Tax Break Snafu in New Windsor

April 11, 1994

A judge eventually may have to sort out the imbroglio over whether a New Windsor development company owes sales tax on materials used in building a sewer pumping station. While state tax collectors, accountants and lawyers argue over this case, Carroll's local governments should establish clear policies so this confused situation is not repeated.

At the root of the issue are the public improvements -- streets, sewers and street lighting -- that developers build as part of their subdivisions but then turn over to local government. Developers typically look for every opportunity to reduce those costs. Bill and Mel Schneider, who are building Blue Ridge Manor in New Windsor, thought they discovered a new wrinkle when they proposed using the town's tax-exempt certificate to buy materials for the pumping station their development needed.

The developers, their lawyers and the town's long-time clerk-treasurer, Richard Warehime, drew up an agreement in April 1992 with the New Windsor town government covering the construction of a sewer pumping station. Apparently, former Mayor James Carlisle signed off on the arrangement but did not fully understand its implications. Mr. Warehime established a separate account to handle the purchase of the materials.

Had there been more publicity about this cozy arrangement, other developers in town probably would have clamored to take advantage of it. The agreement between the Schneiders and New Windsor was only discovered when the town's new mayor, Jack A. Gullo Jr., and new clerk-treasurer, John Keck, were presented bills for building materials used in the pumping station.

If the state comptroller determines the Schneiders correctly used the town's tax-exempt certificate and do not owe sales tax, all developers should be entitled to use it, not just those who make special arrangements. Equal treatment is a basic tenet of democratic government. The Schneiders' agreement with New Windsor reeks of favoritism.

The Schneiders and Mr. Warehime complain that all the publicity about the dispute makes them look as though they are criminals. They might have a better argument if this agreement had been handled in an open and forthright fashion instead of the secrecy that has cloaked it until now.

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