Subsidy Sheet: Where’s the open data for NY business subsidies?

New York Needs a Big Dose of Open Data for Corporate Handouts
March 6-14 is Open Data Week, and wow, New York’s government subsidies to businesses could really use a big dose of open data in New York.

Our best estimate is that NY State government spends at least $4 billion of taxpayer funds every year subsidizing businesses. Unfortunately, the public does not know which specific businesses get tax money, what programs are subsidizing them, or whether or not the subsidies produce jobs. It seems like ancient history now, but in August 2020, NYS Comptroller Thomas DiNapoli released an audit detailing Empire State Development’s (ESD) handling of subsidy deals such as Buffalo Billion. The audit found ESD’s initial project assessments lacked sufficient detail and rigorous evaluation standards for project achievements. Predictably, many of the projects’ job creation numbers fell short of the state’s rosy projections. But audits like this can only tell us so much – we still know very little about the many projects outside of Buffalo Billion.

There’s a way that these gaps can be filled: open data for business subsidies. The public shouldn’t need to rely on vague, inconsistent reports from an economic development agency to find out whether New York’s subsidies produce a good return on investment. The public should be able to judge projects on its own – through a database of deals.

The New York City Economic Development Corporation’s database exemplifies good subsidy data. The downloadable spreadsheet has over 140 columns, including tax revenues recaptured, temporary jobs created, and energy tax savings. Here are some of the datasets provided:

• Taxes paid directly by company before assistance
• Tax revenues gained through penalty and recapture
• Tax expenditures run through Relocation and Employment Assistance Program (REAP)
• Job targets for current project
• Job creation estimate
• Number of full-time employees
• Number of employees earning a living wage

The database itself could be improved – there’s no portal that a layperson could use to easily sort through information, and the data itself is only updated once a year. But it’s still leaps and bounds ahead of what open data New York state provides for its subsidies: nothing.

Counting the Days Until a “Database of Deals”
On February 23rd, ESD President Eric Gertler said that New York state’s database of deals would be completed within a “matter of weeks.” Reinvent Albany and other watchdog groups have been seeking a database since 2015 and hope it will be worth the wait. The database is intended to provide data on all of New York’s economic development projects in one place. It’s being created as part of a 2019 compromise deal between Governor Cuomo and the legislature, in which the legislature reportedly agreed not to pass bills mandating its creation.

A paper record of the compromise is not publicly available, but the original database of deals legislation required that the database would include the name and location of subsidy benefit recipients, the total number of employees at all sites of a project, a statement of compliance indicating whether or not benefits have been canceled or recaptured, and much more. There is no guarantee that ESD’s database will include any of this.

Reinvent Albany’s OZ Advocacy Featured in Pat Garofalo’s “Boondoggle”
Reinvent Albany was honored to have our advocacy for the Opportunity Zone Tax Break Elimination Act featured in Pat Garofalo’s “Boondoggle” Substack, which features some of the best writing we’ve seen recently on American business subsidies. Garofalo is Director of State and Local Policy at the American Economic Liberties Project.

In the article, Garofalo covers the “good, bad, and the ugly” of Opportunity Zones (spoiler: it’s mostly ugly) and mentions state efforts to end the tax break:

Four [states] — California, Mississippi, North Carolina, and Massachusetts — have already decoupled their own capital gains tax from anything related to Opportunity Zones, and New York has a bill to do the same, sponsored by state Sen. Mike Gianaris and Assemblyman Jeffrey Dinowitz. It would be a big deal for New York — the world capital of finance and a huge real estate and development market — to break up with OZs in this way […] As several organizations led by Reinvent Albany, including my own, noted in this memo, “Both New York City and State have budget shortfalls of several billion over the next few years, and budget cuts are likely to have a major impact on school districts and social services across the state. Opportunity Zone subsidies cannot be justified in the best of times, so there is no reason why New York should continue forgoing precious tax dollars during a historic budget crisis.”

Many thanks to Pat for the mention – we encourage everyone to subscribe to Boondoggle here.

Other subsidy news

• Genesee County Economic Development Center accepted Plug Power’s application for incentives. We covered the potential deal in last week’s Subsidy Sheet. The incentives themselves have not yet been approved.
• Facebook is getting into the data center tax break game.

What we’re reading

• In the Daily News, NYC Councilmember Brad Lander opines on why real estate subsidy 421-a needs to end. In 2021, the tax break will cost NYC $1.7 billion.

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 [at] reinventalbany.org. We look forward to hearing from you!