One of New York’s economic development tools is the broad category of tax expenditures which include special tax breaks, credits, and exemptions, reducing business tax liability. Unlike budget appropriations, which are reviewed and voted upon each year by elected officials, tax expenditures once on the books are not. Because of this, they are often referred to as “back door” spending.
Industrial Development Agencies (IDAs) are the main source of economic development subsidies at the local and county level. Established in 1969 as public authorities, they were designed to “advance the job opportunities, health, general prosperity and economic welfare of the people of the state of New York and to improve their recreation opportunities, prosperity and standard of living.”
While in theory the concept is a good one, too often projects don’t deliver on their promises. Around the state, workers in the building trades who aren’t protected by local labor agreements watch as taxpayer-subsidized projects employ out of state workers. The most recent annual report by the State Comptroller’s office found “no apparent connection between higher tax exemptions and job growth.”
An evaluation of IDAs by New York Jobs with Justice and Urban Agenda found that IDAs are spending more each year but creating fewer jobs. In 2008, the state spent $135 million on projects that failed to produce any jobs. The report found that more than fifty percent of the subsidized projects did not disclose any data on the impact the program had in the community.
To ensure that our IDAs are supporting responsible businesses that will deliver on their promises business standards, accountability measures and transparency reforms are needed. Wage standards for construction and jobs created in the post-construction phase should be required, government should be able to recapture its investment if goals are not met and information should be transparent.