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By Matt Ryan

February 17, 2013

Gov. Andrew Cuomo wants to limit the ability of industrial development agencies, the state's main economic development tool, to unilaterally grant state tax exemptions. That's a good first step toward reining in an expensive program that too often fails to deliver good jobs and community benefits. However, more must be done to increase the accountability of IDAs and the dozens of other uncoordinated economic development agencies that take billions of dollars a year out of local communities.

There are 114 industrial development agencies around the state, which offer corporations tax-exempt bond financing and state and local tax exemptions for the purpose of creating or retaining jobs. Unfortunately, IDAs have a poor track record of delivering jobs. More than half of all the projects completed in 2010 — projects that have received public subsidies for years, even decades — failed to create a single job.

This failure comes with a big price tag: nearly $500 million in tax revenue is lost each year. That's money that could be used to improve schools, roads, public transit and other services that we all rely on.

Two years ago, Cuomo created regional economic development councils in order to advance a more coordinated, regional approach to economic development. The regional councils developed long-term strategic plans, many of which emphasized high-quality jobs, workforce development targeting economically disadvantaged residents, infrastructure improvements and adherence to smart growth principles. But while regional councils began doing economic development somewhat differently, IDAs continued doing business as usual.

Cuomo's plan, tucked into his state budget proposal, would bring IDAs into conversation with regional councils, and put additional scrutiny on state exemptions to ensure that subsidy deals conform to the criteria set by the relevant regional council.

This would limit state tax exemptions to certain economic sectors, excluding retail projects. The proposal would also require businesses to pay the taxes they owe, then be reimbursed — so companies deliver on their commitments.

Still, state sales tax breaks only account for 12 percent of the tax exemptions granted by IDAs. Local governments lost out on the vast majority of tax revenues — $426 million in 2010, including $200 million lost to local school boards. While state tax breaks will come under greater scrutiny if these changes are approved, local governments will be left to find solutions to runaway IDAs on their own.

After years spent advocating for greater IDA accountability and transparency, we know this will be a challenge. Local taxing jurisdictions such as school districts, along with community leaders, labor leaders and other representatives, often do not have a say in how local IDAs grant tax breaks.

As many times as local advocates are able to win commitments for good jobs, local hiring, affordable housing, or other community benefits from recipients of huge public subsidies, there are countless other examples of IDAs throwing money at car dealerships, dollar stores and other projects that fail to create economic opportunity.

It's time that local communities and governments had the tools to measure performance and get our money's worth from IDAs and similar programs. We know that local governments are feeling the strain.

Earlier this month, the state Budget Division released a list of local governments under "fiscal distress." More than a third of all cities, counties, towns and villages that were assessed qualified as being in fiscal distress.

All of our economic development agencies should demand that companies receiving subsidies have a positive impact on our communities and create family-supporting jobs.

Companies that fail to create the jobs they promised should be required to give the money back. And ordinary citizens should be able to see a report card for all companies that receive subsidies, from IDAs, regional councils, the Empire State Development Corporation, and others.

To read the full article visit The Albany Times Union