Subsidy Sheet: Departments of Free Riding – Unaccountable IDAs Give Away $1.7B in Town, County Subsidies a Year


How is it that local taxes in New York are so high and yet so many basic public services are underfunded? Well, that’s what happens when some taxpayers have to pay all of the taxes and others very little or none. In New York State, local Industrial Development Agencies (IDAs) have the superpower of deciding which businesses have to pay taxes and which can free-ride on taxes paid by others. 

In fiscal year 2020, New York’s 108 IDAs handed out a total of $1.7 billion worth of business subsidies in the form of tax exemptions to private businesses. Unfortunately, information about who is getting subsidies and how much they are getting is not transparent. The state and its localities do not collect data on which businesses are getting subsidies, how much they are getting, and how many jobs they promise and actually create.

The state Industrial Development Agency Act created IDAs in 1969. IDAs are broadly tasked with growing economies and creating jobs, and their boardmembers are appointed by the governing bodies of municipalities or counties. IDAs can acquire, own, and dispose of property; issue debt; own property that is exempt from property taxes and mortgage recording taxes; and make state and local sales tax-exempt purchases in support of projects the board deems worthy. 

New York State IDA projects have ballooned in size over recent years. While the total amount of business subsidies they hand out is growing, according to the State Comptroller, the number of IDA projects has actually been declining. This is part of a longer-term trend in which IDAs hand out bigger subsidies to fewer businesses. 

New York Corporate Welfare This Week

  • BREAKING NEWS: The campaign to stop horse racing subsidies was relaunched. NYS subsidizes horse racing to the tune of $230 million/year and advocacy groups are trying to put an end to the frivolous handouts.
  • EPICly Dumb – Governor Hochul wants to reanimate and rebrand the recently dead Start-Up NY program. Newsday gives a rundown of Hochul’s wacky plans to replace the utterly failed Start-Up NY program with the Extended Prosperity and Innovation Campuses (EPIC) Initiative.
  • Spotify latest heavily-subsidized business to cut jobs. Spotify announced layoffs less than 15 years after Empire State Development promised the company $11 billion in rent subsidies over 15 years in exchange for creating 1,000 jobs and retaining another 832. Wonder if Spotify will pay any of that back? 
  • Genesee County’s bonfire of subsidy insanity. After the state and Genesee County poured millions of dollars into readying the Science, Technology, and Advanced Manufacturing Park (STAMP), both the state and locality are now throwing money at individual tenants
  • Isn’t the real question whether taxpayer handouts pay private developers to convert offices to residences? NYC is abuzz with talks of office-to-residential conversions. Crain’s gives an overview of how that would work and of course, subsidies are a huge piece of the puzzle. 
  • Do the Bills really have to stay in Buffalo? Taxpayers are shelling out $1.25 billion to build, maintain, and operate a new stadium for the Buffalo Bills over the next 30 years. Unfortunately, the lease terms keeping the Bills in Buffalo over that period are pretty lax.
  • Empire State Development is giving $9 million in Excelsior Jobs tax credits to Zinc8 Energy Solutions to create 500 jobs in Ulster County. 

Fun fact: With 535,000 residents, the New York City Housing Authority (NYCHA) would be the second largest city in New York State. (Buffalo is next with 283k residents.)

Thanks to the Investigative Post for another shout-out! They especially liked our rundown of business subsidies announced in the State of the State. We’ll be keeping a close eye as details about these subsidies are made public in next week’s Executive Budget

If you got this from a friend, sign up here. Subsidy Sheet is written by Elizabeth Marcello and edited by John Kaehny.