Establishes an energy system tax stabilization reserve fund in the Lowville Central School District to lessen or prevent increases in the school district's real property tax levy

Section two: This section makes definitions of important terms in the bill, including providing that PILOT payments may mean either PILOTS under Real Property Tax Law Section 487 permitting municipalities to enter into PILOT agreements for wind energy systems) or Subdivision fifteen of § 858 of the General Municipal Law (authorizing IDA created PILOTs) and adopting the definition of wind energy systems already found in Real Property Tax Law § 487.

Section three: This section permits the school district to create a tax stabilization fund if the fund shall be approved in a separate ballot proposition by a majority of voters in a special district election or in the annual district meeting and election. The proposition must set forth the maximum allowable balance for the fund. After the establishment of the fund, the board of education may make payments into the fund in the following manner and from the following sources: (a) money from the district's unassigned fund balance which accrued prior to the establishment of the tax stabilization fund in an amount not to exceed the amount over any maximum allowable balance in the unassigned fund balance and/or money from authorized or required reserve funds which accrued prior to the establishment of the tax stabilization fund and in amounts which the Board of Education are not necessary for the purpose of such fund or funds and (b) all or part of any portion of the amount by which the amount of the PILOT payment received in any budget year exceeds the amount of PILOT payment received in the preceding budget year. No such payment may cause the fund to exceed the maximum balance approved by the voters. This section further provides that funds may be withdrawn from the fund for any lawful purpose. Such withdrawals would be subject to the usual disclosures required for withdrawals from other reserve funds including disclosures required by the property tax report card. Deposits and withdrawals would be subject to the district's normal annual budget process. All money in the fund is to be deposited, invested, and accounted for under the requirements of subdivisions 2 and 6 of section 3651 and 3652 of the Education Law

Section four: provides for an immediate effective date.

Justification

The Maple Ridge Wind Farm in Lewis County, one of the largest and most successful wind energy enterprises in the United States, pays an annual PILOT payment which is presently around $7.8 million to municipalities and school districts which host wind towers. This PILOT payment has been one of the leading causes for wide community acceptance and support of this important alternative energy project.

The Lowville Central School District presently receives about $3.5 million of this amount each year. The district has employed this money prudently, presently using all of the PILOT payment each year to keep the tax levy level and allowing any balance to accrue in fund balance. However, over the years, the volume of PILOT payments has led to an accumulated unassigned fund balance. The PILOT agreement started in the 2006-2007 school year and will end in 20212022. At that point, the PILOT will either terminate completely or be replaced, perhaps by an IDA sponsored PILOT which would not be as generous. The result would be that the PILOT at that point would cease to be a windfall and its loss would become the source of wrenching dislocation in the district's finances.

The district requires the approval given in this bill to use accumulated fund balance and PILOT revenues to establish a tax stabilization fund which will one day be equal to the task of smoothing the transition that will be required by ramping up the tax levy over a period of time. Absorbing all of the loss or decrease in the PILOT in one or two years would cause a severe spike in the tax levy, dramatic slashing of programs or both. The bill contains significant safeguards to insure the dedication of PILOT funds for this purpose.

At present, the district is accumulating significant funds from the PILOT which exceed allowable fund balance. This legislation seeks authorization to establish a tax stabilization reserve fund to insure that future decrease or loss of the PILOT payments will not cause a dramatic and onerous spike in the real property tax levy. The district seeks permission through this legislation to prudently use these funds to promote fiscal and tax stability. The Senate and Assembly authorized just such a fund last year for the Ballston Spa school district.

Legislative history

2013 - S. 1961B/A. 7760a - Passed Senate/Assembly - Education Committee. Died in Assembly. 2011-12 S. 6835 - Passed Senate/A. 9859 - Real Property Taxation Committee. Died in Assembly.

Legislation similar to this bill was passed last year to deal with a comparable situation for the Ballston Spa School District as a result of PILOT payments received from the Global Foundries semiconductor manufacturing facility. See S. 5501A/A7622B, signed into law as Chapter 506, Laws of 2015.

Fiscal implications

None for the State of New York. Positive impact on the district's fiscal and tax levy stability.

Effective date

Immediate.