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School districts seek veto power over tax breaks for industry

Assemb. Michaelle Solages (D-Elmont) speaks during the IDA

Assemb. Michaelle Solages (D-Elmont) speaks during the IDA hearing in Manhattan Friday. Credit: Craig Ruttle

School districts are seeking veto power over the tax breaks awarded to expanding businesses by industrial development agencies across the state.

In testimony to three state Assembly committees on Friday, the state School Boards Association said districts are greatly affected by multiyear property-tax reductions granted by IDAs – but have no say in the process. Property taxes are the primary funding mechanism for public schools.

“Too often there is little to no communication, leaving the school district to learn of a multimillion-dollar impact on its budget after a decision has already been made,” the association said in written testimony to the committees.

Because of this impact, districts should be provided “with the authority to determine whether or not a [tax-break deal]...shall apply to school property taxes,” the association said.

Friday's public hearing in Manhattan was held by the Assembly committees so that they could consider ideas for changes to the state laws governing IDAs before lawmakers return to Albany in January for the 2020 regular session.

There are more than 100 IDAs, including eight on Long Island. Since the late 1960s, they have granted reductions in property, mortgage recording and sales taxes in return for jobs and investment.

The state Economic Development Council, which represents IDAs in Albany, said they “increase revenue coming into local communities” as aid recipients make building improvements and hire employees, which in turn leads to higher collections of income, sales and property taxes.

The council supported prior efforts to improve IDAs’ public reporting and “will continue to work with the legislature on commonsense reforms that address concerns around transparency and oversight but that do not hinder or restrict economic development,” executive director Ryan M. Silva said in Manhattan.

He proposed expanding IDAs’ powers to include making loans and grants to small businesses, downtown retailers and employee training programs.

Assemb. Michaelle C. Solages (D-Elmont) said the Nassau and Hempstead IDAs should not have given tax breaks to automobile dealerships in recent years. The IDAs maintained that the dealerships were exempt from the state prohibition against helping retailers because they are "tourist destinations.'' 

IDAs are “using the tourism loophole for car dealerships, for malls [and] for many entities," which puts more government costs "on the taxpayers’ backs,”  said Solages, author of a new law requiring IDAs to livestream their meetings over the internet.

Under questioning by Solages, the state’s top IDA regulator, Jeffrey Pearlman of the Authorities Budget Office, said car dealerships “don’t pass the smell test” as tourist attractions.

On Long Island, no dealerships have been awarded tax breaks in the past year and the Nassau IDA has said it will no longer accept aid applications from them.

Pearlman, who grew up in Huntington Town, urged lawmakers to modernize IDA laws. “IDAs right now are engaging in activities that go beyond their mission,” he told Assemb. Fred Thiele (I-Sag Harbor), chairman of the Assembly’s local governments committee. “There’s a little bit of the Wild West out there.”

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