Two New York groups critical of public subsidies for corporations released a report Monday alleging the tax breaks and government grants largely fails to create jobs in the state.
The report from ALIGN (Alliance for a Greater New York) and the Getting Our Money's Worth coalition highlights spending trends and mega-projects from seven of New York's 15 major subsidy programs that provide regional data. It also assess the regional performance of industrial development agencies, which are operated by cities and counties.
The report found that spending varies dramatically by region and generally corresponds to the level of economic activity, with New York City spending the most and the Mohawk Valley and North Country regions spending the least.
Industrial Development Agencies (IDAs) have increased their spending on net tax exemptions since 2009 in seven out of 10 regions. However, overall IDA subsidy spending has remained flat due to several enormous subsidy deals in New York City winding down, the report said.
Subsidy spending is largely uncoordinated, with the state's regional economic development councils only coordinating around 6 percent of the $7 billion spent each year in New York on corporate tax subsidies, the groups said.
Big businesses take advantage of multiple, uncoordinated subsidy programs the most, they said. For example, Target Corp. is currently receiving 14 separate subsidies across New York for their retail stores and warehouses, and this only takes into account the seven programs with regional data, the report said.
Only a tiny fraction of New York's businesses are accessing economic development subsidies. The report said 96 percent of businesses are shouldering the tax burden for the 4 percent that get the subsidies.
"We need a New York that works for all of us, where big corporations are responsible for paying their fair share of taxes to support our schools, roads, public transit and the services that we all rely on," said Tomas Garduno, political director of ALIGN.
Most economic development programs do not report in great enough detail to assess performance, the report said. Industrial Development Agencies are an exception, where an analysis of job creation performance found significant failures, it said.
The most recent IDA data shows that 33 percent of net spending resulted in no job promise, no job creation or a loss of jobs, it said. That means that if IDAs are any indication of the overall performance of New York's economic development system, it can be assumed that approximately $2.3 billion is wasted each year, the report said.
Overall, 72 percent of IDA projects lost jobs, failed to create jobs or never made job-creation promises, it said. IDAs in the Finger Lakes region had the lowest failure rate, at 52 percent, while 85 percent of Central New York IDA projects failed, it said. The report only looked at projects that ended in 2011.
It said nearly one half of the net tax exemptions provided in Central New York went to a single project, the Sithe Energies gas-powered electric plant in the Oswego County town of Scriba. The plant, which is now owned by Dynegy Inc., received nearly $15 million in tax exemptions annually, according to the report. It said the project was estimated to create 50 full-time jobs but created 43.
Oswego County economic development officials have said the estimate of the power plant receiving $15 million in tax exemptions annually is misleading because it is based on an outdated property tax assessment that placed its value at $650 million. The town latest assessment puts the value of the facility at $200 million, so the $5.5 million in payments in lieu of taxes the plant makes each year now nearly equals what property taxes would be if the plant had no exemptions, county officials say.
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