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Sara Foss's Thinking It Through
by Sara Foss

Thinking It Through

A Daily Gazette life blog
Her column and blog rolled into one
 

Beech-Nut story sign of a bigger problem

By Sara Foss
Sunday, November 17, 2013

Most people rejoice at the prospect of free money.
But Montgomery County public officials don’t sound particularly enthusiastic about the windfall of tax money they received from Beech-Nut Nutrition last month.
Nice as it is to be given more than $1 million in property taxes, the money represents failure: In 2012, Beech-Nut missed its job creation goals by more than 100 full-time employees.
That’s bad news for a county that’s even hungrier for jobs than it is for money.
“We got the money because Beech-Nut is missing jobs,” Montgomery County Treasurer Shawn Bowerman told Gazette reporter John Enger. “The county would be better off with the jobs.”
Montgomery County Economic Development Director Ken Rose agreed. “I’d rather have the jobs,” he said.
It’s great that the county’s payment-in-lieu-of-taxes agreement with Beech-Nut holds the company accountable for failing to uphold its end of the bargain. Being exempt from property taxes is a pretty sweet deal — the sort of deal that suggests just how desperate people were to keep Beech-Nut in the area when the company decided to leave its longtime home in Canajoharie.
The Beech-Nut money will be used in various ways. It will help pay for the renovation of the Town Hall and DPW garage in Florida and go into the Greater Amsterdam School District’s rainy day fund. But it won’t give the county what it really needs, which is jobs.
This is troubling because Montgomery County bent over backwards to ensure that it would get these much-needed jobs. It built a penalty into the PILOT agreement. It set concrete targets. It allowed Beech-Nut to built a $125 million factory and not pay any property taxes on it. But none of this seems to have worked the way it was intended. And in a small, rural area with a high unemployment rate, the missing Beech-Nut jobs would make a big difference.
According to the New York State Department of Labor, Montgomery County’s unemployment rate is high — 8.5 percent in August, down from 9.9 percent the previous year.
To get a better sense of what these numbers mean, I contacted Mark Barbano, the DOL’s labor market analyst for the Mohawk Valley, a region that includes Montgomery, Fulton, Schoharie, Herkimer, Oneida and Otsego counties. He told me that the county has the 58th worst unemployment rate in the state out of 62 counties. Fulton County is in a similar boat, with an unemployment rate of 8.3 percent, the 55th worst in the state.
The rest of the Capital Region fares much better: Saratoga County ranks second, with an unemployment rate of 5.4 percent, Schenectady County ranks 25th, with an unemployment rate of 6.9 percent, and Schoharie County ranks 34th, with an unemployment rate of 7.2 percent.
What’s really hurting Montgomery and Fulton counties, Barbano said, is the ongoing loss of manufacturing jobs.
“They’re more dependent on factories,” he said.
Of course, economically depressed communities throughout the state are in a similar position.
In the Washington County town of Fort Edward, union leaders are making an effort to save the General Electric plant based there, which the company intends to close and move to Clearwater, Fla. Last week, the union proposed making a $25 million investment in equipment upgrades that would allow GE to cut 20 of the nearly 200 jobs at the plant.
Much like Montgomery County’s deal with Beech-Nut, the union’s willingness to reduce the size of the workforce at the GE plant suggests how desperate people are to keep the company in Fort Edward.
“This area simply can’t afford this plant closing,” UE Local 332 President Scott Gates said last week. “We’re hoping to get the governor engaged with us and the company to help save this factory and this community.”
These aren’t empty words.
Upstate New York is full of abandoned factories and communities that have yet to recover from the loss of the businesses that once thrived in them. The Beech-Nut story, as well as the Fort Edward story, are just the latest chapters in a long-running saga. And it’s a depressing saga, one that nobody seems to know how to change. Every time a company threatens to leave, local governments do everything they can to get them to stay. I would like to see a new strategy emerge, although I have no idea what it would be.
Under the long-term PILOT agreement Beech-Nut signed with the Montgomery County Industrial Development Agency in 2008, the company is exempt from property taxes on its baby food factory in the Florida Business Park through 2020 as long as it maintains its workforce at certain levels.
In 2011, Beech-Nut was required to employ 371 people. But it finished the year with about 260 employees. For 2013, Beech-Nut is required to employ 417 people. But officials said they expect the company to fall short of that goal, too.
Meanwhile, Barbano suggested that it might be a long time before the economic picture improves in Montgomery and Fulton counties. Those counties, he said, typically see seasonal job growth in the warmer months, when there’s construction work and hotels, motels and restaurants see an uptick in visitors and tourists. But many of those jobs will disappear during the winter, and January, February and March will be likely be tough.
“There will be Christmas hiring, but it will be negated by construction layoffs,” he said.
So, yes, property tax money is nice to have.
But jobs would be much better.
Sara Foss, a Gazette columnist, can be reached at sfoss@dailygazette.net. Opinions expressed here are her own and not necessarily the newspaper’s. Her blog is at www.dailygazette.com/weblogs/foss.

 
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