BUFFALO’S BUSINESS
IDA reform may spell trouble for local firms
Published: November 22, 2009, 12:30 am
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Imagine this scenario: Chris Koch and other top executives at New Era Cap Co. are sitting down, trying to figure out which of its U. S. factories to keep open, either one in Derby or a sister plant in Alabama.
They paw through stacks of paperwork, comparing incentives, labor costs, taxes and utility rates. They weigh the pros and cons of each facility. They discuss all the intangibles they can think of.
“Wait,” someone says. “A big piece of the puzzle if we stay in Derby are the tax breaks we’d be getting, tax breaks through an industrial development agency. We can’t afford all the strings that are now attached to them. Alabama’s looking better and better.”
That conversation didn’t happen— but it could happen a lot if Gov. David A. Paterson succeeds in pushing through his frightening proposal for IDA reform that would require most companies receiving tax breaks through those agencies to pay workers—and even some vendors— higher wages.
“We were shocked,” says James J. Allen, the executive director of the Amherst Industrial Development Agency. “No one will use the IDAs if that legislation passes.”
IDAs and other economic development officials for years have been battling similar IDA reform legislation spearheaded by Assemblyman Sam Hoyt, D-Buffalo. But Paterson’s proposal puts the embattled governor squarely behind the effort, with his own proposal that would impose even more onerous wage burdens on contractors, as well as many of the companies that occupy those buildings.
At the heart of Paterson’s proposal is a requirement that most companies receiving IDA tax breaks pay “prevailing wages” of at least $14.68 per hour on upstate projects. That wage standard would apply to the construction firms building the facility, as well as any workers at the businesses or non-profit firms occupying those buildings, provided the project employs at least 100 people.
The proposal also targets building maintenance and grounds work that often is done by outside contractors, specifically identifying janitors, grounds keepers and even garbage collectors, as being subject to the higher wage requirements on projects covered by the proposal. Retail workers also would be covered.
Across upstate, projects valued at more than $4.65 million, and receiving tax breaks worth at least $96,115, would be required to meet the higher wage standards. The proposal would cover projects worth at least $10 million by non-profit groups employing at least 500 people.
“It truly would put us out of business, because the costs it imposes on anyone who uses the IDA far outweigh the benefits,” Allen says.
Brian Sampson, executive director of the pro-business Unshackle Upstate coalition, called the Paterson proposal “shameful.”
“Our economy is in the worst shape it has been in since the Great Depression,” Sampson says. “How can the governor propose a measure that will destroy hope for economic recovery in New York?”
The answer to that is politics. The politically- weakened governor is pandering to the labor unions that have hijacked the IDA “reform” effort into a push to force contractors working on taxpayer-backed projects to pay higher wages.
Whether the governor has the political clout to push his proposal through the log-jammed state Legislature remains to be seen. The similar IDA legislation backed by Hoyt in the Assembly and state Sen. Antoine Thompson, D-Buffalo, in the Senate has cleared the Assembly twice in recent years, but never made it through the more narrowly-divided Senate.
That’s one instance where it’s a good thing that very little gets done in Albany. With the governor’s IDA proposal, we can only hope it stays that way.
drobinson@buffnews.com
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