Stop playing games with other people’s money

In Columns by Hal Peterson0 Comments

The following two sentences head up a column published in June by the Journal News, a Westchester County newspaper.  (1) “New York taxpayers will have to make up $700 million in tax breaks given to private companies, part of an economic machine that promises thousands of jobs in return.” (2) “It’s a system that revolves around more than 100 local, quasi-public entities known as industrial development agencies, or IDAs, that are peppered throughout the Empire State.”

In July, the New York Post reported that New Yorkers “get very little bang for the $8 billion spent every year by the Empire State Development Corporation, an umbrella organization overseeing the functions of the NYS Department of Economic Development, the Urban Development Corporation, and the Job Development Authority.”

Earlier this year, the office of state comptroller Thomas P. DiNapoli, issued two audits. The first, “Public Authorities Borrow and Spend Billions with Limited Transparency, and Accountability while accumulating $267 million in debt: The second, “Tax Breaks from IDAs Continue to Climb.”

With all of the above in mind, both entities obviously operate with irrational autonomy, regulatory oversight is a mixed bag of effectiveness, reporting requirements are left to the imagination of the holder, accumulated debt is shocking, transparency is lacking, and “yes’ waste outpaces ‘results.” Another view, published on the web site of the PEW Charitable Trusts:

“New York State spends billions of dollars a year on tax credits, deductions and exemptions meant to encourage businesses to create or retain jobs and make investments. When designed and managed well, tax incentives can strengthen a state’s economy. However, research reveals that lawmakers often approve or continue incentives without knowing their potential cost or whether they are working. Better information to avoid unexpected budget challenges, identify effective incentives, and reform or end programs that are not meeting expectations.”  

To summarize, my own investigative work further questions the on-going sustainability of many projects most notably the Buffalo Billions ‘Solar City’ endeavor (and scandal) that currently sits idle waiting orders to create a promised 1,400 manufacturing jobs; and Start-UP NY program, with more than half of the participating companies dropping, out for a variety of reason, as reported by Newsday.

I’ll close with some thought offered by former NYS Assemblyman Richard Brodsky. “What you have is a system that has never been successful in creating jobs and has been a vehicle for crony capitalism and give away of public money.” There is a theoretical problem with all of this…the term ‘economic development projects’ especially when used by IDA’s has meant giving money to the people who own the project. It turns out that doesn’t work, ever…there is amble evidence that taxpayer money to support many of their projects does not create jobs.” To quote Oliver Hardy (in many Laurel and Hardy movies) “Well, here’s another mess you’ve gotten me into.”

 

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