Cuomo Buys New York 76 New Jobs For $47 Million
In its first full year of operation, a corporate welfare program championed by New York Gov. Andrew Cuomo created just 76 new jobs despite a $47 million ad campaign.
When Cuomo championed the creation of “Start-Up New York” in 2013, he called it a “game-changing initiative” that would “supercharge” the state’s economy, but two years later, the program has turned out to be an expensive failure, Prof. Lawrence Wittner of the University of New York wrote Thursday in Counter Punch.
In June of 2013, Start-Up New York received legislative approval to establish tax-free zones for businesses that relocate on or near state colleges and universities. The tax exemption lasts for 10 years, and supporters hoped the offer would entice businesses to expand or relocate to New York. (RELATED: McAuliffe Sets Record for Business Incentive Deals)
However, in its first annual report on the program in April, Empire State Development (New York’s economic development agency, which administers Start-Up New York) conceded that results have fallen well short of expectations.
By the end of 2014, the state had established 356 tax-free zones at 62 college and university campuses, and 54 businesses had been approved to participate in the program. Cumulatively, the companies committed to creating 2,085 jobs and investing over $91 million over the course of five years. (RELATED: These Billionaires Make Bank When Taxpayers Subsidize Business)
By the end of the year, 30 of those firms had begun operating, but together they created just 76 new jobs and invested less than $1.7 million in local economies. Wittner observes that this amounts to a mere 4 percent of the new jobs they had promised, but ESD officials protest that the program is “still in its early stages.”
Although the program has only cost a little over $50,000 in direct tax benefits, New York has spent nearly $150 million just to advertise the program since its creation, and Cuomo is currently asking the legislature for an additional $50 million, according to the Fiscal Policy Institute.
“When the state spends more on ads than is promised in investment,” the group noted. “One has to question the wisdom of continuing such a program.” (RELATED: States May Have to Disclose Business Subsidy Costs)
Wittner agrees, but adds that Start-Up New York is just one aspect of the general failure of economic development programs in the state. Excluding tax breaks, he points out, Empire State Development spent about $1.3 billion in 2014 to spur the creation of 14,779 jobs—an average cost of $87,962 per job.
Moreover, fully one-third of economic development spending in New York is unrelated to job creation, and state comptroller Thomas DiNapoli recently blasted ESD for failing to ascertain whether its investments are even reasonable.
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