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IDAs Dropped $5.6B on Tax Breaks for Businesses Since 2008

11:55 PM, Mar 18, 2013   |    comments
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By Joseph Spector
Albany Bureau

ALBANY, NY--  The state's industrial development agencies doled out $5.6 billion in tax breaks to local projects between 2008 and 2011, a state report Tuesday found.

WEB EXTRA: Click here to see how much WNY IDAs gave out in tax breaks

In a struggling economy, the 104 local development agencies across New York increased the exemptions for new projects by 50 percent between 2010 and 2011, from $26 million to $39 million, the report from the state Authorities Budget Office found. The number of new projects increased from 208 to 253 between the two years, the report said.

The agencies are the economic development arms of local governments, including counties, cities and towns. They gave out tax exemptions to 18,000 projects, although the list included the projects that received the breaks over a number of years.

"Economic-development officials see these tax exemptions as effective and essential for spurring economic development," said David Kidera, director of the Authorities Budget Office, which was created in 2009 to oversee the state's hundreds of public authorities.

"They view any restriction on the availability of financial assistance options as detrimental to job creation and economic development."

The report comes as Gov. Andrew Cuomo is proposing the state take a larger role in the oversight of the IDAs, which have been criticized for operating outside of the public view.

Under Cuomo's budget proposal, the projects the IDAs could approve would be limited. They also would be required to go through the state's regional economic councils for state sales-tax rebates.

Legislative leaders are not backing Cuomo's plan.

At a time when local governments and schools are struggling for new revenue, the report said the industrial development agencies gave out $2.2 billion in tax exemptions after companies made payments in lieu of taxes. About $1.6 billion was outside New York City.

The exemptions for school taxes totaled $757 million over the four years. IDA projects were exempt from paying $276 million in state sales taxes and $262 million in local sales taxes, the state report said.

Officials from the local agencies criticized the report, saying it doesn't show the economic benefits of the projects.

The IDAs in 2010 assisted roughly 4,400 projects that invested $72.9 billion, according to the state Economic Development Council, which represents the agencies. The projects created nearly 182,000 jobs, the group said.

"IDAs are a highly efficient economic development program," said the council's executive director, Brian McMahon, in a statement.

The Yonkers IDA doled out nearly $140 million in tax exemptions over the four years, ranking it fourth highest in the state, the report found. The Westchester County IDA ranked fifth giving out $136 million in benefits and agreeing to $92 million in payments of lieu of taxes - the most of any IDA.

Eileen Mildenberger, the Westchester IDA executive director, said the agency's incentives helped create 2,000 jobs, retained 4,500 jobs and led to $500 million of capital investment in the county - which has the highest property taxes in the nation. Local governments and schools must approve the payments in lieu of taxes, she said.

"What the report omitted was the benefits provided to the county far exceeded any costs that were given through tax exemptions," she said.

Melvina Carter, president of the Yonkers IDA, also defended the breaks. The IDA doubled its exemptions over the four years - from $26 million to $52 million.

"We're developing our city so that it benefits our residents and it brings people into our area," she said. "So the story, unfortunately, caters, I guess, to public outcry, but it does not really paint the whole picture."

Monroe County ranked eighth on the list, totaling $114 million in tax exemptions through its IDA.

Judy Seil, executive director of the county's IDA, said the county surveys the companies every year to ensure they are meeting their contractual obligations to receive the tax breaks. Over the four years in the report, she said the IDA added 153 new projects that invested more than $1 billion into the local economy.

"I think that's good during that time period that we're talking about because the economy was in dire straits at that time," Seil said.

Some IDAs rapidly increased their exemptions. The exemption for the Tompkins County's IDA rose from $3 million to $11 million over the four years, the report said.

The Orange County IDA had the largest increase over the period, growing from $4 million in 2008 to $74 million in 2011.

The Chemung County IDA provided $31 million in exemptions, ranking 26th in the state. Broome County ranked 32nd at nearly $28 million, and Dutchess was 34th at nearly $26 million.

Some groups were critical of the spending, saying there needs to be greater oversight on how the taxpayer money is spent.

"The tax exemptions granted by hundreds of industrial development agencies around the state come with a huge price tag, which is mostly born by local taxpayers, governments and school districts," Jennifer Diagostino, executive director of the Coalition for Economic Justice, a Buffalo-based advocacy group, said in a statement.

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