Suffolk County Executive Steve Levy said on February 19 that New York State’s “cost recovery tax” placed upon local Industrial Development Agencies (IDA) throughout the state is “counterproductive to the creation of jobs and the promotion of economic development” and announced the county will be joining statewide efforts to retract and repeal the fee.

Levy said the tax, which was implemented in the 2009-2010 state budget, is levied by the state against revenues earned by local IDAs for services provided. The Suffolk IDA was notified in early February of a tax of nearly $95,000, due by the end of March.

“Revenues generated by the IDA should be reinvested back into local job creation and economic development, not shipped back up to feed an Albany bureaucracy,” said Levy. “The revenue our IDA generates helps support important local economic development programs including tourism promotion, entrepreneurial and small business development, local fishery analysis and business marketing initiatives.

“This $95,000 could be better used to actually promote job growth here in Suffolk,” he added.

Levy said he will be lending support to the efforts of the New York State Economic Development Council, a consortium of local Industrial Development Agencies, to repeal the tax based upon several factors including:

• Lack of timely notice of the fees (which by statute should have been given prior to November 1, 2009)
• Imposing the tax on IDA “pass through revenues” (such as PILOTS collected and redistributed, state and federal grants) which are not real revenues
• IDAs already pay a Bond Issuance Charge which was enacted as a cost recovery source of revenue of the state, making the new tax duplicative
• The cost recovery charge is punitive in that it will require either a larger local taxpayer contribution into the IDA or the reduction of economic development services

“This ill-advised tax on economic development comes on the heels of the governor proposing to eliminate Empire Zones,” said Levy. “The only way we were able to attract large companies to Suffolk, such as Canon and its 2,000 jobs, was through Empire Zone tax incentives coupled with assistance from the Suffolk County IDA. This is a time we need to expand our economic base, not shrink it.”

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