The Office of the New York State Comptroller issued in early May an Annual Performance Report on the New York State’s public benefit corporations (Industrial Development Agencies) that were created to facilitate economic development in specific areas by attracting, retaining or expanding businesses. To accomplish this mission these organizations offer financial assistance in the form of tax-exempt debt financing and exemptions from property, sales and mortgage recording taxes. In return, they are expected to make annual payments in-lieu-of-taxes to help offset the loss of revenues from the tax exemptions provided.
In 2010, 114 active IDA’s supported over 4,400 projects providing tax exemptions in excess of $1.3 billion with offsets totaling $785 million. When a property is exempt from paying taxes to the local governments in which it is located, the amount that would have been paid generally is shifted to the remaining property taxpayers. The hidden burden is approximately $140 more per household each year.
The report issued raises one serious question. To quote State Comptroller Thomas DiNapoli “taxpayers are not getting enough bang for their buck when it comes to IDA’s…residents in high-cost regions such as Long Island and the mid-Hudson Valley have every right to question whether the additional tax breaks are producing promised economic benefits.”
For more information concerning the problematic value of IDA’s and other Economic Development entities, I recommend the use of the authorities of the Budget Office Audit Report OR-2011-01 covering Schenectady County, issued on December 20th, 2011.