Top National Expert on New York’s $11B in Corporate Subsidies: “Forget the Mega-Deals”  

Investigative Post’s Jim Heaney sat down with Good Jobs First executive director Greg LeRoy recently to get his take on economic development subsidies in New York state, and the full half-hour podcast is now up. Some key takeaways from LeRoy’s talk include:

• The subsidy-hunting industry was born in New York State in the 1930s, says LeRoy, with the launch of the Fantus Factory Locating Service, which “helped thousands of companies over the next several decades run away from the Northeast and the Midwest to the south and in some cases offshore.“ (There are now more than 300 such site consulting firms.) LeRoy says they invented the now common strategy of making sure the public does not know whether a company is choosing a location for the subsidies or just taking money for a place it would have chosen anyway: “The public just knows that companies are asking for a lot of money and one community gets lucky and gets the jobs, even if they put too much money on the table. Nobody really knows what was in the company’s mind.”
• Independent research has found that between 6 and 25 percent of company location decisions are influenced by government incentive programs — meaning “the other 75 to 94 percent were windfalls” for company profits.
• Amazon has been a poster child for getting something for nothing, extracting subsidies — including $124 million from Niagara County — for building local warehouses that it would have had to build anyway to keep up with its next-day delivery guarantee.
• Micron’s chip plant near Syracuse will get billions of dollars in federal tax credits, but also potentially more than $10 billion in New York State subsidies — despite U.S. Department of Commerce guidance that cautioned against giving the money directly to chip companies, and instead use it to build infrastructure and a reliable workforce.
• The absolute worst return on investment from government subsidies comes from film production tax credits, where “there’s no credible research from any place showing that any state has ever gotten back more than 20 cents on the dollar.”
• Despite Western New York’s plethora of development authorities dispensing subsidies — Buffalo and Niagara Falls alone have eight overlapping IDAs in one two-county metro area — it remains an economic wasteland, one that if it were its own state would be fourth-poorest in the nation. One big problem: IDAs have a huge incentive to hand out more money whether it helps the economy or not, because “they take a cut of those transactions and transaction fees, which comprises 80 to 100 percent typically of their revenue base for their payrolls.”

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More NY corporate giveaway news from this week:

• A class action suit in Queens charges that a property owner and manager attempted to evade rent regulations for a Long Island City building that received state 421-a tax breaks in exchange for keeping rents down. The landlord, says the suit, offered tenants at the Alta LIC tower reduced rents to move in during the COVID housing downturn in 2020, but forced them to accept one-time discounts while registering the apartments at higher rents — allowing the landlords to rake in a windfall once housing demand rebounded. The suit resulted from an investigation by Housing Rights Initiative, one of many by the nonprofit that have unearthed similar alleged infractions; attorney Lucas A. Ferrara told Law360 that “this kind of misconduct isn’t a rare misstep — it’s become a business model.”
• Syracuse.com looks further into New York State’s cuts to the EmPower+ program that offers energy efficiency upgrades for low- and moderate-income households, profiling a medical resident in Syracuse who cut his sky-high electric bills with the help of $10,000 in insulation and high-efficiency appliances. NYSERDA director of home modernization Courtney Moriarta told the news site that the program had been “burning too hot” and needed to be pared back “to the budgets that we have” — after the state legislature cut its funding for the program from $200 million in 2023 to zero in 2024. (It restored $50 million this year.) If you’re a data center, though, New York is happy to provide you with all the electricity you need, even if it means building a new nuke plant to do it.

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