The NY State Senate will hold a hearing Friday, June 24 on the Hochul administration’s Penn Station redevelopment plan, which includes a secretive financing process that could deliver a billion-dollar-plus tax break to Vornado, a major campaign donor. We thank Senators Liz Krueger, Leroy Comrie, and Brad Hoylman for holding the hearing.
Reinvent Albany and government officials have sharply criticized Empire State Development Corporation for keeping financing issues secret, with NYC’s Independent Budget Office saying it is “impossible for IBO to evaluate the financing proposal and quantify its impact on the city and state.”
The Newsday editorial board slams the huge tax breaks that Long Island’s Industrial Development Agencies (IDAs) give to big companies every year. IDAs have attracted increased scrutiny in recent years for their handouts to trillion-dollar companies and general lack of transparency.
Newsday highlights the many reasons IDAs need to be totally overhauled:
- Subsidy recipients often falsely argue that e-commerce companies wouldn’t come to New York without IDA tax breaks. It’s clearly ridiculous to argue that Amazon would build in Pennsylvania to ship to Long Island, an area with 7.6 million residents.
- IDAs are notoriously opaque and don’t even have to notify affected jurisdictions before approving tax breaks. This leaves school districts, for example, little time to respond to the deals. A Comrie/Solages bill that passed the legislature could fix this if signed by Governor Hochul.
- Giving tax breaks to most retailers is illegal in NY, but Amazon is still allowed to receive tax breaks simply because it is an e-commerce retailer.
At Boondoggle, Pat Garofalo has a great summary of recent research showing that e-commerce centers actually do more harm than good to local communities. As Pat notes, there is a Ryan/Solages bill in New York that would prohibit IDA subsidies for e-commerce facilities.
421-a, a state law which requires New York City to give a $1.7 billion annual tax break to real estate developers, is officially dead – at least for now (Crain’s). Though the program ostensibly exists to build cheaper apartments, groups like the Community Service Society of New York have shown how 421-a is actually one of the least effective ways to build affordable housing.
Legislators were reportedly reluctant to renew the program during an election year when they’re getting primaried by opponents of the program. Unfortunately, tax breaks have a tendency to rise from the dead, and the legislature could reauthorize the 50-year-old program next year once elections are over.
In City and State, Nora Carrier writes about other developer tax breaks lawmakers should go after now that 421-a is gone.
Other stories you may have missed:
- Economist Tim Bartik has a new report detailing “How State Governments Can Target Job Opportunities to Distressed Places.”
- New research shows that voters oppose secret subsidy deals (hat tip to Pat).
- Consumer advocate Ralph Nader says it’s “time for a taxpayer revolt against corporate welfarists,” citing our John Kaehny’s comments on the $10 billion Green CHIPS subsidy that the NY legislature introduced and passed in the last weeks of session (Albany Herald).
- From the Onion: “North Dakota Constructs Billion-Dollar Stadium Just In Case Some NFL Franchise Gets Desperate.”
Fun fact: In 1998, Eastern New York was given the marketing nickname “Tech Valley” to promote the area as a competitor to Silicon Valley (Wikipedia). The area has received a large number of subsidies, but it appears that the name never caught on.
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!