By Samantha Maziarz
October 13, 2011
About 40 members of several grass-roots organizations gathered here Wednesday to call for reforms in the way industrial development agencies and the New York Power Authority spend taxpayer-funded subsidies, outlining a list of changes they said would provide a better rate of return on public investment.
“Are we getting our money’s worth for our region’s multitude of economic-development programs? With each passing year, we find the answer becomes more and more resoundingly clear. It’s ‘No, we are not getting our money’s worth,’ ” said Allison K. Duwe, executive director of the Coalition for Economic Justice.
The group released a 75- page report, “Generating Waste: Problems With NYPA and the IDAs and How to Solve Them,” in conjunction with the Partnership for the Public Good, the WNY Area Labor Federation and the Niagara-Orleans Labor Council. It outlines what it believes to be major flaws in local economic-development agencies, giving examples and proposing solutions.
The report contends that the agencies’ project subsidies don’t create business or add jobs, but instead give some companies an unfair advantage as they compete against one another for a finite number of customers.
“These projects don’t grow our economic pie; they just res-lice it into different-sized slices,” said Sam Magavern, codirector of Partnership for the Public Good in Buffalo.
The jobs they do create pay poverty-level wages in retail and hospitality, he said. IDAs are industrial in name only, he added, giving just 15 percent of their grants to manufacturing facilities.
Rather than lure companies from other states, the report says, the IDAs almost exclusively pull businesses out of other New York State towns and counties. Many IDAs overlap and compete with one another and should instead merge, it says. Campaign donations and the agencies’ business leadership create unfairness in grant decisions, it notes.
Companies that receive taxpayer- funded grants should be held to specific job-creation standards and should have to return the money if they don’t create the number of jobs they promised. Between 2003 and 2005, 23 companies receiving NYPA Expansion Power subsidies failed to meet job requirements, but only six had their allocations reduced, according to the report.
Unused low-cost NYPA power should go to Western New York businesses and residential customers rather than being sold, the report says.
Subsidies should go to projects that wouldn’t be implemented without subsidies and to companies that reinvest in infrastructure in the urban core rather than subsidizing sprawl.
“Niagara Falls taxpayer money is going to support two doctors’ offices and one dentist’s office in Wheatfield,” Magavern said. “If that makes your blood boil, it should.”
Because the agencies are so inefficient, business subsidies should be reduced and the money rerouted to job creation in infrastructure, health and education, the report says. From 2003 to 2009, IDAs in Erie and Niagara counties have granted $3.3 billion in net tax exemptions, according to Jim Briggs, president of the Niagara-Orleans Labor Council. If that money had gone into direct job creation, he said, it could have meant 122,000 jobs.
“It’s time to return to the more old-fashioned notion of economic development of spending money on the public good,” Magavern said.
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