Sen. Palumbo backs bill to protect school funding

A bill is currently in New York State Senate committee discussions that would protect schools from losing money to industrial development agencies’ tax abatements — and it has the full support of both Riverhead’s Board of Educations and the Greater Calverton Civic Association. 

Both parties have been very vocal in expressing disapproval of the Town of Riverhead’s Industrial Development Agency and its controversial projects, including EPCAL, and specifically the financial impact tax exemptions it has granted have had on the school district. 

Colin Palmer, president of the Board of Education, has called for disbanding the agency. 

State Sen. Anthony Palumbo (R-New Suffolk) paid the civic group a visit at its first meeting of the new year last Thursday to discuss the proposed legislation. 

“It’s pretty straightforward — it limits the IDA exemption to everything but school taxes,” Mr. Palumbo said. “The school taxes — though it’s quite a significant amount of your bill — we would want to ensure that there are payments in lieu of taxes, or PILOT payments, as we call them.” 

Although lawmakers have been busy with budget hearings and reentering legislative session, Mr. Palumbo said the bill is gaining some traction. It may take some time, but if the governor were to sign off on it, the law would take effect immediately. 

Introduced early last year by state Sen. Sean Ryan (D-Buffalo) and Assemblyman Harry Bronson (D-Rochester), the justification portion of the bill states that the purpose of IDAs is to “incentivize economic development by attracting businesses and creating new jobs.” These incentives include waiving state or local taxes, as well as taxes received by local school districts. 

The memo continues with a history of IDAs, which have been around since 1969, noting that “they have offered billions of dollars of incentives [to] large multi-national corporations.” Any data on job creation or economic benefits sent to the state is self-reported by the corporations, so their “exact effectiveness in this area is unknown,” according to the bill proposal.

IDAs typically acquire properties and lease them to private companies in exchange for these PILOT payments, which causes these abatements to occur. Since the IDA is a public agency, it is not required to pay property tax and the PILOTs equal a small share of what the property taxes would have been. 

Given the last two challenging years for educational institutions statewide, legislators who support the bill believe the law would simply increase school funding, which would allow for the allocation of more resources and help stabilize teacher retention. 

According to an analysis conducted by the national policy resource center Good Jobs First, New York public schools lost at least $1.8 billion in fiscal year 2021 to IDA tax abatements. Additionally, tax abatements cost an average of $541 per pupil among impacted school districts. 

The nonprofit collected data of all known New York State school revenue losses to tax abatements in FY 2021 and reported that Riverhead Central School District lost roughly $3,815,524. Shoreham-Wading River Central School District reported the tax abatement offset, not the abatement cost itself, which was $2,797,475. 

In Southold Town, for fiscal year 2021, Mattituck-Cutchogue Union Free School District lost $23,719 due to tax abatements and Greenport Union Free School District reported $21,089 in losses. The Southold Town Board recently decried the IDA’s tentatively approved $2.7 million tax relief package for the $43.9 million luxury hotel proposal known as The Enclaves. Although it is unclear how the development could impact the Southold Union Free School District, Supervisor Al Krupski said it is evident the project would add pressure to the schools.

In a letter sent to the Riverhead IDA in the fall, Riverhead school board president Colin Palmer said the school district has been “robbed” of over $15 million in revenue over the past decade because of these tax breaks.

He added that this money could have been used to introduce new educational programs and services, provide students with more social-emotional support, expand technological capabilities and offer professional development opportunities for faculty members. 

Most notably, these funds could help increase classroom capacity to meet growing student enrollment, a school board concern related to the spike in proposed housing developments in Riverhead and the likelihood that their developers will ask for IDA tax abatements. 

“What is even more frightening are the over 650 new apartment units in the Riverhead pipeline, a good portion of which will undoubtedly be occupied by families with school-age children,” Mr. Palmer wrote. “If the IDA continues its practice of granting these abatements, the additional students generated by these projects without the commensurate tax revenue will further exacerbate the district’s financial health.” 

Another issue raised at the Greater Calverton Civic Association meeting was facilitation by IDAs and community development agencies in the construction of charter schools, which Mr. Palumbo said also drains money from the surrounding public schools. 

“Charter schools provide a nice option in some respects, but the financing of it is atrocious,” Mr. Palumbo said. “They are sucking from our school districts — it’s a constant battle.” 

Mr. Palumbo added that the Riverhead school district received some “huge bumps” in owed state aid since the restoration of Foundation Aid a few years ago. 

Riverhead Central School District is projected to receive over $80 million in state aid for the 2024-25 fiscal school year — a roughly 4.3% increase from last year. 

Gregory Wallace, president of the Riverhead Central Faculty Association, said that between past underfunding of Foundation Aid and loss of money with the passage of the gap elimination adjustment, nearly $200 million has been diverted from the school district since 2011.

According to data Mr. Wallace compiled from 2014, the school district has lost roughly $57 million to charter school funding. Adding in the $15 million lost to the IDA grants, Mr. Wallace said it is fair to estimate Riverhead district has lost nearly $400 million in total. 

“We go and meet with the IDA, politicians, and they say [we] need to do a better job educating [our] students,” Mr. Wallace said. “We’ve had a large influx of students, and we have $400 million diverted from us in the last 14 years — it’s had a tremendous impact on the services we can deliver to our students.”

Editor’s Note: This story has been corrected. The entire Riverhead Board of Education does not have a position on disbanding the IDA, only the agency exempting school taxes.