State Senate repeals “cost recovery” tax; Passes bill to relieve economic development agencies from unfair tax
Albany, N.Y. – The New York State Senate has passed legislation (S.2682) that repeals the “cost recovery” tax imposed on local economic development agencies in 2009 and also requires the State to reimburse agencies for any monies previously paid.
State Senator Michael H. Ranzenhofer introduced the bill in the State Senate.
"After being passed in the 2009-10 State Budget, the cost-recovery tax hurt the efforts of local industrial development agencies to get New Yorkers back to work by taking away economic development money from local communities and sending more revenue to Albany. During a time of high unemployment and an economy struggling from a national recession, the IDA cost-recovery tax made a bad situation even worse,” said Ranzenhofer. “Repealing this unfair tax puts funds back in the right place, in the hands of local community business leaders to entice businesses to locate in the State and create jobs, not in State coffers.”
The 2009-10 state budget contained a maximum $5 million statewide cost-recovery tax on local economic development agencies. The tax does not reflect a rational basis for actual costs incurred by the State for providing services to local economic development agencies. Local economic development agencies already pay a Bond Insurance Charge to recover costs.
Members of local economic development agencies expressed their support for the legislation.
“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,” said Genesee County Economic Development Center President and CEO Steve Hyde.
“The ECIDA funds a varied menu of economic development services (including tax abatements, loans, real estate development, international and venture capital) with a lean staff and no governmental operating support. The tax due on March 31, 2011 represents two to three qualified professionals leaving ECIDA with the option of cutting services or charging companies more at the very time when services are most needed and companies can least afford to pay more,” said Erie County Industrial Development Agency COO Al Culliton.
Governor Cuomo has also included an identical provision in his 2010-11 executive budget proposal.