The Aug. 12 Sunday Gazette editorial “Public money talks the loudest of all” suggests that a “major culprit” in the failure of Malta’s Luther Forest Technology Campus to attract businesses is the town’s reluctance to award payments in lieu of taxes, or PILOTs.
The editorial suggests that even though PILOTs are corporate welfare, they are needed in certain cases, Malta being one.
In fact, most Schenectady County residents now have very little information about existing PILOTs, i.e. to whom and how they are awarded or the amount of increased local taxes John Q. Public is paying to support each one.
Five different public benefit corporations now operate in Schenectady County as local development corporations or industrial development agencies, each able to award PILOTs. A PILOT can reduce or eliminate school, city, town and county taxes for the lucky company for as long as 15 years. These reduced or forgiven taxes can be in the hundreds of thousands of dollars and must be made up each year by the taxes paid by the residents and other businesses in the affected community. The IDAs and LDCs giving these tax breaks finance their own operations through fees they charge to those getting the PILOTs. It is not unusual for these fees to exceed $100,000.
Information that is now lacking and needs to be reported to the public annually includes the number of PILOTS active in the reporting year for the city, each town, the county and each school district; the added taxes others must shoulder to support each PILOT; and the rationale behind each one awarded — such as more jobs or community improvement, etc.
While it is obvious that such a report might include the number of jobs added by each PILOT, it is too complicated to report this accurately without statewide guidelines mandating standardized definitions of what is to be counted as a “new” job.
Metroplex is unique in the world of corporate welfare in Schenectady. While the LDCs and IDAs fund themselves by requiring payments from those to whom they award PILOTs, Metroplex alone also receives a direct award from the Schenectady County government of .05 percent of the total sales taxes collected each year. Of this amount, Metroplex must by law distribute 30 percent to the towns. None goes to the city.
As sales tax revenues rise, as they do each year, so does the Metroplex kitty. In February, the Capital District Business Review reported the county gave Metroplex a total of $7.7 million from sales tax receipts. The Business Review also reported that since the passage of the Metroplex Law in 1998, Metroplex has gotten $87 million in sales tax receipts for it to award as corporate welfare. In addition to this money, the county law gives Metroplex the authority to issue up to $75 million in bonds.
Clearly, Metroplex is the elephant in the room when it comes to corporate welfare in Schenectady, and the staff members who advise the agency’s board as to who is to get these funds are the elephant’s keepers.
Numbers in perspective
To put this year’s $7.7 million to Metroplex from county sale tax receipts into perspective as part of the total county budget, a few weeks ago the legislature approved an annual budget for the Schenectady County Community College in the amount of just under $2.1 million, substantially less than the recommended level of one-third of the SCCC’s total annual budget.
SCCC faculty claim they are among the lowest-paid in the SUNY system. But as one county legislator announced after voting for the recent tax settlement with General Electric, “We want to be known as business friendly.”
In December 2011, the New York State Authorities Budget Office issued a report on economic development in Schenectady County, titled “Operational Review Schenectady County Economic Development Entities,” which is available online at their website.
This report resulted in one news story in the Gazette, which included criticism of it by the head of Metroplex, Ray Gillen, “. . . there was not a page that didn’t have an error,” no comment from the Gazette editorial page, and no public review or comment on the report’s findings and recommendations from any town, city or county governing body.
The ABO director, David Kidera, and the deputy director, Mike Ferrar, taped shows on their report for public access TV (Cannel 16) that can still be seen through the Open Stage Media website by going to Video on Demand and clicking on Green Talk.
Basis of decisions
Easily available, full information is the bedrock of our form of government. We, the voting public, can only require good decisions from our elected leaders when we have full information. The tax-paying funders of all PILOTs in Schenectady County don’t have that information now and are not likely to get it soon if we do not forcefully request our elected representatives in government and those serving on our school boards to get it.
We are now funding PILOTs throughout the county. The reporting proposed here is a very modest first step which should easily get full support from the Schenectady Chamber of Commerce, good-government groups such as the Schenectady County League of Women Voters and Common Cause, as well as every elected school board member and elected members of our city, town and county government.
Elmer Bertsch lives in Niskayuna. The Gazette encourages readers to submit material on local issues for the Sunday Opinion section.