Subsidy Sheet: New York provides massive corporate subsidies through discounted energy

Four million dollars to create one job? New York provides massive corporate subsidies through discounted energy.
Two weeks ago, Reinvent Albany publicized a proposed subsidy deal with Plug Power in upstate Genesee County. We estimated the deal would cost taxpayers a stunning $1.7 million per job. Buffalo’s Investigative Post dug deeper and determined the Plug Power deal, if approved, will actually cost an astonishing $4 million per job.

How did the Investigative Post reach that number? By calculating the cost of discounted power.

Power subsidies are a key part of Governor Cuomo’s economic development programs, and many of his press releases claim that the subsidies have kept thousands of jobs in the state of New York. But the state provides little information on how much power subsidies cost New York in tax revenue. The Governor’s press releases rarely disclose the monetary value of power subsidies. The New York Power Authority’s website also does not provide any quick answers.

We do know the companies that receive power subsidies are very large, and that they receive a lot of power. According to the Northwest Power and Conservation Council, one megawatt can power about 800 homes for a year. In other words, in 2019, JPMorgan Chase received enough power for over 7,000 homes in exchange for creating zero jobs:

Source: Governor Cuomo’s press releases.

The Governor’s press releases argue that the subsidies retain New York jobs, but if we take him at his word, then power subsidies have stopped many companies in New York from packing up and leaving. The NYU Langone deal “retained” 4,000 jobs. JPMorgan kept 22,196. A 2016 release trumpeted power subsidies retaining 400,000 jobs. There are about 8,400,000 employed workers in New York. By the Governor’s reasoning, around 5% of those would be jobless without power subsidies.

This seems extremely unlikely – as we’ve said many times, business subsidies have very little impact on where companies decide to locate. Power subsidies are usually far smaller than business subsidies, so likely have even less of an impact. This means that discounted energy is just another one of the countless ways that companies get to keep dollars that should go to public services.

Nassau Amazon warehouse gets $10 million in tax breaks
Last week, the Nassau County Industrial Agency approved an estimated $10 million in tax breaks for an Amazon warehouse in Syosset. Amazon is planning to build another five warehouses on Long Island – before long, the surface of the earth may be nothing but Amazon shipping centers.

Syosset Park Development LLC, the warehouse developer, will also receive some of the tax breaks, which include $2.8 million in sales tax exemptions and $8 million in property tax exemptions (the latter is according to the local school district). Like Ulster County’s Kingston IDA, only one board member voted against the project, and the local school board also opposed the subsidies.

Reminder (again): Amazon is a trillion-dollar company and Jeff Bezos is the second richest man in the world.

Other Subsidy News

• In the Buffalo News, one observer thinks Samsung might still come to Upstate NY.
• Newsday’s Editorial Board says Amazon warehouse tax breaks will do little to stimulate the local economy.

What we’re reading

• Check out every single one of Good Jobs First’s Sunshine Week posts on state transparency and tax subsidies.
• At Boondoggle, Pat Garofalo writes about how non-disclosure agreements prevent the public from knowing what companies are receiving subsidies.
• Hollywood apparently plans to use tax breaks to make itself the film king once more.

If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany. Please send questions and tips to tom@reinventalbany.org. We look forward to hearing from you!