Watchdog Testimony Calls for Legislature to Make Fact-Based Policy, Curtail Corporate Subsidies
Reinvent Albany advocates for open, accountable New York government and fact-based public policy. Thank you for inviting our testimony today. We have three broad points to make about New York State economic development policy and spending.
First, corporate subsidies do not equal economic development. Independent researchers have repeatedly shown that state and local investment in education, child care, public transit, transportation, and power infrastructure increases the economic well-being of the average person far more than taxpayer handouts to corporations.
Second, corporate subsidies may be off-budget, but they are not free to taxpayers. The best estimate is that New York State and local governments are spending a combined $11 billion a year on corporate subsidies, with $4.5 billion coming from the state. The most expensive subsidy programs are in the form of reimbursable tax credits that are functionally state grants to individual businesses. You would not know it in Albany, where swarms of lobbyists shill for corporate handouts, but there is an overwhelming consensus among independent experts across the political spectrum that the vast majority of economic development subsidies are a waste of taxpayer dollars – here are 25 of the most important independent studies.
Third, subsidy math does not add up. One million in tax dollars spent on public infrastructure buys a million worth of new jobs + one million in new public infrastructure. If spent on corporate subsidies, you get the jobs but no public benefit. Take Buffalo, which needs to spend a billion dollars replacing an enormous backlog of lead water pipes. Coincidentally, the Tesla/Riverbend plant in Buffalo hit state job targets a decade after it got a billion dollars in public subsidies. If the State gave Buffalo that billion in 2015 to replace lead pipes, Buffalo would now have lead-free water and have provided 1,700 people with good jobs for more than a decade. The logic of subsidy seekers is that, “but for” subsidies, businesses and jobs would not exist. That’s simply false, and historically the fastest growing segments of New York’s economy are the least subsidized.
Specific to FY 2027 Executive Budget and One House Proposals
Today, Reinvent Albany is asking you to make fact-based policy and curb wasteful and unjust corporate tax subsidies that take taxes paid by average New Yorkers and puts it in the pocket of the wealthiest corporations and their investors. Regarding the Governor’s proposed FY 2027 budget, we urge you not to waste even more taxpayer dollars:
- Reject $150 million in new subsidies to Broadway.
- Reject $100 million in new POWER-UP likely for data centers.
- Pass S3340 (Gianaris) / A3246 (Dinowitz) to decouple NY from Trump Opportunity Zone program before it sends billions of dollars to out-of-state luxury apartments – forever.
- Renew funding for hugely successful Orange County IDA monitor.
- Pass the Stop Climate Polluter Handouts Act ((S3606-A (Krueger) / A3675-A (Simon)), which ends $336 million in fossil fuel subsidies.
- Wean NY off film/TV subsidies.
1. Reject $150 million in new subsidies to Broadway.
Six years ago, there was no Broadway tax credit. The onus was on Broadway producers to fund their own productions, come up with creative ideas, and make them profitable.
Today, that is no longer the case. Broadway producers have received about $400 million in state payouts, and with hardly any required public reporting from Empire State Development. Productions that are already self-sufficient – such as The Lion King – have received at least $3 million from the state.
While the Governor’s Office says “campaign donations have no impact on government decisions,” New Yorkers should wonder why the Governor’s budget includes more Broadway tax credits after numerous Broadway producers made five-figure contributions to the Governor’s campaign.
It makes no sense for New York to give tax subsidies to productions owned by billionaires. We urge the Legislature to reject these subsidies.
2. Reject $100 million in additional POWER-UP subsidies.
The Governor’s budget includes an additional $100 million for the Promote Opportunity with Electric Readiness for Underdeveloped Properties (POWER-UP) program. Though this was envisioned as a $300 million program (and this is the second tranche), legislators should reject continued funding for utilities and authorities supporting “high-load” customers, meaning those who consume a lot of energy, such as high-tech manufacturing for semiconductors and data centers. The program can also help support businesses working on renewable energy or life sciences, but it’s illogical for the program to devote even more than the billions it already has to data centers and chip fabs.
