Four Subsidy Stories You Might Have Missed This Week
1. Reinvent Albany and six watchdog groups have called for New York State to fully fund the Authorities Budget Office, which oversees nearly 600 state and local authorities spending at least $40 billion a year (Daily Star). View the original letter here.
Several local industrial development authorities have been embroiled in corruption scandals, and more effective oversight could deter fraud and waste and ensure compliance with procurement guidelines, [Reinvent Albany Executive Director John] Kaehny said … “Those places are outside the government that you vote for, and they are making all these decisions about borrowing money, giving tax abatements and giving away big subsidies without it going through your county legislature, town council or mayor.”
2. The City of Rochester is planning to renew its participation in the state 485-a tax break – widely viewed as a handout to real estate – before the new mayor and council are sworn in next year (New York Focus).
A New York Focus analysis of property tax records for the 29 Rochester developments that have received 485-a exemptions found that they will cost the city at least $1.8 million in foregone taxes this year and could add up to more than $20 million by the time the last of the current exemptions expire.
3. General Electric received hundred of millions of dollars in subsidies – including from New York – but has outsourced many of its jobs overseas (Time).
In the late 2000s, for example, GE took advantage of a $5 million state grant and a series of tax breaks to announce a multi-million dollar Schenectady renovation project that brought at least 500 high-paying jobs. Half of those jobs focused on developing renewable and alternative energy sources, making Schenectady the hub of GE’s burgeoning renewable energy work … But four years later, the company stationed the headquarters of its new venture, GE Renewable Energy, in Paris rather than New York state.
4. At Boondoggle, Pat Garofalo writes about a CEO who allegedly admitted his company never planned to leave Utah – despite saying they would relocate without subsidies. Garofalo notes that in New York, State Senator James Skoufis has called for an investigation into whether Medline made the same false claim.
Designing a real test that can determine which corporations would move elsewhere “but for” a particular subsidy, as the term of art goes, and which are gaming the system is really hard. As Good Jobs First, put it, a “but for” requirement is “a frequently-abused rule that is almost impossible to verify and has more to do with covering politicians’ backsides than preventing needless giveaways.”
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!