New York spends approximately $7 billion each year on subsidies to businesses across New York. Fifteen economic development programs, some with hundreds of local entities, issue subsidies such as tax exemptions, tax credits, grants, tax-exempt bonds, and discounted land to corporations, ostensibly in the name of job creation, economic growth and an improved quality of life for all New Yorkers. This report takes a closer look at the subsidy programs that report regional data, their job creation performance, and the most expensive projects funded in each program.
Only seven of the top 15 economic development programs report data regionally, and most programs do not report in great enough detail to assess their performance. When we are able to assess performance, as with Industrial Development Agencies (IDAs), we find significant performance failures. The most recent IDA data shows that 33% of net spending resulted in no job promise, no job creation or a loss of jobs. If IDAs are any indication of the overall performance of New York’s economic development system, we can assume that approximately $2.3 billion is wasted each year and could be repurposed to addressing the jobs crisis. Unfortunately, subsidy spending is on the rise. Tax credit programs have nearly tripled their spending over the last 8 years, from $673 million in 2005 to $1.7 billion in 2013.4 With little accountability, businesses often take the money and run.
In looking at the available regional data, we identified several problems. Simply put, there is very little transparency or accountability among these programs, spending is increasing in most regions of New York, a small number of big businesses are taking advantage of uncoordinated programs, and too often subsidies fail to create jobs for New Yorkers. The Just and Open Business Subsidies (JOBS) Act, A8203, new state legislation, offers key solutions to these problems by requiring recipients of economic development subsidies to set clear good job and local hiring targets, transparently track subsidies and job creation on a single public website, and establish a “money back guarantee” to recapture subsidies if recipients break their promises. By enacting common sense reforms, it will be possible to assess the effectiveness of all of New York’s economic development programs—at the local, regional, and statewide level.