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Tax Breaks for NY Businesses Grew 16% in 2011

11:21 PM, May 7, 2013   |    comments
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By Joseph Spector
Albany Bureau Chief

ALBANY, NY--  Economic-development agencies run by local governments doled out $1.5 billion in tax breaks to 4,486 projects in 2011, an increase of 16 percent in net exemptions since 2010, the state Comptroller's Office said Tuesday.

The Industrial Development Agencies, the local job-creation programs run in counties, supported nearly 4,500 projects and provided $560 million in net tax exemptions in 2011. The number of job gains through the agencies grew by nearly 36,000, up nearly 20 percent since 2010, the report said.

The report found that the often-overlooked IDAs gave out tax breaks to some projects where few if any jobs were created. And the number of breaks to retail projects - which often provide low salaries to workers - has steadily increased.

For example, Monroe County had the largest active tax break - for the Medley Centre mall project - while the Hudson Valley had among the highest breaks per capita.

For the Medley project, a foundering rehabilitation of the former Irondequoit Mall, no jobs have been created, despite $1.5 million in tax breaks, the report said.

"At a time when many counties, cities and towns are facing serious fiscal challenges and stagnant economies, the need for IDA projects to generate jobs for New Yorkers and expand the local tax base is especially urgent," Comptroller Thomas DiNapoli said in a statement.

IDAs have been criticized for lack oversight as they dole out big breaks to businesses in the hope of job creation.

Last month, the state's Authorities Budget Office said in a report that the IDAs gave out $5.6 billion in tax breaks to local projects between 2008 and 2011. The exemptions increased by 50 percent between 2010 and 2011, the report said.

DiNapoli's report, however, said $917 million in payments in lieu of taxes made by businesses offset most of the tax breaks in 2011. So the net breaks totaled $560 million - an increase of $77 million, or 16 percent, in 2010.

Since 2008, IDAs have been able to provide tax breaks to retail projects, and the number of them nearly tripled since them - from 36 projects to 105 projects in 2011. The state budget this year again limits the use of tax breaks for retail projects.

DiNapoli warned that tax breaks for retail stores is risky and produces low salaries; the average starting salary for a retail salesperson is $17,250, state data show.

DiNapoli said the Monroe County IDA is supporting five projects for Wegman's Food Markets, a supermarket chain.

Four of the five largest retail IDA projects in 2011 were for shopping malls, including Medley Centre. The fifth top project was $600,000 through the Chemung County IDA for a CVS distribution center, which was approved in 2009.

The Capital District and the Mid-Hudson region had the highest level of IDA exemptions per capita: $78.03 per person in the Albany area and $67.49 in the Hudson Valley, which includes Westchester, Rockland, Putnam and Dutchess counties. The statewide average was about $29 per person.

DiNapoli said the tax breaks can be helpful to create jobs, but also limit the amount of taxes a municipality can collect -- which is risky at a time of limited revenue for governments.

"Tax breaks come at a price," DiNapoli said, "and IDAs need to deliver on their promises to taxpayers."

For more information, visit http://www.osc.state.ny.us/localgov/pubs/research/ida_reports/2013/idaperformance2013.pdf

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