billion in annual wages. Those wages helped generate $12.4 billion in annual New York State Tax revenue, according to the report.

For every dollar of taxes abated, IDA projects generated $6.57 in new tax revenue for the state, the report states. And for every dollar of exemptions issued, $74.89 in employee earnings was generated in the state and $237.46 in sales was generated, it says.

IDA projects created $830 million in new tax revenue to local taxing jurisdictions in 2021, including $338.9 million in payments to school districts across the state, according to the report.  

“This is new revenue to the schools that otherwise would not have occurred without IDA involvement,” the EDC said in a press release. “The total amount of school taxes abated by IDAs represents less than .5% of total school spending in 2021,” the EDC said.

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