In these days of heated economic competition among states, big companies promising lots of jobs and a boost to local economies play “Let’s Make a Deal” to see which state will offer them the best combination of tax breaks, construction incentives, housing availability, and access to transportation hubs and qualified employees.
States that desire an economic boost often feel as if they have no choice but to participate.
New York state has taken that approach to heart, as it demonstrated with last week’s announcement that Amazon would be locating one of its regional headquarters in the New York City community of Long Island City, Queens, creating 25,000 high-paying jobs.
The state’s big score comes with a big price tag — $1.2 billion in tax credits, more than $500 million in grants to offset the company’s construction costs, and tax credits for hiring employees that could approach $900 million.
Snagging a big company like Amazon certainly can provide a boost, at least to the local economy.
It can raise the overall standard of living, attract spin-off businesses, support and expand the small-business community, and bring in new tax dollars to improve infrastructure and schools.
But these deals, even for the winners, also come at great potential expense — to the people living and working in the communities; to the people who provide public services like transit, education, social services, public safety and healthcare; to homeowners and renters; to the environment and to the overall quality of life.
And the impact is not restricted just to the people directly affected by it.
When the state provides tax breaks and other incentives to these companies to locate in a particular area, they’re taking tax dollars paid by all New Yorkers away from other needs. And as we well know in New York, we have plenty of needs that urgently must be addressed.
A decision of this magnitude — with this much taxpayer money on the line and with such a large potential impact — should not be made in secret and without a great amount of input from the people who will be affected.
Nor should the state promise shortcuts after the deal is in place in order to expedite the company’s progress.
Yet that’s exactly how this deal has gone down so far.
Gov. Andrew Cuomo, New York City Mayor Bill de Blasio and their team negotiated this deal without getting the public’s input.
They agreed to provide at least $2 billion in state tax money without soliciting the input of the state Legislature or the citizens.
The secrecy of the negotiations didn’t allow them to vet, prior to the agreement, the company’s claims of job creation and the potential cost to the state of each job. (Already, some experts are disputing the amount the state would be paying for the creation of each job.) Before the governor and the mayor agreed to the deal, this is one element that should have been hashed out in public.
Any potential approvals of the state financing through the state’s Empire State Development economic development arm will be decided by an organization called the Public Employees Control Board.
On the surface, it seems as if this satisfies the requirement that the Legislature, representing all the people of the state, has a say in the spending of this money.
But in reality, this has the potential to be just a rubber stamp for Gov. Cuomo’s plan.
According to the PACB website, the five members of the board are appointed by the governor. One member of the board represents the governor and serves as the chairman. (How convenient.) The other four members are appointed by the governor based upon recommendations by the legislative leadership.
So it would seem approval would be a lock, especially given the political makeup of the Legislature, which next year will be run by all Democrats, the governor’s party.
But some local legislators, surprisingly, have expressed opposition to the whole thing.
Wouldn’t it have been better had lawmakers been in on the negotiations to perhaps extract more local concessions and so that when the deal was announced, they could demonstrate unified support?
We learned in a Daily News report this week that the panel won’t even have a say over the $500 million in construction grants.
If the governor’s panel approves the incentives, where does that leave the rest of the state’s legislators? We have several Democrats representing us locally in the Assembly. Do they get a voice? How about our Republican representatives? Yes, there’s a member of the PACB representing the minority party, but he’s appointed by the Democratic governor. How swayed is he going to be by upstate objections?
Another consideration: The panel could actually kill the deal.
As much as it’s unfair to have such a small unrepresentative body be able to approve the deal, it’s equally unfair that the body can also kill this potentially major economic opportunity.
An expenditure of that much state taxpayer money should be subject to extensive public hearings across the state and a vote of the entire state Legislature, not just a handful of the governor’s appointees and not during the lame-duck period of an outgoing Legislature.
The other portion of this deal that leaves out the public is the approval process for the project itself.
The governor is reportedly planning to rezone the 20-acre site using what’s called a General Project Plan (GPP). Under the GPP, the state could potentially have the site rezoned to the proper designation without getting approval from the New York City Council. The result could be zoning changes that don’t fit in with the community’s desires and which exclude the elected representatives of the city where the project is being built.
The lack of public oversight could also have other implications.
Have officials actually detailed how much of an impact this project will have on the housing market, on the existing mass transit system and on traffic?
What will be the local impact on schools with an influx of 25,000 employees and their families?
How about hospitals and emergency services?
Is this going to be an improvement or make things worse?
The Daily News is reporting that 1,000 public school staffers will be vacated from their offices to make room for the Amazon project. That little tidbit wasn’t mentioned in the governor’s announcement. Where will they go and who will pay for their new office space?
Someone at a public hearing might have pointed out that the state might not need to offer such a lucrative package, given that Amazon was looking for a location with a large pool of qualified employees, access to markets and a major airport, and a large population density.
New York City is almost unique in its ability to meet those terms, not to mention offer the entertainment and cultural benefits no other city can offer — without the state having to offer big tax breaks.
One might question whether the state throwing billions of dollars Amazon is really worth the cost. New York City has 8.6 million people.
How much of a positive impact is another 25,000 workers really going to have?
The approach of throwing taxpayer money at companies certainly hasn’t helped upstate New York’s economy recover, especially when the companies failed to fulfill their job-creation obligations.
What is clear is that the people most affected by this deal and who will pay for it with their tax dollars had no say whatsoever in the amount of the incentives offered, the terms and conditions, or even a say in if they wanted it in the first place. Nor will they be given much input as the project moves forward.
That’s not how government is supposed to work.
The people are supposed to be in control of the government. Not the other way around.