A new report finds New York industrial development agencies cost public schools almost $2 billion each year.
This stems from flaws in the state’s property tax cap formula and artificially low property valuations after-tax abatement deals expire. This harms school districts because 50% of their funding comes from property taxes, twice the national average.
Ron Deutsch, senior policy fellow for Reinvent Albany, says when IDAs offer tax abatements for housing, it presents a unique challenge for school districts.
“It increases the number of students as a result of new housing being developed,” he said, “but doesn’t provide any resources for the school districts as a result of this bizarre tax gap formula problem.”
Lawmakers have introduced bills to fix these flaws, but have yet to pass them. Deutsch noted that a lack of political will and pushback from some IDAs has kept efforts from moving ahead, despite research consistently showing these tax programs are detrimental for school districts.
This has been a longstanding issue, with previous reports showing how IDAs grow rich on the backs of school districts. The property tax cap was established in 2011, and since then, schools have been taking in fewer tax dollars because of IDA abatements.
Greg LeRoy, executive director of Good Jobs First, said one way to solve this problem is to take the school district’s share of property taxes off the table.
“Even if it were an elected body granting these abatements, and it’s not, it’s a recipe for mischief or worse if you let one body of government play with another body of government’s revenue,” he said, “and, especially when half the money is another body of government that has nothing to say.”
LeRoy said the state must strive to create great places to live with great schools, and business and employment opportunities to help them grow should come later. He said he feels IDAs could convince people not to live in certain areas since they’re allowed to eat into school district budgets.
Edwin is a reporter and producer in North Tonawanda, New York. He’s previously reported for the Niagara Gazette and the Ithaca Times. Edwin got an early start in radio interning for WBFO-88.7FM, NPR’s Buffalo affiliate. In 2018, he graduated from SUNY Buffalo State College with a B.A. in Journalism, and in 2022, graduated from Syracuse University with an M.S. in Communications.