Archive: News

For eight years the fate of the Cayuga Power Plant has loomed over the Lansing Board Of Education's budgets.  Starting in 2010 the value of the district's largest taxpayer has plummeted by 100 million dollars, and Lansing School District Business Administrator Mary June King says it is likely to lose even more value after the current negotiations with Tompkins County are concluded.  King presented five scenarios assuming various plant value losses that could result in the tax rate rising anywhere between 22 cents per thousand dollars of assessed value to as much as $1.51.  That would mean that owners of a $200,000 home may pay between $80 and $338 more than they did this year.

"I've been telling you we're in negotiations," she told the Board.  "I'm not at liberty at this time to share details from those negotiations.  Hopefully the County will have completed its negotiations with the plant by the end of February.  I can assure you that we're going to see a decrease in the value of the plant.  Of that I am absolutely confident."

The power plant paid $1,241,190 to the Lansing Central School District this year, amounting to about 4.5% of the entire school budget.  Even at that rate homeowners have been making up for decreasing plant value both in higher taxes and in tax money already paid subsidizing the levy each year.

The coal-powered plant has lost $100 million in assessed value since 2010.  The plant's devaluation and uncertain fate has challenged the school board with an annual rock and a hard place since then: the less the plant pays, the more homeowners and other local businesses must pay.  The rock is decreasing revenue from the plant that is not being made up by new development.  The hard place is how much more in taxes property owners can endure and/or how much of its program the District is willing to cut.

"Your most critical question during this budget process over the course of the next month and a half is going to be, depending on what the (power plant) PILOT change is, and where that leaves you with the property tax cap, -- we've typically made a practice of hitting that ceiling of the property tax cap and appropriating funds as we need to based on the way the budget lay out -- it can become pretty severe," King warned.  "You have to make those determinations of do you stay under the property tax cap and do you continue to hit the property tax cap as a ceiling regardless of what the value of the plant is?  Because that will be an impact on the homeowners in this district."

Each year the Board Of Education begins with a 'rollover budget'.  That is next year's cost of keeping everything as it is -- not adding, not cutting.  From there it is a mathematical shell game -- now you see the tax rate rise next year, now you don't because of under-spending this year.  School administrators have become skilled at keeping taxes steadily rising in small increments, rather than large jumps -- in part by conservative under-spending several budget years in a row, and in part by squirreling away money wherever it can.

Just over a year ago that led the NYS Comptroller's office to accuse the district of collecting too much in taxes over a three year period.  District officials responded by accusing the auditors of ignoring the ongoing uncertainty about the fate of the plant coupled with reductions in state aid.

"As long as we have no legal recourse to the liability presented by this $1.3 million PILOT payment, we will continue to ask our taxpayers if they trust us to hold onto the dollars we end the year with (through efficient operations) so that we can apply these dollars if and when we know the future of the power plant," reads the district's official response to the audit.  It adds, "In short, the Comptroller's analysis of budget variations fell short of anything that could be considered thorough.  Instead the audit makes sweeping generalizations, indicating that the budget-building process must be flawed, or worse, a calculated exaggeration of projected costs, which is simply not true."

King told the Board Monday that it will have to decide how much longer it can afford to bail out homeowners, because the threat of a severe further devaluation of the plant could mean that the district will run out of money to appropriate to keep the levy down.  She presented estimates that show the tax rate will go up to $21.12 if no funds are appropriated to decrease the levy, or $20.69 if $395,000 is appropriated.  But she warned that the board can't just appropriate money to lower the levy today, and then make up the loss next budget year.  The state property tax levy cap law has complicated taxation for school districts.

"When the value of the plant decreases you have one opportunity to get those dollars in the tax levy.  That is the immediate year of the value decreasing.  The property tax cap will not let you say we're going to appropriate $500,000 and just raise taxes $200,000 this year when we're losing $700,000 of income from the plant, and then the next year we'll get another $200,000 from the taxpayers, because the property tax cap may not allow you to go back and capture that money, and that's the real rub."

All local taxing authorities in the state have the option of voting to ignore the tax cap on a year to year basis.  Most vote to do so just in case they need to exceed the cap, even if they don't want to or intend to.  But school district budgets uniquely must be approved by the voters as well as the Board.  If a budget exceeds the tax cap a super-majority of voters must agree.  The question facing the School Board is how many taxpayers will vote to pay more?

"When the value of the plant decreases you have one opportunity to get those dollars in the tax levy," King explained to the Board.  "That is the immediate year of the value decreasing.  The property tax cap will not let you say we're going to appropriate $500,000 and just raise taxes $200,000 this year when we're losing $700,000 of income from the plant, and then the next year we'll get another $200,000 from the taxpayers, because the property tax cap may not allow you to go back and capture that money, and that's the real rub."

The PILOT benefited both the plant owners and the County in that both could predict expenses and revenues for years into the future, providing some stability for both.  It applied an assessor's formula to assign a fair value to the property and the prospects for the business.  Initially the PILOT was to raise the assessment from $142 million, ordered by the court in 2008, to $160 million.  From there its value would rise $25 million per year until it reached $255 million in 2013.

That was not fated to happen.  Just as the agreement was being signed in 2009 the economy tanked.  The plant owners asked for an immediate renegotiation based on extraordinary circumstances.  In 2010 the value sank to $130 million, then $112.5 million in 2011, $86.25 million in 2012, $74 million in 2013, and $60 million in 2014.

The Tompkins County IDA (Industrial Development Agency) is in the latest round of  PILOT (Payment In Lieu Of Taxes) negotiations to determine the plant's value for the next few years, and Lansing School District Business Administrator Mary June King says she is not optimistic about the plant's value staying at $60 million.

"I just think that this is what we've been waiting for," King said.  "We've been planning for this moment for eight, nine years," she said.  "I think we knew that something was going to happen with this plant, and I'm not sure that what we're going to see is going to be real far from what we've been anticipating."

At this stage it looks like the new PILOT may vindicate the District's policy of squirreling the money away.  Each year the Board Of Education decides on how much they want to raise taxes, and so far they have had enough money to include the option of keeping the tax rate from jumping too high all at once.  King said that by the end of February she hopes to have more solid numbers relative to the power plant PILOT, or at least a clearer idea of how much more value will be lost.

The next PILOT negotiation meeting is scheduled for February 8th.

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