The Innovation Trail's Marie Cusick explains how these obscure economic development tools work, and just how much it can cost taxpayers when they don't work.
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“Everyone right now is saying that we’re broke and that we need to all tighten our belts, and we need to think about cutting spending.”
That’s Allison Duwe, head of the labor-backed, Coalition for Economic Justice.
“But the reality is we’re not broke. There’s money that we”re not collecting from corporations, from businesses, that are receiving significant tax breaks.”
Duwe’s talking about nearly half a billion dollars in tax revenue that’s not collected, because of Industrial Development Agencies (or IDAs).
Half a billion is how much money IDAs gave away in 2009, mainly through
property and sales tax breaks.
They’re supposed to help their local economies, and create jobs.
But in their four decades of existence, IDAs have been accused of everything from failing to comply with state laws, to simply being inefficient.
Bob Ward is the deputy director of SUNY’s Rockefeller Institute of Government in Albany. He also served on the board of directors for the town of Bethlehem IDA for five years.
Ward believes the government’s role in economic growth is often overstated.
“IDAs are involved in maybe a few tens of thousands of jobs created each year. Many of those jobs would have been created whether the government, or a quasi-governmental agency were involved anyway.”
You could think of IDAs as local job creation machines. But despite some reform efforts over the years, IDAs don't always work.
In 2008, over half of all the IDA projects in New York State were expected to
create fewer than 10 jobs.
Richard D'Attilio is the executive director of the Broome County IDA. He says he looks beyond those jobs numbers, toward the long-term benefits for the community.
“A Lot of elected officials really need to talk about jobs. And From my perspective I talk about the whole package. And I believe investment is as important in the community as the job creation.”
In recent years, many New Yorkers have found it tough to find a job, but it's certainly not too tough to find an IDA.
There are currently 115 of them around the state, sometimes more than half a dozen in the same county. And in some cases, IDAs have been accused of working against each other when courting companies, as State Comptroller Tom DiNapoli points out.
“There can be some overlapping jurisdictions, and they’re certainly not meant to raid each other, but sometimes those issues have come up.”
That's why reform advocates say that it’s time to take another look at IDAs.
Kristi Barnes is with the Alliance for a Greater New York, an advocacy group based in New York City.
“Where people see that hitting home is really in their property tax levies, in their school taxes. And you know, who’s actually paying the tax burden? Where it’s being shifted from big companies onto everyday working families.”
Comptroller DiNapoli agrees that New York needs to re-think its IDAs.
“I do think there needs to be a more clear state strategy on how what they’re doing is integrated into a broader approach to economic development in our state.”
The Comptroller recently issued a report assessing the state’s economy and found its recovery is slower than expected.
So it may be hard to argue against anything that could create a job, even if it doesn’t always work.