WEALTHY WELFARE: New York Sends Millions To Massive Rich Company
The state of New York is planning to spend nearly $5 million to subsidize a new headquarters for one of the country’s largest private employers.
In a blog post for Art Voice on Monday, Paul Wolf reports that Rich Products of Buffalo, NY will receive “$4.9 million in capital grants and tax incentives” for a recently completed $25 million headquarters expansion, and another “$419,000 is anticipated to come through the Erie County Industrial Development Agency as well.”
According to Forbes Magazine, Wolf claims, “Rich Products is the 140th largest private employer in America,” and had revenues of $3.3 billion in 2014.
Moreover, at the time of his death in 2005, company founder Robert Rich, Sr. was personally worth an estimated $2 billion, “and his company was the largest family-owned food products company in America.”
“You would think that a company as large and successful as Rich Products could pay their own way,” Wolf says, but as he points out, “corporate welfare in New York does not have any limits.” (RELATED: Virginia Legislators Resist Bailout of ‘Corporate Welfare Fund’)
Rich Products will receive a $2 million grant from Empire State Development (ESD), a government agency designed to promote business investment, and another $2.9 million in tax credits through the Excelsior Jobs Program.
“As a result of the project, the company has retained 651 jobs and created 74 new jobs,” ESD claimed in a year-end press release.
ESD officials assert that, “Rich Products considered locations in Florida, Georgia, Tennessee, Toronto, and Hong Kong for the expansion project,” making the subsidies necessary to keep the state from losing hundreds of jobs. “Without ESD’s assistance,” the press release claims, “the project most likely would have taken place outside of New York state.”
Overall, the ESD board of directors “approved nearly $9 million to fund nine projects generating economic growth and opportunity across New York State” in 2014, which together “will leverage over $38 million in private and other public funding.” All told, the subsidies “will create 68 new jobs and retain 677 existing jobs,” the press release claims.
Jason Conwall, ESD’s press secretary, told The Daily Caller News Foundation that the agency’s cumulative job projections are lower than the total number of jobs created or saved by the subsidized projects because ESD only includes jobs that are directly affected by the grants it awards. (RELATED: Politicians Eager to Subsidize Craft Brewers)
In the case of Rich Products, for instance, New York awarded $2.9 million in tax credits for the creation of 17 new jobs, and even though the company ended up creating 74 new jobs with the project, ESD only counts the original 17. (RELATED: States May Have to Disclose Business Subsidy Costs)
“The ESD board of directors is subject to the Open Meetings law, so all materials are posted online,” Conwall told TheDCNF, adding that all of the board’s decisions are subject to public hearings and review by the state’s Financial Control Board.
As a result, he said, “the board is very careful about the jobs it claims to save or create,” and is attentive to ongoing projects, ensuring that companies meet job creation expectations before ESD disburses funds.
Wolf, however, contends that, “the New York State Constitution explicitly states that government funds are not to be provided to private businesses,” but politicians have found ways around the ban in order to “make friends with the wealthy.”
“Small businesses have to take out loans” to finance new projects, Wolf points out, “but billion dollar companies get taxpayer funded grants.”
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