|
|
|||||||||||
Home / News / Press Releases
/ Testimony
/ Legislation
/ On the Issues
/ Newsletter
/ Resources /
|
|||||||||||
|
|
For Immediate Release: March 23rd, 2004 Contact: Contact: Jordan Isenstadt (c) 516.991.3842 (w) 212.490.9535 (f) 212.490.2151 ***PRESS
RELEASE*** State Senator Liz Krueger Pushes for Empire Zone
Reform Proposes ‘Corporate Accountability for Tax
Expenditures Act’ That Would Create a Transparent and Comprehensive Record of
All Economic Development Incentives Albany, NY – Saying "this issue can no longer be
ignored," State Senator Liz Krueger (D-Manhattan) today called
for immediate action to reform New York State’s Empire Zone program following
a report critical of its management by State Comptroller Alan G. Hevesi. “Dollars
spent on tax breaks should be reviewed with the same degree of scrutiny as
dollars spent on all other government programs,” remarked Senator Krueger. “In addition to real job creation,
companies should be expected to have a record of good corporate citizenship
if they are going to receive public support.
Currently there are no such standards. If subsidies are really going to benefit the people of New
York, the businesses that receive them should be required to pay a living
wage, avoid criminal activity and work with the communities in which they are
located. As a result, I have
proposed legislation that would require that a much higher level of
examination and analysis be placed upon state-brokered tax break deals.” The Corporate Accountability for Tax Expenditures Act (S. 5921) was
introduced by Senator Krueger in January and would amend the Business
Corporation Law and the Public Authorities Law. Specifically the bill would require that State economic
assistance provided by any state agency or public authority must be based on
the terms of a standardized written incentive agreement. In addition, the legislation mandates that
certain development assistance agreements be submitted to the Department of
Taxation and Finance. Furthermore,
the bill provides that if a business fails to create or retain the specified
number of jobs and breaks the contract, the business will no longer qualify
for State economic assistance. “This legislation will go a long way towards ensuring that tax incentive
programs such as Empire Zones are actually delivering the economic
development benefits they claim to provide to our State,” said Senator
Krueger. “While job creation must
be a key aspect of New York State’s economic future, it is not acceptable for
thousands of businesses to take advantage of the incredibly weak Empire Zone
program that masquerades as a job creating mechanism. The numbers prove that the Empire Zone
program is misusing precious State funds by giving tax breaks to companies
that have figured out how to manipulate the system.” The Economic
Development Zone Program (now known as Empire Zones) was originally
conceived by the State Legislature in 1986.
The stated intent was to offer limited tax breaks to companies willing
to settle in depressed geographic zones.
The idea was to attract businesses and high paying jobs to
impoverished areas. Whereas there
were once only a handful of zones in the late 1980’s, there are now 72 zones
across the state, which have increasingly been created based on politics,
rather than on need. Presently,
businesses can qualify for virtual tax-free status through sales tax
exemptions, state reimbursements of local property taxes and business taxes,
and savings on electricity and gas. Comptroller Hevesi’s audit reviewed Empire Zones in Binghamton, Buffalo,
Friendship (Allegany County), Islip, Rochester, Syracuse, Tonawanda and
Yonkers. It discovered that: ·
· 47
percent of the businesses that received tax breaks created fewer jobs than
promised and 23 percent actually lost jobs. Only 30 percent of the
businesses exceeded hiring expectations; ·
· Local
zones did not evaluate the performances of the companies, so many firms have
for years continued to receive tax breaks even if they are not creating jobs,
despite the fact that job creation is one of the criteria for receiving tax
breaks; and ·
· Oversight
of the program is poor, so it is difficult to determine the amount of tax
breaks that are given out, or how much the program costs. Senator Krueger noted several egregious examples of companies taking
advantage of the program included an East Harlem business that received
$500,000 in state economic development tax breaks and created merely two jobs
that paid a total of $14,080 a year; a Syracuse company that created one job at
an annual salary of $26,000 and claimed tax credits in excess of $250,000;
and a Rochester company created one job at a $10,000 annual salary and
received a real property tax credit of $137,000. In total, the Empire Zone’s will cost an
estimated $291 million in lost tax revenue this year. The Comptroller’s office is scheduled to
release additional audits of the program. “The
State’s structural budget problems mean that we must ensure public
transparency and ongoing review of expended dollars and lost State revenues,”
Senator Krueger said. “We need
to evaluate whether these models are working and we must exercise oversight
to make sure that programs run efficiently so that the State gets the best
deal for each dollar. Many of the
corporate tax expenditures have been enacted in the name of encouraging
investment and job creation in New York, however the efficacy of the
expenditures have yet to be analyzed and measured. By having the Department of Taxation and Finance submit a
report on all of the State’s tax expenditures and exemptions, we can make
more informed decisions based on the effectiveness of the existing program.” -30- |
|||||||||
