The 2009-2010 New York State Budget contained a statewide “cost recovery” tax on industrial development agencies (IDAs) of up to $5 million. Genesee County Economic Development Center (GCEDC) in conjunction with many other IDAs across the state joined together to fight the tax through legal action. The Attorney General’s Office agreed not to enforced, nor collected the tax in 2009-10 due to the legal action taken by the IDAs.
In October of 2010 IDAs were once again presented with a “cost recovery” tax bill that is due to the State of New York on March 31, 2011. For GCEDC the bill amounts to $33,000. GCEDC’s has sought the assistance and support of our local state legislators and both Senator Ranzenhofer and Assemblyman Hawley introduced bills to repeal the tax in 2010 and again in 2011.
On Match 9, 2011 the New York State Senate passed bill 2682, written and sponsored by Senator Ranzenhofer, to repeal the IDA tax and reimburse any payments that IDAs have made to the state.
Steve Hyde, President and CEO of the GCEDC noted "This tax, based on operating revenue, is a disincentive for IDAs to expand programming or reinvest back into the community. Senator Ranzenhofer should be applauded for introducing the legislation to repeal this unfair tax. His fellow Senators who joined him to pass S.2682 also deserve congratulations for standing up against this unfair assessment."
The IDA tax, in some cases, was being imposed on pass through revenues that an agency over saw such as grants or PILOT payments. It is typical for IDAs to hold funds temporarily as a custodian or applicant before the revenue is passed to the proper jurisdiction. To this end, municipalities that sponsor economic development agencies, like Genesee County, would be required to either make larger contributions to the agency and offset the tax, or reduce economic development services. In essence this tax equals an unfunded mandate that would be borne by local communities.
Steve Hyde concluded that "across the state IDAs have joined together to oppose the IDA tax and have filed another lawsuit against New York State. The suit contends that all IDAs are exempt from fees, taxes and assessments. With the passage of S.2682 it is clear that the New York State Senate agrees with our assertions and wants to see local level economic development succeed. GCEDC and IDAs across the state are hopeful that the New York State Assembly will do the "right thing" and vote yes to repeal the IDA tax before the March 31st deadline."