IDAs Should Kick Start the Upstate Economy
by Joe Rossi, Political Director, SEIU Local 200United

Industrial Development Agencies (IDAs) should be helping to kick start the Upstate economy. Instead, many of them give tax breaks to companies that turn around and cut jobs.

IDAs give businesses property and sales tax breaks in order to spur job growth. They also issue low-interest bonds, called Industrial Development Revenue Bonds, which give companies access to the money needed to finance construction of new developments.

This help that IDAs give is not free. Every dollar of taxes that goes unpaid because a business gets IDA assistance is a dollar of taxes that has to be paid by other businesses and homeowners. Because of this, taxpayers deserve to be confident that IDA projects are creating jobs that pay decent wages for people who live in the area. Otherwise, we’re just wasting precious resources.

And it’s clear that many projects that our IDAs help are not creating jobs. The State Comptroller, Alan Hevesi, released a report on May 16 that showed that one-third of IDA projects did not meet their job creation commitments and another third of the projects actually lost jobs! According to the report, the Onondaga County IDA was 546 jobs short of its goal. As we all know, given our economic condition, Upstate New York can’t afford to be paying for job creation programs that don’t work.

When companies don’t create the jobs they say they are going to create, taxpayers should get their money back. But while the Onondaga County IDA has what is called a recapture provision, which says that a company should pay back the tax breaks if they don’t meet their goals, according to the Comptroller, the IDA has never used it! Unfortunately, that’s normal for IDAs. Imagine if the rest of the economy worked like that and people were rewarded for failing to meet their commitments.

When IDA projects do create jobs, often there are no standards for the types of jobs that are created. So, we get IDAs helping to build Wal-Mart stores, like the one in Utica, where employees make so little that they are eligible for taxpayer-funded healthcare. That means that we’re subsidizing these companies twice – once by giving them tax breaks and the second time by paying for their employees’ health care. That doesn’t help our local economy.

IDAs are generally organized at the county, town, city or village level, but they are regulated by state law. Because portions of this law expire at the beginning of July, our State Assembly Members and Senators have a chance to fix the system before they leave Albany at the end of June.

Several brave Senators and Assembly Members, led by Senator Maziarz in the Senate and Assembly Member Sweeney in the Assembly, have decided to take a stand and call for a change to business as usual. They have proposed legislation (S. 7391/A. 10787) that would fix these problems.

But they can’t pass these reforms without grassroots help. If you would like to support their proposal, or find out more about it, go to http://www.nyjwj.org/ida.html.

By Joe Rossi, Political Director, SEIU Local 200United

5/17/06