BUFFALO’S BUSINESS
Plan shows all jobs aren’t equal
Published: January 10, 2010, 12:30 am
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Idon’t know if anything will come of Gov. David A. Paterson’s proposal to replace the state’s controversial Empire Zone economic development program.
After all, the Excelsior Jobs Program is the brainchild of a politically embattled governor who is at odds with his own Democratic Party, which just happens to control both houses in the State Legislature.
But no matter what happens, it was heartening to see that the proposal breaks away from the historic focus that state and local economic development programs have had on the number of jobs that are being created by a project.
Instead, Paterson’s proposal makes a significant stride forward by putting the emphasis on the quality of the jobs, not the quantity.
It is the long overdue recognition, as Empire State Development chief executive Dennis Mullen says, that all jobs are not created equal. A job that pays $10 an hour is not the same as a position that pays $30 an hour.
That’s just common sense, but it’s an element that has been sorely lacking from the formulas that are used to dole out lucrative incentives to businesses across the state.
Even the new incentive program adopted earlier this month by the six industrial development agencies in Erie County missed the boat here. While the IDAs’ new tiered incentive program is a significant advancement that offers more lucrative incentives to projects that are likely to have the greatest economic impact and fit best within the region’s economic development targets, it still gives too much weight to how many jobs are being created, and not enough to how much those positions pay.
Not so with the Excelsior program. Its main incentives are based on tax credits offered to companies that create jobs, make capital investments and put money into research and development. And the tax credit based on job creation hinges not on how many jobs are added, but on how big a company’s payroll is.
It’s a recognition that a company that creates 100 jobs that pay an average of $30 an hour pack more of an economic punch that the business that adds 290 jobs that have wages of just $10 an hour.
And because the program is centered around tax credits, it dodges the longtime problem of companies promising the moon to win a lucrative incentive package and then failing to deliver the jobs they pledged. Those broken promises proved to be the undoing of the Empire Zone program, which doled out more than $600 million in incentives to 9,000 companies.
To get the tax credits in the Excelsior program, companies first will have to create the jobs or make the required investments in facilities or R&D.
“They have to take an action to get these funds,” Mullen says.
Another big step in the right direction.
Business officials gave the governor’s proposal generally positive reviews, although, as Andrew J. Rudnick, the president of the Buffalo Niagara Partnership, says, “There are some devilish details to be sure.”
State officials say they think the incentives are enough to overcome New York’s high taxes and other disadvantages. Rudnick and Brian McMahon, the executive director of the New York State Economic Development Council, are concerned that funding will be too tight, given the state’s budget woes. Paterson administration officials concede the program will have funding caps, although they won’t say what they are.
It all could be moot, since the embattled governor likely will have a hard time finding support in a legislature he is painting as the bad guy behind the state’s troubles. But hopefully, these good ideas can rise above the fray.
drobinson@buffnews.com
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