Fool me twice

A few weeks ago, the Sullivan County Industrial Development Agency (IDA) voted unanimously to extend the current exemption on state and county sales taxes paid by the Millennium Pipeline Company (Millennium) to December 31 of this year. In explaining the decision, chairman Alan Scott said that the company “deserves it,” since it will be spending money in the county.

We find this decision incomprehensible, especially in light of Sullivan County Treasurer Ira Cohen’s recent op-ed outlining the county’s dire financial straits. It is even more stupefying in light of the fact that the county has already figured once as a patsy in its tax negotiations with Millennium.

Millennium received substantial payment-in-lieu-of-taxes (PILOT) concessions from the county in 2006, before it commenced laying pipe. It improbably pled poverty (Millennium’s three owner companies had racked up $24 billion in 2005) and claimed that it couldn’t install the pipeline unless it got tax breaks. It was obvious that the long-term trend in energy prices, combined with the fact that the existing rights-of-way ran through Sullivan, meant that the company was bluffing, and we said as much in an editorial at the time. Yet the IDA caved. The subsequent disclosure of massive gas deposits in the Marcellus Shale—all of which on the New York side of the river will eventually run through the pipeline, generating huge profits—nailed home the fact that we had been played for suckers by conceding a projected $14 million in tax payments. That’s peanuts to them, but big bucks to us.

Admittedly, the foregone sales taxes for the remainder of the year might not count as “big bucks.” We asked Cohen if he had any idea what the sum would amount to, and he said he lacked the data to provide an estimate. But let’s say it comes to $10,000 or $15,000. Measly, you think? Well, New York State wants to close the Beaverkill Campground this year for what some estimate as a savings of $10,000 to $15,000, a move that could devastate tourist businesses in the Roscoe area. In tough economic times, every penny counts. Meanwhile, what negative consequence would have ensued if Millennium had had to pay sales tax like the rest of us? What would they have done? Aborted construction?

When it comes to “deserving,” here are some facts to weigh: the NYS Department of Environmental Conservation has charged Millennium with hundreds of environmental violations, which it hasn’t admitted to, but for which it paid $200,000 in fines (which go to the DEC, not the county) plus $1 million to set up a third-party supervisory structure for the remainder of its work. No remediation has been arranged. A leak was recently discovered in the pipeline in the Town of Hancock, on a property whose owner alleges that his septic system was ruined by the company. Substantial damage has been done to the roads—the estimate for Cochecton is $1 million—and the jury’s out whether the company and towns will see eye to eye as to what counts as adequate repair.

The IDA’s primary concern should be the deserts of the people of Sullivan County, not those of an outside company. County residents deserve to have Millennium pay to repair their roads and remediate environmental damage. They deserve to have multi-billion dollar corporations share the tax burden and pay sales taxes just as they have to. What they don’t deserve is to get mugged twice, even if it’s only for pocket change the second time around.

Cohen, though he believes the IDA is “generally professional and proactive, knowledgeable and well-guided,” pointed out one other problem in a response to our queries about this decision. Like the original PILOT deal, it was made unilaterally, without consulting with the local tax districts that will suffer its impact. He noted that while that’s legal, New York State law should possibly be changed in this regard. Cohen also suggested, given that IDA members are appointed by the legislature, that the legislature “should exercise closer supervision and control as a policymaker, and conversely, the IDA should adhere to the policies set forth by the legislature, as far as types of projects it should induce generally, criteria to be used, and consent for PILOT agreements.”

We regret to be kvetching constantly about the IDA. Very likely it makes 19 fabulous decisions that fly under the radar for every one that we notice and complain about. But there is simply no excuse to dole out tax exemptions that rob the county of income without conferring any advantage. If changing New York State Law and/or closer supervision by the legislature such as Cohen suggests would forestall a recurrence of this behavior, then let’s get those things done.

Also in this issue:

• My words are not the story

Dr. Punnybone

T wrecks