This bill has been amended

Bill S6833-2013

Authorizes the Ballston Spa Central School District to establish a semiconductor manufacturing tax stabilization reserve fund

Authorizes the Ballston Spa Central School District to establish a semiconductor manufacturing tax stabilization reserve fund.

Details

Actions

  • Apr 29, 2014: REPORTED AND COMMITTED TO FINANCE
  • Apr 9, 2014: COMMITTEE DISCHARGED AND COMMITTED TO EDUCATION
  • Mar 17, 2014: REFERRED TO LOCAL GOVERNMENT

Votes

VOTE: COMMITTEE VOTE: - Education - Apr 29, 2014
Ayes (18): Flanagan, Farley, Lanza, LaValle, Little, Marcellino, Maziarz, Ranzenhofer, Robach, Seward, Valesky, Avella, Latimer, Addabbo, Breslin, Montgomery, Stavisky, Tkaczyk
Ayes W/R (1): Peralta

Memo

BILL NUMBER:S6833

TITLE OF BILL: An act to establish a semiconductor manufacturing tax stabilization reserve fund in the Ballston Spa Central School District to lessen or prevent increases in the school district's real property tax levy

PURPOSE: To authorize the Ballston Spa Central School District to establish, subject to voter approval, a real property tax stabilization fund out of a portion of the proceeds of a payment in lieu of taxes (PILOT) agreement with the Global Foundries semiconductor manufacturing facility.

SUMMARY OF SPECIFIC PROVISIONS: This measure enables the Board of Education of the Ballston Spa Central School District to establish a tax stabilization reserve fund to lessen or prevent increases in the District's real property tax levy resulting from decreases in the amount of, or termination of, the payments in lieu of taxes receivable by the District over the years of a PILOT agreement with Global Foundries. Such fund may only be established upon approval of a majority of the voters of the District on a separate ballot proposition conducted in accordance with the provisions of Article 41 of the Education Law.

The Board may determine that there shall be paid into the Fund all or any portion of the amount by which the PILOT payments to the District for each fiscal year is greater than the amount of such payments for the previous fiscal year, provided that no payment into the fund causes the total balance of the fund to exceed the amount approved in the District referendum.

In any fiscal year in which the PILOT payments to the District are less than the amount of such payments received in the preceding fiscal year, or where the District does not anticipate any payment, the Board may authorize withdrawal from the Fund in an amount not to exceed the difference in payments between the two years. Additionally, moneys may be withdrawn for any other lawful purpose, subject to voter approval pursuant to the provisions of Article 41 of the Education Law

Finally, the measure provides that, when computing the District's tax levy limit for a school year, the PILOT payments received shall be decreased by any amount paid into the Fund for the prior school year and increased by any amount withdrawn from the Fund in the prior school year. Similarly, in any year that a portion of the PILOT payments are added or removed from the Fund, that change will be reflected in the tax levy limit calculation.

JUSTIFICATION: The Global Foundries semiconductor manufacturing facility has proven to be a significant economic contributor to the Capital Region generally, and the Towns of Malta, Ballston and Stillwater specifically. Due to its disproportionate impact on local taxing jurisdictions, the facility has entered into PILOT agreements with each taxing jurisdiction. The largest impact, by far, is on the tax base of the Ballston Spa Central School District.

The PILOT Agreement reflects the very nature of the semiconductor industry, resulting in the establishment of a payment schedule for the

District which has a steep upward trajectory until 2016, followed by a steady, and comparatively rapid, annual decrease in PILOT payments. While this clearly represents a significant short-term benefit for the District's taxpayers, it is the fiduciary duty of the School Board to develop a strategy for long-term fiscal stability as the PILOT runs its course. The most well-established vehicle for executing this type of fiscal discipline is the creation of a tax stabilization reserve fund. However, a special fund of this nature can only be established by the Legislature.

There is significant precedent for this approach. Chapter 202 of the Laws of 2001 established a nuclear energy facility tax stabilization fund for the taxing communities in Westchester, Onondaga and Oswego counties where the PILOT payments of nuclear power plants can dominate the tax base. As a result of this enabling legislation, the Hendrick Hudson School District (Westchester County) immediately established a tax stabilization reserve fund to help manage the PILOT payments over time. In a 2013 audit of that school district, the State Comptroller reviewed their use of the fund and concluded:

"District officials have taken appropriate actions to manage the District's financial condition. They recognized the need to be proactive in budget development and expenditure controls. We commend District officials for their progressive involvement in managing the District's financial condition. As a result, the District's financial position has remained strong."

The PILOT payments of the semiconductor manufacturing facility have the same, if not greater impact on the Ballston Spa CSD as Indian Point has on the Hendrick Hudson CSD. The School Board in Ballston Spa is looking for the same opportunity to exercise sound fiduciary oversight as was provided to the several communities hosting nuclear facilities. The existence of the two-percent tax cap makes it even more imperative that sound fiscal policy be employed here. Moreover, the establishment of a tax stabilization fund in this case, unlike that in Hendrick Hudson, will be subject to a voter referendum. Failure to act will subject the district taxpayers to potentially devastating fiscal uncertainty.

