Changes in tax incentives

Partnership slams plan for IDAs

By FRITZ MAYER

ALBANY, NY — When the state budget was passed on April 8, it contained provisions that will bring changes to the Empire Zone program. One of the biggest is that the end of the program, which was scheduled for December 2011, was moved up 18 months to June 2010.

Critics have charged that the elimination of the program will hurt the state by making it even less attractive to do open business here because of relatively high tax rates. A spokesman for Governor David Paterson, however, said the sunset date does not necessarily mean the program will come to an end. Instead, the legislature may impose new reforms before renewing it.

In the meantime at a press conference in Owego on April 9, Paterson defended the reforms that are coming this year as a means of reducing waste and fraud. He said, for instance, that the practice of “shirt changing” will end. Shirt changing is when a company gets into the program and receives tax incentives to create jobs, then changes its name, and the newly named company also gets tax incentives.

Other tax incentive programs that may be headed for change are those overseen by the 115 industrial development agencies (IDA) in the state. A bill that would reform those agencies was passed by a senate committee on April 9.

The bill would bring a number of requirements to businesses that take advantage of IDA programs. For instance, it would require that they pay “prevailing wages” to employees, which in many cases would mean paying higher wages. The bill would also impose greater accountability for the creation of new jobs.

The possibility of the passage of the bill prompted Tim McCausland, president and CEO of the Sullivan County Partnership for Economic Development, to send a letter to senator John Bonacic criticizing several of the bill’s provisions.

McCausland said the prevailing-wage mandate would add 28 percent to the cost of projects in upstate New York and, likewise, a living-wage mandate would discourage businesses from locating here.

The bill would require that IDA boards include representatives of special interest groups, including unions, that would serve, wrote McCausland, “special interests rather than the economic development interests of their local government sponsors.”

Also, he said that the new requirements would allow any individual to “hold up a project indefinitely simply by lodging a complaint against the IDA.”

McCausland urged members of the partnership to contact elected representatives in Albany and urge them to oppose the legislation S.1241.