By Joseph Spector
May 30, 2013
New York spends $7 billion a year in incentives to lure and keep businesses, a report Wednesday found, but the state doesn't adequately oversee how the money is spent.
New York has more than 15 major economic development programs, the report from labor-backed groups said, yet many of them aren't closely monitored to ensure that companies are meeting job-performance goals.
“Our findings show that New York’s current spending on economic development is more of a gamble than an investment,” according to the report from ALIGN NY, based in New York City, and the “Getting Our Money’s Worth Coalition,” which includes unions and community organizations.
Unions have increased their criticism of New York’s economic-development programs because in recent years the state has limited aid for education and social services. Aid for education has increased in the past two years, totaling nearly $21 billion.
Gov. Andrew Cuomo last week proposed tax-free zones for businesses that locate near colleges. Local governments and colleges have touted the initiative, but unions and conservatives have knocked it.
“We have a long history of these programs not working,” said Ronald Deutsch, executive director of New Yorkers for Fiscal Fairness. “The current ones do not work -- so why should we think it will work now.”
On Wednesday, Cuomo held a public meeting at the Capitol with business leaders to hail the tax-free proposal. Cuomo said it would boost the upstate economy, which has struggled for decades.
“You can’t do more than this: no taxes. No taxes for 10 years,” Cuomo said.
The report contended that the $7 billion in tax breaks and grants to businesses includes wasteful spending and limited oversight. Only a few of the programs require companies to set performance goals for job creation, while others don’t seek refunds from companies that do not meet their agreements.
The largest program for state incentives is through the Empire State Development Corp., the state’s economic development arm. It doled out more than $1 billion in tax breaks and grants in 2011, the report said.
The state gave out nearly $600 million in incentives through its hundreds of public authorities in 2012, while it provided nearly $370 million for film productions in the state.
Ken Adams, president and CEO of Empire State Development, said there is a “disconnect between this report –- the findings of which are based on some outdated and inaccurate data -- and today’s reality.”
“The report advocates for transparency and accountability–laudable goals and also hallmarks of this administration,” Adams said in a statement. “At Empire State Development, the state’s lead economic development agency, those standards are already in place: from open-to-the-public board meetings to mandated project reporting to pay-for-performance incentives and claw-back provisions."
Some projects noted in the report included nearly $30 million in tax breaks for the Avalon on the Sound East apartment complex in New Rochelle and $21 million in tax breaks for the Ridgehill Village project in Yonkers. It also said that Agro Farma, Inc, now known as Chobani, Inc., received $8.5 million for its growing yogurt plant in Chenango County.
To read the full article visit The Poughkeepsie Journal