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Too many PILOT programs fail to give public adequate information

Razors_Edge_Article

On the opinion page of the SUNDAY GAZETTE from this past Sunday there is a highly interesting piece by Elmer Bertsch. In his feature opinion essay he calls attention to the number of PILOT agreements being offered to businesses in Schenectady.

A PILOT agreement is a negotiated payment from a business to a government. The acronym means “payment in lieu of taxes.” As Mr. Bertsch points out in his excellent opinion piece, 44 companies in Schenectady are now paying no, or greatly reduced local, county or school taxes on their properties because they have cut special PILOT agreements with unelected officials of IDA entities.

PILOTS can be misused–reports often lack information

The underlying issue is that a PILOT agreement can be—if misused–a clever way to finesse the tax system in order to improve the bottom line for those businesses fortunate enough to know how to go about getting a special deal for themselves.

Mr. Bertsch laments the fact that the annual report on the PILOT agreements, given by the chairman of one of the three Schenectady local authorities which negotiates the special payments, lacks some specific information. The annual report—so says Mr. Bertsch—does not include this essential information: 1) the full assessed value of each PILOT property 2) the 2014 taxes that would be due if the business had not been granted a PILOT tax break 3) the actual number of 2014 PILOT agreements 4) the total number of years granted for each PILOT agreement.

That is a raft of undisclosed information.

Monitoring these arrangements, some might even say “insider deals,” is the responsibility of elected officials through legislative oversight. Mr. Bertsch rightly questions the ability and willingness of legislators and politically appointed government officials to be adequate public watchdogs of arcane IDA activities that trade public revenue for special tax breaks to closely connected businesses.

Questions taypayers, the media and watchdog groups need to keep asking

I pose a direct question: who on the IDA committees is empowered to decide which businesses get which special tax break and for what reasons? Moreover, how is it possible that in a city so strapped for revenue as Schenectady is (and think about Amsterdam’s fiscal situation because NYS IDA’s operate everywhere across the state) non-elected officials are giving tax breaks that should be the public’s money? And then, how is it allowed that such key information is not transparent to the public?

I suggest that pursuing such questions about how IDAs grant tax breaks may reveal much about the by now well-documented public corruption problems in our Empire State of 2010-2014.

Who is getting appointed to the IDA boards, of which there are over 100 in NYS? How are PILOT agreements being monitored in other parts of the state? What is the social and financial relationship between the IDA officials, the politicians who appoint them, and the business owners who are applying for PILOT tax exemptions?

In any case I refer you to the excellent opinion piece by Mr. Elmer Bertsch for some added details about the specific Schenectady PILOT situation: 44 businesses getting special tax deals in a city struggling against deficits. Would this situation be another vivid example of insiders getting special deals against the public interest?

It is too easy to argue, of course, that such special treatment helps keep businesses in Schenectady. It is an argument that looks increasingly worn and overused. Forty-four PILOT deals?

Keep reading, and be loyal to true friends…but not to the extent one would actually help them cut special deals against the public interest…

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About L. D. Davidson

L. D. Davidson ‘s column, The Razor’s Edge, appears every Wednesday.

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