Five Subsidy Stories You Might Have Missed This Week
1. Gotham Gazette does a roundup of the good, the bad, and the ugly in this year’s budget for “good government” groups, detailing the outcome of Authorities Budget Office funding (good), the Database of Deals (potentially good), restoration of Comptroller Powers (bad), and the Buffalo Bills stadium (ugly).
In an interview with the Investigative Post, our John Kaehny weighs in on the budget’s corruption risks and whether or not Governor Hochul has changed New York’s political culture.
From the interview:
Kaehny: By far the most jaw-dropping surprise is the huge size of the slush funds approved in the final budget. We can document at least $8 billion in new “COVID Emergency” funds that can actually be spent on anything the governor and legislature agree on — and are NOT subject to review by the state comptroller.
2. Reinvent Albany published a memo of support for S1655 (Skoufis) / A5200 (Solages), which would prohibit Industrial Development Agencies from providing subsidies when the recipient is not known at the time of the public hearing for the project. Reinvent Albany is part of the #BanSecretDealscoalition calling for an end to non-disclosure agreements in subsidy deals (check out Pat Garofalo’s recent Boondoggle post on secret deals in Kansas and Oklahoma).
According to a 2019 report released by the NYS Senate Committee on Investigations and Government Operations, IDAs sometimes provide subsidies without disclosing the recipient or beneficiary of those subsidies to the public. IDAs should be transparent and accountable to the communities they serve. The public has a right to know which companies are receiving public funds.
3. The Amazon Labor Union has filed a complaint with the NY Attorney General claiming that the company’s alleged labor law violations make it ineligible for public subsidies(The Lever). According to the article, most NY contracts state that subsidy recipients must comply with federal labor law. It’s unclear how much Amazon could stand to lose, but Good Jobs First’s Amazon Tracker shows that New York State and local governments have given more than $300 million to Amazon since 2014.
As Amazon now faces investigations over allegations that it violated labor laws, the company continues to benefit from lucrative subsidies and tax breaks, even though most of these funds are conditioned on complying with regulations, including labor law. In all, the company has received more than $4.1 billion in subsidies from state and local governments nationwide, according to data collected by subsidy-tracking organization Good Jobs First.
4. An audit by NYS Comptroller Tom DiNapoli found that some private forest owners are receiving an 80% forest conservation tax break without doing much conservation. The Department of Environmental Conservation oversees the 480-a program but has failed to sufficiently monitor subsidy recipients, according to DiNapoli. Just how many programs like this are out there?
The audit examined a sample of 135 of the 6,858 properties in the program and found 45 (33%) were not in compliance with its requirements and may have improperly received the local tax exemption. The landowners of the 45 properties saved approximately $525,745 in local taxes between 2017 and 2019 because the property values were reduced by over $6.1 million annually for land valued at a total of almost $8.2 million.
5. Some fascinating statistics about public misperceptions of business subsidies in this op-ed by David Guenthner and John Mozena (The Hill).The authors detail a new poll showing most Americans believe business subsidies are critical for job creation, despite mountains of evidence to the contrary. But there is hope: When advocates are vocal and on message, the public’s view can change: Most New Yorkers were opposed to the Bills stadium subsidy, for example.
One good place to start with this transparency is to end the ability of economic development bureaucrats to hide information on proposed subsidy deals prior to a final vote. Tennessee and Michigan took positive steps recently by running their electric-vehicle incentive packages for Ford and General Motors, respectively, through their legislative appropriations processes rather than delegating approval to state appointees … In the latter case, the sunlight allowed the media and public to flag concerns about the terms of the deals and motivated legislators to prod the negotiators to ensure the fine print matched the breathless press releases.
CORRECTION: Last week’s Subsidy Sheet erroneously stated that the contractor for a new “independent analysis” of state tax incentives would be chosen by Empire State Development. It will in fact be chosen by the Department of Taxation and Finance. In addition, the contractor will have to be selected on the basis of whether it provides “best value.” It is not simply hired by the Department.
We regret the error and have changed this budget item from something “to lament” to something that “could be good, could be bad.”
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!