Tuesday, May 01, 2012

Mall PILOT Keeps Taxes Under Cap

Tom Kackmeister said...

I first discussed this subject with the Asst. Superintendent for finance at the Greece Central school district thsi AM . I sent this to various contacts including my state and county legislators as well as various media contacts. I also sent it to the school district via their web site.
School Budgets: Property Tax Cap & PILOT money!

This is a very big deal. It is a significant factor in the Greece school budget and may be significant in other school districts (and towns) as well.

The Greece Town Mall property has been granted a $90,000,000 property tax assessment reduction in exchange for a PILOT payment of approximately $2,030,000 to the Greece School district. The money is about a wash. As adopted, this PILOT allotment is currently for one year only. We’ll see how that plays out. (Note PILOT is Payment In Lieu of Taxes)

The major significance of this however is the effect this has had on meeting the 2% state mandated property tax cap.

PILOT money is not included in the calculation of the property tax levy increase. The Greece tax levy as calculated by the Greece school district amount to a 1.1% increase. This is under the 2% cap. However if that PILOT payment by the Greece Mall had been paid via property taxes, it would have been included in the cap limit. In that case the levy would have increase by 3.1% to support the adopted budget. That is over the 2% cap. If the PILOT had not been adopted, the district would have been required to adopt a budget roughly $1,000,000 less than they did to stay under the cap. (Note: the way the district has been told to include the PILOT money, they generate an increase of 1.7%. That does not accurately reflect the property tax levy implications as I have outlined above. Do not be confused by that calculation.).

This is all (currently) legal. Who should we blame for this work-around the cap limit? Obviously it starts with the PILOT program and this huge increase in PILOT granted the Greece Town Mall. All levels of local government benefit by removing this $90 million from the tax levy calculation. I wonder who at the state legislature and county governments and town government and school districts are aware of this? How many have indeed been implicit supporters of this work-around in order support their own inflated budgets? Maybe this is a way the state legislature has willingly bypassed the 2% cap legislation. I certainly hope the media will see the merits in bringing this situation to the attention of the general public.

I think this stinks. Why is the governor allowing this to take place? I can see a major thrust for even more PILOT programs in the future as public entities try to use this neat cap loop hole. I would like to hear from the governor, from my state legislatures, my county legislators my town and school administrators. I hope we can limit the Greece Town Mall PILOT program to one year and require the school district to make up an additional $2,000,000 in budget cuts next year to offset this cap loop hole.

Tom Kackmeister
513 East Moreno Dr . Rochester NY 14626


Charlie Hubbard said...

WHAM is reporting that the Comptroller is questioning the tax breaks given by Comida and Comida like committees as a way to increase employment. The Comptroller is saying it is NOT working.
What we DO know is our taxes are going up to support this con.

Charlie Hubbard said...

Today's D+C has the article about Comida.
FINALY someone is speaking out about how these tax breaks are paid for by US. It happens to be someone from Albany - localy little if anything is said.

Bottom line it's politicians wanting to 'control' the winners and losers while hoping the rest of us won't mind paying more.

Dangerous - very dangerous.

Tom Kackmeister said...

My mistake:

I recently characterized the PILOT program granted to the Mall at Greece Ridge, as a workaround of the 2% tax levy limit. I was wrong. Meaghan McDermott of the D and C shared with me the formulae used by the state to calculated the tax cap limit. That formula demonstrates my error. Sorry.

However the PILOT program has permitted the perception of better financial control than has been implemented. Specifically the PILOT calculation describes a tax cap limit of 1.7%; and a school district proposed tax levy increase of 1.1%. However if the PILOT program had not been implemented, and all other figures were held constant, the tax cap limit would have been 3.9% and the proposed budget 3.1% (all figures approximate). Quite a difference! If the PILOT program is in not repeated next year the district will have to report a huge increases in these equivalent figures. Hope they do use consistent reporting.

Also: the formulae provided by the state clearly isolate the factors which permit a tax levy over 2%. In the Greece case there is a year to year increase of over 1$ million in local capital costs and $150 thousand in addition pension costs. Nothing wrong with what was done but the perception of a tax levy cap of 2% might be encouraging a complacency that is not merited.

As an aside: I forwarded my earlier analysis to a wide audience including politicians at the state and county level. The school district was also sent a copy. My thanks to the D and C reporter who understands the facts of this 2% limit and thought it worthwhile to follow up with me. No one else responded; I have to wonder to what degree they understand facts of this 2% tax levy cap!

The PILOT program does need additional scrutiny but that is for another time.

Tom Kackmeister

SCATS said...

To Tom ~~ Maybe they just don't care?

Anonymous said...

That the PILOT program is intended for nothing other than deception is apparent from its name alone: Payment In Lieu Of Taxes. Think about that: you can pay your tax with money, or, in lieu of paying your tax, you can... pay money. It is a tax either way, but the PILOT payment is explicitly not called a tax. This is the New York way: complexity to conceal duplicity.