IDAs are draining state, local coffers
Gov. Andrew Cuomo’s proposal to limit the ability of Industrial Development Agencies to grant New York State sales tax exemptions to development projects is a good first step to rein in out-of-control IDAs. More needs to be done to fix them.
In Western New York alone, IDAs hand out tax breaks to a doughnut shop, auto dealerships, a liquor store and dollar stores and hotels – projects that do little to create new jobs and economic opportunities for the region. Such retail projects would not be eligible for state sales tax exemptions under the governor’s proposal. After all, it is called industrial development for a reason.
While the proposal includes other improvements to the IDA system, including requiring approval from Regional Economic Development Councils for projects seeking state sales tax exemptions, it leaves the majority of subsidies such as property, mortgage and county sales tax to the special interests for each IDA board to hand out.
Too often, IDAs provide tax exemptions to companies that fail to create meaningful employment. Instead, they generate poverty-level jobs. This puts further strain on state and local governments to pick up their slack, which turn to area taxpayers to make up for the lost revenue from IDA deals. This leads to pressure to cut essential public services.
To stop IDAs from draining local and state coffers, the state’s elected leaders should fix this failing system. Economic development agencies must be made to prioritize companies that generate family-supporting employment. Companies that fail to produce the jobs they promised should be required to give the money back. Ordinary citizens should be able to see what IDAs are doing with their tax dollars and have a voice in the process.