IDA tax breaks given to big companies hurt Long Island residents

Over the past decade, about 1.5 million New Yorkers fled the state. In just 12 months, from July 2020 through July 2021, 350,000 did.

On Long Island, the number of people leaving for elsewhere in the United States, compared with the number arriving, has increased annually in both counties since 2012.

A Zogby poll in March found 39% of 1,000 respondents plan to leave New York, and taxes are the biggest reason for 37%, far outstripping any other gripe. Just 8% mentioned weather, a favorite excuse of high-tax apologists.

But unlike companies that threaten to leave, or say they can’t afford to open their business here if they must pay their full share to support schools and governments, no one offered these residents a property-tax reduction or a sales-tax reduction or an exemption from the mortgage recording tax to stay.

When residents say they are leaving because they can’t afford to remain, you can believe them. They have no incentive to exaggerate. When corporations tell the industrial development authorities empowered to foster local economic development by approving tax breaks that they must be excused from taxes to do business on the Island, it’s not necessarily so. Often, tax breaks simply increase profits.

And particularly with facilities like Amazon “last-mile” distribution centers and large-scale warehousing, which often must be built precisely near major arteries or communities where companies need them, claims that those companies will go elsewhere often ring false. Long Island is difficult to get to, and doing business here is punishingly expensive. If companies build warehousing or distribution centers here, it’s usually because that’s where they’re needed.

Amazon should pay

Amazon expects to have at least 10 distribution centers on Long Island to make last-mile deliveries to customers’ doorsteps (though it won’t seek tax breaks for many). Expensive warehousing projects are mushrooming across the Island because demand is high.

These are the conditions under which companies should be able to pay full taxes. It’s important, too, to remember that these companies are taxed largely because they use services. They batter roads with traffic, need police and fire coverage, and when they get breaks they also deprive school districts of taxes.

It’s not that IDAs shouldn’t exist, although Long Island would be better served by just one or two than the eight — representing counties, cities, towns and villages — that it has. Major employers have tax clout everywhere in the nation; when a new business that would aid the economic trajectory of a Long Island community comes along, romancing with tax breaks can make sense.

It isn’t as if all taxes are justifiable. The mortgage recording tax on the Amazon site where Syosset’s Cerro Wire once stood would’ve been $537,750 were it not waived. The levy for that filing is a ludicrous 1.05% of the mortgage amount. But that tax is also punitive for homeowners, for whom the charge on a $500,000 loan would be $5,250 even when refinancing, or rather, “staying in the community.” Where is their exemption?

Deals have conflicts

Syosett and its Amazon facility highlight many of the conflicts surrounding IDA deals. The Syosset school district opposed the breaks, saying they left residents to pick up the tax tab for one of the world’s most valuable companies. Nassau County IDA Chairman Richard Kessel argued that the Island needs jobs, and the site sat vacant for 30 years and needed pollution remediation.

The inability to build there for decades, though, was largely caused by strife and agitation between multibillion-dollar mall companies. Remediation needs when known, as at this site, are discounted in land-sale negotiations. And a school district, with deep contacts in the community, shouldn’t be ignored.

In Suffolk County, Amazon’s Westhampton Beach “last-mile” facility, owned by Rechler Equity, got $2.3 million in breaks in a quiet process, then faced several county legislators demanding they be revoked.

What did the Westhampton Beach and Syosset IDA applications for “last-mile” Amazon facilities have in common?

In both cases, applicants played fast and loose with county IDAs by stating in aid applications that Amazon would use an out-of-state warehouse if tax breaks weren’t given. Really? They would have delivered LED light bulbs overnight at no cost from Stroudsburg, Pa.?

Critics say IDAs typically do a poor job with transparency and notice, particularly when on giving school districts time to analyze complex deals. By law, IDAs don’t even have to notify affected taxing jurisdictions before approving tax breaks. A bill passed in the state Assembly and Senate to fix that should be signed by Gov. Kathy Hochul, but it also needs to be expanded. Those jurisdictions need plenty of time and detail to decide whether each break makes sense.

Many school districts also object strenuously to renewals of IDA deals, in which established companies claim they’ll leave or close if they are forced, once an original abatement runs out, to pay their full taxes. It is, too often, not true and an abuse of the system.

In New York, granting IDA tax breaks to retailers is illegal, and should be. That makes the tremendous irony of granting such breaks to Amazon, which is in some sense both the world’s largest retailer and the biggest challenge to Long Island’s locally-owned retail businesses, even harder to comprehend.

Faced with their tax bills, many New York residents are fleeing because they can’t pay. One reason is that so many businesses don’t pay.