I was astounded to read the editorial in The Buffalo News on Jan. 25. After the public flak over the USA Chamber ad, the editorial board apparently made the same mistake. The editors came out in favor of the deal giving AES Somerset more than a $90 million property tax break over 12 years ($43 million assuming no inflation).
The maximum loss projected for losing the AES lawsuits was $45 million in tax refunds. The fact that the IDA cost taxpayers twice that amount seems to be of no concern to the editors of The News. In order for the tax refund to be that large, the court would have had to agree with the ridiculous AES claim that the plant was worth only one-tenth its cost to build or $100 million.
In my opinion, the reason AES officials pursued the deal for a payment in lieu of taxes (PILOT) is because they knew their ridiculous claims were not working in court and they were likely to lose. Not a "few" Somerset residents but more than 700 filled the school auditorium in opposition to the PILOT. Hundreds more signed petitions from across the county asking for the rescinding of the "baseless" PILOT with no new jobs and no new construction. Over 100 more were at the last Niagara County Legislature meeting expressing their loud opposition to the PILOT.
The Rockland County plant that received a tax refund is not an apples-to-apples comparison at all. It was a plant using old technology. Rockland was often shut down and was not making profits. That is why it was also in federal bankruptcy court.
In Rockland, officials used an old assessment and a court-ruled improper assessment method. The Town of Somerset uses an approved assessment method, which is provided by both the New York State Office of Real Property Services and an internationally known expert, Black & Veatch. AES is much newer; has state-of-the-art pollution controls; is well maintained and profitable. The Office of Real Property Services puts the fair assessed value at $1.149 billion for 2006. AES is currently discounted by 40 percent to $667 million assessed value.
AES Somerset cries about its assessment being brought closer to fair market value over the last three years, but hides the fact that AES has had the best and most profitable three years on record. AES Somerset net profits were more than $130 million in 2004; more than $150 million in 2005; and more than $190 million in 2006.
Wouldn't you agree that paying taxes has not been a problem? Wouldn't you agree that increasing AES' assessed value is not the problem? Wouldn't you agree that AES has shown an excellent ability to compete in the power generation market?
Corporate greed is the only problem here. Please join thousands of taxpayers who want fair taxation for all and believe big business should pay its fair share just like homeowners and small retail businesses do.
Merrill Bender of Somerset is a freelance writer on tax reform and Social Security reform.