March 6, 2013 —
For years we’ve been told Sullivan County is broke. Last December’s difficult county budget negotiations witnessed legislators scrubbing every dollar. There, it was suggested that the time had come to rethink our reliance upon the axe, that greater proficiency was needed with tools that generate revenue. And it was suggested that we could and should consider actual need, in addition to eligibility, in making decisions to authorize Sullivan County Industrial Development Agency (IDA) tax breaks. An informal survey of most county legislators indicates a majority of them are receptive to these suggestions, as I suspect most of the public is too, so a question we all should ask is when and how we might act on them.
The when is now, with applications before our IDA from EPR Properties and Empire Resorts on behalf of the Concord project. The how is to remind our legislators that county tax breaks are public assistance, not frequent-flyer bonus points. And regardless of how positive the IDA’s cost/benefit analysis will be for the project, we can’t afford authorizing that public assistance when it isn’t necessary for the project to proceed.
Establishing need is a condition for public assistance. It’s the DNA of programs established for the poor, but it loses traction when well-funded companies seek financial support from the public.
Setting aside the many millions more in combined property and mortgage tax exemptions requested for the Concord, the sales tax exemption alone on the reported estimate of $24 million in material and improvements translates to $2 million. If our county authorizes just this one exemption it will forego $1 million in sales tax revenue, net of the state’s share, for a project valued at an estimated $1.2 billion. In more digestible terms, that’s a $17 exemption for each $10,000 in total project value. So another question our county should be asking is: would we forego purchasing a $10,000 piece of equipment we needed if we had to pay $10,017? Neither will EPR/Empire. Put another way, though $1 million is peanuts for EPR/Empire, it isn’t peanuts for us. Recall this year’s message from our legislators: 84% of our entire county tax levy is consumed by state mandates, leaving just $9 million for other county services.
New York State (NYS) law already assures many millions in property tax exemptions for the Concord without IDA involvement. So we’ll need to also understand how much and why our IDA would authorize additional exemptions—the sales tax exemption being just one example—and the fees they’ll receive in exchange for doing so.
Whether you believe, as I do, that the Concord is an important project, it’s difficult to ignore some similarities it shares with what many people consider the poster child for public assistance abuse, the Millennium Pipeline project. Millennium was well funded just as EPR/Empire is reported to be. Considering Millennium’s history and business objectives and that practical site alternatives were virtually zero, it wasn’t rational to conclude Millennium wouldn’t proceed without receiving every nickel it requested from our county. Something similar can be said for the Concord. And like Millennium, EPR/Empire could ultimately issue the same veiled threat by refusing to proceed unless it does get everything it wants. That doesn’t mean we can’t arrive at an amicable arrangement. It means their foremost responsibility is to cut the best deal they can for their shareholders, not for Sullivan County. Establishing whether giving them everything they want is necessary for them to proceed is important, because it elevates our county’s negotiating position. It isn’t adversarial; it’s smarter business.
Wish lists don’t establish need and neither does eligibility. That NYS doesn’t require our IDA to make those distinctions doesn’t prevent them from doing so. Our IDA knows this and so does every member of our legislature.
[Dave Colavito is a resident of Rock Hill, NY]