Statistics for 2009 show little return for state IDA tax breaks

Taxpayer dollars are getting wasted on the state’s Industrial Development Agencies, say economic jus

Taxpayer dollars are getting wasted on the state’s Industrial Development Agencies, say economic justice advocates.

Based on statistics released by the state Comptroller’s Office for the year 2009, the Alliance for a Greater New York and the Buffalo-based Coalition for Economic Justice put out a report detailing what they characterized as useless tax incentives by IDAs. IDAs are local economic development agencies that are able to provide incentives to companies that promise expansion or job creation.

The report noted that half of the projects that ended in 2009 didn’t actually create a single job and that $141 million of the state’s IDA tax breaks went to companies that cut jobs or didn’t create new jobs.

The Capital Region, including Saratoga, Schenectady and Albany Counties, spent $64.7 million in net tax exemptions. Of the projects that concluded in 2009, 54 percent of them didn’t end up creating jobs and in some cases jobs were lost. Additionally, of the 48 subsidized projects that ended in 2009, only 11 met or exceeded the job creation or retention promises that were made when the firms received their breaks.

The 25 projects in the Capital Region that didn’t reach their initial job creation or retention promises ended up falling 5,400 jobs short of the mark.

The fourth-most expensive project in 2009 in the district was for GlobalFoundries, which received $3,307,519 in net exemptions for its Fab 8 facility in Malta. This money, in conjunction with millions in state subsidies, netted 28 jobs, according to the report.

Allison Duwe, Executive Director of the Coalition for Economic Justice, noted that the trends in the Capital Region have persisted around the state with the IDA system.

“IDAs were not performing well before the economic crisis, and the latest data reinforces that IDAs are not equipped to respond to New York’s jobs crisis, despite giving away considerable public dollars in corporate subsidies,” said Duwe.

Overall in the Mohawk Valley region, which includes Fulton, Montgomery and Scoharie counties, the IDAs were a little more effective. Five of 16 IDA projects that were completed in 2009 met or exceeded their job goals.

Amsterdam was the site of the district’s most expensive and fourth-most expensive projects for 2009, which Montgomery County Business Development Center’s Director Kenneth F. Rose touted as evidence of their success.

The most expensive project was $2.93 million in net exemptions during 2009 for Beechnut, which added 121 jobs. The fourth most expensive project was $1.03 million in net exemptions during 2009 toward Target Corp., which added 618 jobs.

Rose said his organization has generated results by including a “claw back” provision in contracts with companies that get tax breaks and other incentives. He said that some companies will promise things they can’t deliver if there isn’t a penalty, so they attach strings to their money.

After establishing a base level of employment before a company begins getting subsidies, Rose said, they measure the jobs created or retained compared to what the company promised. If they don’t hit their goals, the company is liable for a percentage of the subsidies they received.

“If the company doesn’t hit the numbers they’re supposed to hit … we feel pretty protected,” Rose said.

He said that because of all the scrutiny IDAs receive more of them are getting tough with the businesses that are given breaks. While there are already accountability measures in place at other IDAs, he predicted more would follow.

Nathalie Alegre, an organizer with Alliance for a Greater New York, said all of this information could be utilized by the Regional Economic Development Councils, which are Gov. Andrew Cuomo’s attempt to reform the state’s economic development practices.

Categories: Business, Schenectady County

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