The Fairport Industrial Development Agency is among a group of economic developers suing the state for trying to tax them.
“We’re right in the thick of it,” said Executive Director Kal Wysokowski. “We’re listed as a plaintiff in that action.”
She said about 25 IDAs have filed suit through the New York State Economic Development Council, a membership organization for IDAs and other economic development associations, which is leading the effort to stop the tax.
Lawmakers last year approved a measure to collect about $5 million from IDAs across the state. They left implementation to the Division of Budget, which calculated what is called the cost-recovery tax, basing it on 4.7 percent of each IDA’s 2008 gross revenue.
Wysokowski said Fairport received a bill for $21,911 and decided to join the suit.
“There’s never been an assessment on IDAs,” she said. “This was the first one. That was one of the reasons we entered into the lawsuit because we’re a public authority and tax-exempt, so it was disconcerting that the division of budget could levy a tax on a tax-exempt organization. So, we’re challenging that.”
Wysokowski said if the tax stands, costs will have to be passed on to businesses the IDA serves, as IDAs have not budgeted for that expense. She said basing the tax on gross revenue also includes pass-through grants, meaning the additional cost would have to be passed on to any entity the IDA writes a grant for such as the village of Fairport.
“We don’t want to do that,” Wysokowski said. “That’s not why IDAs were created. It doesn’t make sense. We’re here to encourage development and not add to the cost.”
The County of Monroe Industrial Development Agency (COMIDA) was ordered to pay $86,808 to the state, but has refused, said Executive Director Judy Seil.
The fees are a “cash grab” by the state in an attempt to fill its budget deficit, said Brain McMahon, executive director of the New York State Economic Development Council. He said the state’s calculations not only count pass-through grants, but things like payment-in-lieu-of-taxes agreements that many IDAs pass to other taxing jurisdictions.
Everything is temporarily on hold until the matter goes to trial, which McMahon said is expected to happen in June. Last week, the Attorney General’s office suspended the collection of the fees pending the outcome of the legal action.
In order to pay the fees, McMahon said IDAs would have to dip into reserve funds or risk closing up shop. Seil said COMIDA uses its revenues to support organizations like Camp Good Days and Special Times and events like the Xerox Rochester International Jazz Festival.
Messenger Post reporter Mike Maslanik contributed to this story