PRIOR LEGISLATIVE HISTORY: New bill

FISCAL IMPLICATIONS: None to the State, while providing stability for the taxpayers of the Ballston Spa Central School District.

EFFECTIVE DATE: This act shall take effect immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 6833 IN SENATE March 17, 2014 ___________
Introduced by Sen. FARLEY -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government AN ACT to establish a semiconductor manufacturing tax stabilization reserve fund in the Ballston Spa Central School District to lessen or prevent increases in the school district's real property tax levy THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Legislative findings. The legislature hereby finds that the private development and ownership of a semiconductor manufacturing project or projects located within the Ballston Spa Central School District may result in the instability in the real property tax base and the budgets of the district due to the uncertainty with the assessments of such semiconductor manufacturing project or projects and the vari- ability of the payments in lieu of taxes prior to and at termination of such payments. S 2. Definitions. As used in this act: (a) "Board of education" or "board" means the board of education of the Ballston Spa Central School District. (b) "Semiconductor manufacturing tax stabilization reserve fund" or "fund" means the semiconductor manufacturing tax stabilization reserve fund established pursuant to this act. (c) "Payments in lieu of taxes" or "payments" means payments in lieu of taxes receivable by the school district pursuant to contracts entered into in accordance with section 412-a of the real property tax law or section 858 of the general municipal law on any semiconductor manufac- turing project or projects located wholly or partially within the Ball- ston Spa Central School District. (d) "School district" or "district" means the Ballston Spa Central School District. (e) "Semiconductor manufacturing project or projects" shall be defined as in section 412-a of the real property tax law and shall include the land upon which the project is located, buildings for use in the manu- facturing of semiconductors and the acquisition and installation therein of certain machinery and equipment.
S 3. The board of education is hereby authorized to establish a tax stabilization reserve fund to lessen or prevent increases in the school district's real property tax levy resulting from decreases in revenue due to changes in the amount of or termination of payments in lieu of taxes receivable by the school district provided, however, that no such fund shall be established unless approved by a majority vote of the qualified voters of the district present and voting on a separate ballot proposition therefor at either a special district meeting which the board of education may call for such purposes, or at the annual district meeting and election, to be noticed and conducted in either case in accordance with the provisions of article 41 of the education law. Moneys shall be paid into and withdrawn from the fund, and the fund shall be administered, as follows: (a) For any school district fiscal year commencing after the effective date of this act and after the establishment of the semiconductor manu- facturing tax stabilization reserve fund, the board of education may determine that there shall be paid into the fund all or any portion of the amount by which the payments in lieu of taxes receivable by the school district for such fiscal year is greater than the amount of such payments received by the school district for the preceding fiscal year, provided that no payment into the reserve fund shall cause the balance of the fund to exceed the amount approved in a ballot proposition described above. (b) The board of education is hereby authorized to make a one-time deposit into the semiconductor manufacturing tax stabilization reserve fund in an amount not to exceed two million dollars. (c) Moneys may be withdrawn from the semiconductor manufacturing tax stabilization reserve fund subject to the following limitations: (1) For any fiscal year for which payments in lieu of taxes receivable by the school district are less than the amount of such payments received for the immediately preceding fiscal year, or the school district does not anticipate receiving any payment, the board of educa- tion may authorize a withdrawal from the fund in an amount not to exceed the amount of the payments received for the immediately preceding year less the amount of the payments receivable for the fiscal year for which the budget and tax levy is being determined. (2) Notwithstanding paragraph 1 of this subdivision, and in addition to any withdrawal from the fund authorized pursuant to this subdivision, moneys may be withdrawn from the fund for any fiscal year to be expended for any other lawful purpose, provided, however, that no such withdrawal and expenditure shall be made unless approved by a majority vote of the qualified voters of the district present and voting on a separate ballot proposition therefor at either a special district meeting which the board of education may call for such purpose, or at the annual district meeting and election, to be noticed and conducted in either case in accordance with the provisions of article 41 of the education law. (d) The moneys in the semiconductor manufacturing tax stabilization reserve fund shall be deposited, invested and accounted for in the manner provided for in subdivisions 2 and 6 of section 3651, and section 3652 of the education law. S 4. When computing the school district's tax levy limit for a school year pursuant to subdivision 3 of section 2023-a of the education law: (a) The payments in lieu of taxes receivable for the prior school year shall be decreased by any amount paid into the semiconductor manufactur- ing tax stabilization reserve fund for such prior school year and
increased by any amount withdrawn from the fund for such prior school year. (b) The payments in lieu of taxes receivable in the coming fiscal year shall be decreased by the amount to be paid into the semiconductor manu- facturing tax stabilization reserve fund for such coming fiscal year and increased by any amount to be withdrawn from the semiconductor manufac- turing tax stabilization reserve fund for such coming fiscal year. S 5. This act shall take effect immediately.

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