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

Summary of specific provisions

Section 1 of the bill sets forth the legislative findings.

Section 2 of the bill sets forth definitions for terms used in this act.

Section 3 of the bill authorizes the Board of Education of the Ballston Spa Central School District to establish a semiconductor manufacturing 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. 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 pay 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. Moneys may be withdrawn from the fund for any lawful purpose, and the bill provides for disclosure of any such withdrawals.

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 existing 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 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. This will be even more significant depending on any future expansions of the facility.

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 the Indian Point nuclear facility 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

Similar to S.6833A of 2014 - passed Senate

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, and shall be deemed to have been in full force and effect on and after May 19, 2015.