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Op-ed by Frank Natalie

July 24, 2011

Gov. Andrew Cuomo recently released an outline for how 10 regional economic development councils can better coordinate job creation efforts and craft long-term strategic plans for each region in New York. This could bring much-needed sanity to the Capital Region's economic development initiatives, but the devil is in the details.

We have yet to learn who will be appointed to these councils and how they will address the bigger piece of the pie: more than $8 billion in job creation tax breaks currently given away by industrial development agencies and other entities.

As a board member of an IDA, I work to bring good local jobs into the community. I am pleased to see that we have had some successes in our region. The GE battery manufacturing plant in Schenectady received incentives from the Empire State Development Corpoation and local entities, and is bringing 350 good-paying jobs into our area. This doesn't include the hundreds of local union workers employed during construction. The state-of-the-art facility contributed to the Brookings Institution's recent declaration of the Albany-Schenectady-Troy region as the metropolitan area with the highest share of clean economy jobs in the country.

Unfortunately, the approach to economic development in our region has been scattershot and inconsistent. Even with our successes, we've seen too many public subsidies go to undeserving projects, like SI Group's planned construction of a new $12 million biomass fuel boiler at its existing site in Rotterdam Junction. Although the company reneged on its plans and never created the jobs promised from this deal, it will still receive more than $4 million in local property tax breaks over a span of 15 years.

Taxpayer dollars to the tune of $2.4 million have also been awarded to FedEx for construction of a distribution center in Rensselaer County that employs out-of-state construction workers, even as Capital Region tradespeople are unemployed and ready to work. The distribution center will create only four managerial positions and jobs for 133 delivery drivers classified as "independent contractors."

We need to look at the long-term impact these projects have on the region -- and on taxpayers' pocketbooks. A recent report by state Comptroller Thomas DiNapoli reveals that in Greene County, the equivalent of 25 percent of its taxable property was off the tax rolls because of corporate subsidies. At the same time, the county experienced steep job losses, all while IDA salaries rose. And this figure only includes subsidies granted by IDAs, not by the many other economic development programs available to private businesses.

Given the fiscal straits local governments find themselves in, a careful cost/benefit analysis should be carried out for all economic development projects. As evidenced by the comptroller's report, tax breaks in and of themselves don't create jobs. To ensure that taxpayers are getting a return on their investment, public subsidies should only be paid when projects are performing well -- that is, when quality jobs that allow Capital Region residents to have a good quality of life are being created and when projects result in concrete benefits for local communities.

This needs to be true for regional councils and for other economic development programs that are as much in need of reform as ever. What's clear is that we can no longer afford to throw money away on projects like the SI Group and the FedEx warehouse that fail to meet even the most basic criteria for success.

Regional councils can't just window-dress our economic development problems. The opportunity to transform economic development is now. The Capital Region must seize it.

Frank Natalie is vice president of the Capital District Area Labor Federation (AFL-CIO) and a member of the Rotterdam Industrial Development Agency.

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