Subsidy Sheet: New York’s public schools lose at least $377 million a year to corporate subsidies

New York’s Public Schools Lose at Least $377M a Year to Corporate Subsidies 
Across the country, when activists call for an end to business subsidies, the activists themselves are often teachers. There’s a reason: Students are often the ones that corporate welfare hurts most.

At least twice this year, New York school districts have gotten steamrolled by supporters of business subsidies. In Kingston, Ulster County, a school district lost millions to a subsidized parking garage. In Nassau County, Amazon and a developer received an estimated $10 million through tax breaks. Both times, the local school district opposed the subsidies, and both times, IDAs approved the subsidies, with only a single member dissenting.

Last week, Good Jobs First released an excellent report, “Abating Our Future,” detailing just how much corporate subsidies cost American students. Nationwide, school districts lost at least $2.3 billion annually to subsidies in 2019, but this number is certainly many times greater. There are several reasons for this, including: Data was only available for 20% of the nation’s districts, many districts don’t independently report abatement data, and others don’t follow new accounting standards.

New York was one of the main states analyzed in the report. Here are five takeaways from the report about the Empire State:

1. NY schools lose at least $377M a year through abatements, and likely more.
New York schools lost $377,341,677 to tax abatements in FY 2019 – placing NY at second worst in the nation after South Carolina ($423 million).

Source: “Abating Our Future,” Page 13. Good Jobs First.

New York’s number is likely far short of the actual total – Good Jobs First’s calculation did not include New York City, as school districts are “component units of the city and do not produce financial reports.”

2. Three NY school districts have lost more than $10 million to abatements.
Across the country, 87 school districts lost more than $10 million to abatements. In New York, there are three–Peekskill and New Rochelle in Westchester County, and the city of Rensselaer. Fifteen other districts saw abatements of more than $10 million that were later partially offset.

The report also provides these numbers on a per-student basis by state. Texas and New York districts typically lost the most in per-pupil revenue. In one NY district, Chateaugay Central School District, each student lost $10,904 to tax abatements.

Source: “Abating Our Future,” Page 14. Good Jobs First.

3. Students in predominantly black and brown districts were the most affected.
The report notes that the three aforementioned districts were relatively low-income, and the two of them “have large shares of Black and Hispanic students.” These characteristics are common in districts that forego revenue through tax abatements.

In a Bloomberg article on the report, report co-author Christine Wen explains why this might be: Urban districts are more expensive for businesses, which means higher abatements. Since urban districts also have more people of color, students of color tend to lose the most.

4. New York districts often don’t know how much they’re losing.
In a section detailing “indeterminate amounts” of foregone revenue, Good Jobs First notes that some districts can’t even calculate how much is lost, citing reasons such as tax changes or unavailable information. New York’s Cattaraugus-Little Valley Central School District was cited as an example. Their disclosures stated:

At this time, the District is unable to quantify the amount of taxes… abated…

5. New York districts obfuscate how much they’re losing.
New York school districts specifically are the sole exhibit provided for how districts mislead the public about abatement costs. Good Jobs First points to Chenango Valley Central School District’s wording:

School District property tax revenue was reduced by $135,219, and the School District subsequently received payment in lieu of taxes (PILOT) payments totaling $133,597. (FY 2019: p. 47)

This language makes it appear that the district only lost $2,000 – but Good Jobs First in fact found that is highly misleading, as $135,219 is the net loss through abatements, rather than the gross loss. In other words, the calculation to reach the number through abatements is $268,816 – 133,597 = $135,219, NOT $135,219 – $133,597 = $1,622. This misleading pattern was found in several other districts, which Good Jobs First says “renders the data for the entire state unreliable.”

All the unknowns could generate their own standalone report – as noted, we don’t actually know how much NYC students are losing or when some districts are reporting net or gross numbers. The problem is, given New York’s current data transparency issues, is it even possible to answer these questions? And what would it take to answer them?

Other Subsidy News

• Last week, Governor Cuomo announced even more discounted energy “supporting 2,292 jobs.” We wrote in March about how discounted energy may be costing the state hundreds of millions of dollars.

What we’re reading

• We’re late to the party on this one, but Natural Resources Defense Council wrote a great blog post about the need to end New York’s fossil fuel tax breaks.
• New Jersey is responding to Georgia’s restrictive new voting law by offering a larger film/TV tax credit.
• This wouldn’t be Subsidy Sheet without a Boondoggle mention: Last week, Pat Garofalo wrote about Bass Pro Shops, subsidies, and antitrust enforcement.

If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany. Please send questions and tips to tom [at] reinventalbany.org. We look forward to hearing from you!