Not only should the State forego paying for infrastructure for “high-load” users, it should prohibit these companies from receiving ReChargeNY and other NYPA benefits for cut-rate electricity. “High-load” users must pay for their own electricity without shifting costs to residential households while being encouraged to identify ways to use less electricity, which is undermined when they receive subsidized energy. At a time when there is a climate change emergency, the State should not even contemplate diminishing its renewable energy use targets until it ends all subsidies for infrastructure and energy use by “high-load” users in addition to the $334 million in support for the fossil fuel industry.
3. Pass S3340 (Gianaris) / A3246 (Dinowitz) to decouple NY from the Trump Opportunity Zone program before it sends billions of dollars to out-of-state luxury apartments – forever.
The Governor’s budget wisely decouples New York State and City from parts of the federal tax code, as it’s true that the new provisions involving research and production property will cost NY billions of dollars in revenue. We urge you to add a provision also decoupling New York from the federal Opportunity Zone program, which will cost NY up to $424 million annually from 2029.
Until the passage of H.R. 1 last year, Opportunity Zone investments were scheduled to end on December 31st this year, with tax breaks ending in 2047. Thanks to the changes in Trump’s budget bill, those investments and tax breaks can now continue to the end of time.
Since NY mirrors the federal tax code, this means that NY will be sending its tax revenue out of state indefinitely, since NY-based investors can write off their investments in Texas, Alabama, and pretty much anywhere when filing their taxes. Countless studies have shown that most Opportunity Zone investments go to luxury real estate, which is the most profitable – meaning that NY tax revenue is helping build high-end condos with indoor golf, tiki bars, and dog spas. As our report, Guns, Oil, and Crypto showed, NY is also likely funding businesses that contradict its own policy goals, as OZ businesses have included gun sellers and crypto mines.
Opportunity Zones are a ticking time bomb that will lower future state revenues and a complete waste of money for New York. We urge you to decouple from the program.
4. Renew funding for hugely successful Orange County IDA monitor.
The FY 2026-27 budget should fund a three-year extension of the Orange County Industrial Development Agency monitor. The monitor’s last two years have been a major success and saved both Orange County and New York State taxpayers tens of millions of dollars that would have otherwise been lost through unwarranted and wasteful tax breaks – including $80 million in subsidies for an Amazon logistics facility of the type that company officials have previously admitted are located based on access to markets and transportation networks, not government subsidies.
Prior to the monitor’s appointment in 2024, the Orange County IDA was consumed by a major corruption scandal, politicized and publicly condemned for poor decision making. Many of our groups strongly supported the provision in the FY 2023-24 budget that created the monitor and gave them the power to attend all IDA meetings, review contracts and plans for financial assistance, and reject contracts or plans for financial assistance if any violation or conflict of interest was found.
5. Pass the Stop Climate Polluter Handouts Act (S3606-A (Krueger) / A3675-A (Simon)), which ends $336 million in fossil fuel subsidies.
The Senate has included a version in their budget proposal for the last two years. State subsidies for fossil fuel completely contradict the State’s renewable energy goals and should be ended before even contemplating moving the goalposts on renewable energy targets.
6. Wean NY off film/TV subsidies. NY State wrote nearly $1 billion in reimbursement checks to Hollywood producers in 2025.
2025 is likely to be the second consecutive year that state film/TV tax credit spending exceeds $1 billion, with the total hitting $900 million after Empire State Development released the Q3 totals. Part of this is due to a backlog from the pandemic, but the state has shown no appetite for reducing its subsidy handouts – it’s practically a budget tradition at this point that every couple years, Governor Hochul will propose raising the cap, and the Legislature goes along with it.
There’s no logic for this – the state’s own commissioned study by PFM Group found that for every dollar the State spends on the program, it gets only 31 cents back. ESD, in response, commissioned its own REMI analysis arguing that the actual return, when factoring in state and local tax revenues, is $1.60. But this claim is specious – using the assumption that every film/TV job is due to the subsidy, it compares the amount of projected credits with income tax from the jobs using an economic multiplier that is grossly exaggerated. And even using this baseless approach, ESD still finds that the state itself gets only 60 cents back.
Rather than grasping at straws to justify the subsidy, the State should find ways to wean Hollywood mega-moguls off it and channel the nearly $1 billion in annual funds to clean water, public transit, and workforce development programs that result in a higher return on investment.
Thank you for your consideration.