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By Jessica Bakeman

July 14, 2012

ALBANY — Tax breaks for private businesses and job creation do not go hand-in-hand in New York, according to a new report that drew criticism from state and local economic development groups.

The annual analysis of Industrial Development Agency data, produced since 2009 by the statewide Getting Our Money’s Worth Coalition, shows “a widespread failure of New York’s main economic development tool to meet job creation goals,” the group said in a statement Friday.

The analysis shows $182 million in IDA tax breaks went to companies that cut jobs, failed to create jobs, or didn’t promise to create any jobs.

The policy group, which is anchored by ALIGN: The Alliance for a Greater New York and the Buffalo-based Coalition for Economic Justice, criticized IDAs for what it calls “an annual trend of increasingly ineffective spending.”

The state’s 114 IDAs spent $483 million in 2010, according to the analysis.

The report drew disagreement from the economic development sector.

Michael Tomkovitch, chairman of the Dutchess County Industrial Development Agency, said his agency’s annual operating budget is in the $50,000 to $60,000 range and that none of it comes from taxes. Its revenues are from fees for the deals it makes issuing bonds that enable developers to borrow in the private market at lower, tax-exempt costs.

The resulting buildings typically have a reduced property tax schedule under New York state’s standard plan, known as 485b.

This is a valid incentive, Tomkovitch said.

“I think it’s fair to say that in some, but not necessarily all cases, they would not have built the building to begin with if they didn’t get the tax deductions as well as help from other agencies,” he said. “What if they didn’t build the building at all?”

Brian McMahon, executive director of the state Economic Development Council, said the report oversimplifies the work of IDAs by focusing only on job creation.

Referring to the group’s news release, McMahon said: It “is neither factual nor does it reflect even the remotest understanding of the role played by IDAs in economic development in their communities.”

A key finding of the report is that 38 percent of IDAs’ net spending resulted in no job promise, no job creation or a loss of jobs in 2010, up from 25 percent in 2009.

“Over one-half of all projects that ended in 2010 failed to create a single job,” the group said in the report. “Businesses that originally promised to create a total of 7,865 jobs instead lost 7,896 jobs.”

Allison Duwe, the Coalition for Economic Justice’s executive director, said the trends shown by their analysis are “troubling.”

“While state and local budgets are being cut and public services reduced, backdoor spending of public dollars by development agencies continues to rise,” Duwe said.

To read the full article, visit the Poughkeepsie Journal