Graham opposes 'slick lawyering' subsidy deal

The Watertown City Council, and more specifically Mayor Jeffrey E. Graham, has big issues with the economic benefits being offered to the developers of the Galloo Island Wind Farm project.

The mayor has lashed out on his WATN 1240-AM radio show, his blog and Monday night at the City Council meeting against the proposed payment-in-lieu-of-taxes agreement because, he says, it will minimize the amount of sales tax that flows to the city.

The Jefferson County Industrial Development Agency, which crafted a 20-year PILOT for the wind farm's developer, Upstate Power Corp., has been asked by the developer to abate roughly $19.6 million in sales tax while the project is being constructed. That means the city would lose out on about $4.7 million in sales tax revenues in the three years after the construction begins.

"The folks are tired of bailouts ... tired of transferring of wealth through PILOTS ... tired of sales tax abatements that flow straight to the bottom line of the well-to-do," the mayor wrote Tuesday on his blog, Mayor Graham's View. "We are sick of slick lawyering to come up with tax avoidance schemes. And we are sick of being told it 'creates jobs.' The County Legislature needs to take control."

The mayor said that while his position isn't against the wind farm, it is against subsidizing development.

"We're getting to a point where the existing tax base is giving away to certain subsidized elements," he said. "In this case, it's a big company with a big wind farm, but it could be something else."

Sales tax revenues account for the largest single source of income, by far, for the city. Of the $36.1 million in revenues the city expects to collect during the 2009-10 fiscal year, $14.8 million of it is from the city's share of sales tax imposed by the county.

While the JCIDA crafted the PILOT agreement, the county Board of Legislators and other affected taxing districts — in the case of Galloo Island, the town of Hounsfield and the Sackets Harbor Central School District — ultimately decide whether sales tax abatement will be offered to the developer.

For now, the agreement is in limbo. The Jefferson County Board of Legislators withdrew the agreement from consideration at the request of the JCIDA so that it can be revised. Before the meeting, it appeared PILOT supporters on the Legislature did not have enough votes to approve the agreement.