- Statewide unemployment is at nearly 10% and Industrial Development Agencies – our primary tool for economic development – are creating fewer jobs per public dollar. NYS Comptroller DiNapoli’s annual report on IDAs showed that total jobs are down, and the cost per job is up. Total estimated job gains in 2008 were 195,466 compared to 226,602 in 2007, a decrease of nearly 14 percent. In addition, with Empire Zones phased out in June, it is even more crucial that IDA performance improves and we create the good jobs we need now.
- IDA reform means revenue savings to deal with massive cuts in the state budget. The state is facing a budget shortfall of $7.4 billion dollars and nearly all municipalities across the state are facing budget shortfalls. At the same time, hundreds of millions of dollars are lost to IDA-subsidized companies that do not meet their commitments. Last year IDAs gave more tax breaks than ever before, awarding $645 million net exemptions in 2008. Over 80% of IDA spending results in net revenue loss to local government, including local school boards. We can’t afford to throw away money while essential services for children and seniors are cut. Comprehensive IDA reform would stem this wasteful spending so that these much needed revenues can be put to better use.
- IDAs are creating their own shadow entities to skirt reform. In the last year, unaccountable quasi-private development agencies have been popping up around the state. These agencies are established to subsidize nonprofit facilities through the issuance of tax-exempt bonds, which IDAs are no longer authorized to do. IDAs and local officials are working to empower alternate agencies to funnel taxpayer dollars towards civic facility projects with no oversight or accountability. These actions practically guarantee less transparency and increase both the confusing alphabet soup of development agencies and the cost to taxpayers.
- Public officials must reform IDAs to restore funding to nonprofits. Civic facilities represent 13% of IDA projects statewide, and up to 20% of projects in some regions. Without IDA reform and restoration of the IDAs’ authority to provide financing to civic facilities, many of these projects will continue to be held up. With reform, IDAs could responsibly begin financing important projects like hospitals and schools again.
- Reform will prevent IDAs from wasting NY’s federal stimulus money. Industrial Development Agencies and their new shadow agencies have already begun channeling financing from the Recovery Act to businesses. New York must act swiftly to establish standards, accountability, and transparency, so that increased bonding through the Recovery Act doesn’t follow the same flawed path as existing IDA financing, primarily benefiting large corporations that fail to deliver good jobs and sustainable economic development to our communities.
- The recently-enacted Public Authorities Reform Act (PARA) is a big step forward for increased government transparency, but it won’t fix everything that’s wrong with IDAs. We should build off the momentum for reform to enact strong targeted IDA reform. PARA alone won’t boost the effectiveness of economic development, and it doesn’t include clawbacks, anti-raiding mechanisms, community representation on IDA boards, community impact reports, and important wage and environmental standards. Without these reforms and others, IDAs will remain a broken tool for economic development in our state.