Subsidy Sheet: When we subsidize corporations, what do we lose?
Last week, we detailed the $4.4 billion in new tax credits that NYS is likely to approve as part of the budget in the next couple of weeks. In today’s edition, we’ll explore just what those handouts are costing. When we give Disney millions of dollars for The Lion King on Broadway, what do we lose?
An important note: The new reimbursable tax credits appear as authorizations in the state budget, not as appropriations or expenditures. This means they are not included as spending or expenses in the tables, charts, and bottom-line budget summaries, nor in the state’s five-year financial plans or reports on future liabilities. Instead, reimbursable tax credits – which are functionally large grants of taxpayer funds to big companies – are treated like the state’s over-withholding of income tax from your paycheck. When you get your money back from the state, it comes from a revenue fund that taxes get paid into before that revenue is transferred to the state’s general fund. Somehow it is constitutional for the state to pretend reimbursable tax credit payments – which are taxpayer dollars going to a big company – is the same thing as you getting your own withheld money back.
We gripe about this a lot, but keeping these subsidies off-budget is crucial to their political survival. If reimbursable tax credits were counted as on-budget spending, they would compete with schools, hospitals and local governments for funding. As it is, out of sight is out of mind, and other Albany interest groups that count on state aid do not perceive reimbursable tax credits, like the soon-to-be-$800-million-a-year film/TV production credit, as competitors. They should, and it is pitiful to see local governments begging for funding while the state splurges on $4.4 billion in NEW reimbursable tax credits.
Off the cuff, here are a few of the better places the $4.4 billion could go:
- $500 million to replace all of the lead pipes in Buffalo
- Covering the $50 million that 400 NYS mayors say they need to deal with federal budget cuts and rising local costs
- Part of the $2 billion in recurring, annual revenue needed to finance borrowing to close the $35 billion gap in the MTA’s 2025-2029 capital plan
We urge the Governor and Legislature to spend more time focusing on proven investments for helping New Yorkers and less on ways to help their largest campaign donors.
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More NY corporate subsidy news from this week:
- For Sunshine Week, Good Jobs First writes about the “outrageous secrecy” of corporate giveaways across the country, and NY Daily News connects poor transparency laws to secrecy around the Penn Station redevelopment project.
- The “Buffalo Billion” defendants whose convictions were overturned are trying to get clarity from SCOTUS on being retried by federal prosecutors (Times Union).
- NY Assemblymember Patrick Burke writes a humorous letter to DOGE leader Elon Musk about “the single biggest economic development boondoggle in American history” – AKA the Tesla/SolarCity plant in Buffalo (h/t Investigative Post). It’s still a boondoggle, but the Buffalo News reports that the plant is exceeding jobs requirements (at least for now).
- In Crown Heights, Brooklyn, residents are complaining about the $3,600-a-month “affordable” one-bedroom apartments made possible through the state’s 421-a tax break (Brooklyn Eagle).
- The panel overseeing the Buffalo Bills’ community benefits agreements wants more transparency from the team, which will receive $1.1 billion in handouts from New York (Buffalo News).
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