Tax Abatements Cost New York State Schools a Staggering Sum
New York State public schools lost at least $1.8 billion in revenue to tax abatements in Fiscal Year 2021, according to new research published this week by the Washington, D.C.-based nonprofit Good Jobs First.
This figure, Good Jobs First went on to say, combines $430 million in self-reported losses by 318 school districts with $1.4 billion in estimated losses for schools in the state’s five largest cities, where education-specific tax abatement disclosures are not available.
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Good Jobs First, according to its website, is a policy resource center that promotes corporate and government accountability in economic development.
A substantial portion of these abatements occur when Industrial Development Agencies (IDAs) acquire properties and lease them to private companies in exchange for payments in lieu of taxes (PILOTs). With the properties technically owned by a public agency (the IDAs), they pay no property tax. The PILOTs typically equal a small share of what property taxes would have been, Good Jobs First said.
“The school districts of New York, Buffalo, Rochester, Yonkers, and Syracuse (the ‘Big Five’) do not report tax abatements because their finances are not separate from their cities’. Given the enormous costs of known tax abatements to these five cities (especially New York City, where all abatements totaled $4.1 billion in FY 2021) and education’s large share of local spending, their impact on schools is substantial. Our estimates for how much abatements cost schools in the four cities besides New York are close to those reported by the Office of the State Comptroller,” according to the Good Jobs First report.
“The self-reported $430 million in losses represent an $18 million increase from both the 2017 and 2019 losses we at Good Jobs First reported in a 2021 study. New York State, even without the Big Five, would rank second only to South Carolina in total self-reported school tax abatements.”
Among the report’s other findings:
• One of the largest net revenue losses ($19 million) was reported by Peekskill City School District, where nearly nine out of 10 students qualify for free or reduced-price lunches.
• Exactly 37 New York School districts lost more than $1,000 per student per year. Exactly 22 of those 37 lost more than $2,000 per student per year.
• There are clearly some unreported abatement costs: 21 districts beyond the 318 claim that the amount of taxes abated was not available for inclusion in their financial reports. Yet those same districts reported offsetting paymentsof $30.7 million collected in lieu of taxes. That is: they reported benefits but did not disclose abatement costs.As PILOTs typically offset about half of abatement costs, these undisclosed gross costs could equal $61.4 million or more.
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“Disinvesting the state’s foundational workforce development system for corporate subsidies makes no sense at a time of skilled labor shortages and very low unemployment. In addition to our fresh evidence here, there is decades of evidence that IDAs are failing to deliver a better upstate economy. We recommend eliminating IDAs for their lack of accountability,” Good Jobs First wrote.
“Short of that, we recommend prohibiting IDAs from entering into agreements that abate school tax revenues. The alternative is the status quo: ever-higher property tax rates on New York residents to mask the large and rising costs of corporate tax abatements.”
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