banner

 

February 18, 2010

 

IDA required to pay new state fee

By J.D. THRASHER
Staff Reporter
jthrasher@cortlandstandardnews.net

The Cortland County Industrial Development Agency must pay $14,000 to the state by March 31, a new fee on IDAs statewide intended to raise $5 million for the state.
The fee, known as the Cost Recovery Assessment, was approved in the 2009-2010 state budget, said Matt Anderson, spokesperson for the state Division of the Budget.
The state is making every IDA pay 4.7 percent of its revenue to ensure the state receives a total of $5 million each year from the IDAs.
The fees paid to the state for this year come from IDAs’ 2008 gross income.
Garry VanGorder, executive director of the Cortland County IDA, said the tax was meant for bigger state agencies, but was carelessly applied to smaller agencies like the IDA. He said this is a costly decision by the state.
“Fourteen thousand dollars is a lot of money, we could use that money to create jobs,” said VanGorder.
The New York State Economic Development Council, an organization that represents all IDAs in the state, has opposed the fee.
“It is shameful that they’re imposing tax on key economic agencies,” said Brian McMahon, executive director of NYSEDC.
“This tax demonstrates that they do not have a fundamental understanding of IDAs and how they operate,” said McMahon.
The state argues that IDAs are not being singled out, and that sacrifices must be made statewide to ensure economic stability within the state.
“These tough times are requiring very difficult decisions for the state and local budgets across the country,” said Anderson, who admitted that the state has had to delay state funding to institutions like schools, prisons and hospitals. He also said that other state agencies have been asked to pay the state, but this is the first year that IDAs have been included in that equation.
The New York State Association of Counties called the fee redundant and punitive.
“(It) will lead to these resources and those appropriated by counties for local job creation to be used instead to help bail out the state during its time of financial crisis,” the organization says in a resolution opposing the fee.
“The state continues to face an unprecedented budget deficit, this must have been a revenue generator,” said Mark Lavigne, deputy director of NYSAC.
VanGorder said the Cortland County IDA will pay its bill of $14,000 to the state by the March 31 deadline.
The revenue for the Cortland County IDA includes all monies collected by the IDA, including grant money, said VanGorder. It totaled approximately $330,000 in 2008. This total also includes all money budgeted to the IDA from the county.
There are also disputes between the state and those working on behalf of IDAs about the timeliness of the tax. Those working in favor of IDAs say that the tax is retroactive, by using revenues from 2008 and making states pay in 2010. They also say that between the passing of the tax there was no communication from the state to the IDAs, except during the first week in February, when bills asking IDAs for the money were mailed.
“I think it was a surprise,” said McMahon.
Anderson said that the tax was proposed in December 2008 and voted on by the state legislature in April 2009. IDAs have known for nearly a year they must pay this tax, he said.
In addition to helping close the state deficit, the money collected from the IDAs will be used to support oversight services, like the newly independent Authority Budget Office.
The Authority Budget Office conducts aggregate reports and oversight of various state agencies, said Anderson.
He also added that there have been some discrepancies about spending in some IDAs in the past.
The Cortland County IDA was not accused of reckless spending by the state.
The state is not setting a penalty for not paying the tax, but is expecting it to be paid, Anderson said.

 

To read this article and more, pick up today's Cortland Standard
Click here to subscribe