Subsidy Sheet: Hochul dragging feet on subsidy transparency bills
1. Reinvent Albany and nearly 30 other groups urged Governor Hochul to sign a bill that would require Community Advisory Committees (CACs) to meet publicly (NY1). Empire State Development, the state’s “economic development” arm, has provided info about the Penn Station deal to CAC members but not to the public, whom CACs are supposed to represent.
From our memo:
For the CAC for ESD’s Penn Station Area project, it was not until after a FOIL request was filed for CAC materials that ESD posted a portion of the materials provided to the CAC on its website, months after this information was first made available to CAC members … This means that ESD has at times only provided information regarding the spending of billions in taxpayer dollars to a small group of individuals who in theory represent the community, but has not shared this information with the public at large in a complete or timely manner.
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2. The Erie County Industrial Development Agency is considering giving $13 million in tax breaks for construction of a $62 million factory – more than 20% of the project’s cost (Investigative Post). County Executive Mark Poloncarz, however, has said the deal is a no-go.
“Distribution centers are located based on the market they serve and access to transportation,” [Reinvent Albany Senior Research Analyst] Elizabeth Marcello said. “Every dime these guys do not pay in taxes is a dime more existing businesses have to pay for basic services.”
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3. The Supreme Court appears set to yet again limit the federal government’s ability to prosecute corruption – and this time, it involves a Cuomo-era NY subsidy scandal (Times Union). Cuomo’s right-hand man, Joe Percoco, along with numerous other donors and officials, were convicted of wire fraud in 2018, but are likely to see their convictions overturned, Percoco’s on the basis that he was not officially a government employee at the time of taking a bribe. As the Times Union and NY Daily News editorial boards note, it won’t be difficult for corrupt politicians to exploit the ruling: They can simply have outside “non-government” allies do the dirty work.
From the Times Union editorial:
If justices toss Mr. Percoco’s conviction, it would open a massive loophole for dishonest government officials to exploit. Just make sure to funnel corrupt activities through an outside associate, and voila! — prosecutors would find it much harder to build a case. Toss in a measure of plausible deniability, and everyone’s off the hook.
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Other subsidy stories from this week:
- The Investigative Post also wrote about subsidies for high-end apartments in Erie County.
- Ross Barkan writes about the fuzzy subsidy numbers in the Queens soccer stadium deal (Crain’s).
- At Field of Schemes, Neil deMause writes about how tax breaks for corporations are virtually identical to cash expenses.
- A judge ruled that Con Edison isn’t eligible for a $13 billion property tax refund (Crain’s).
- Business writer Peter Coy explores place-based aid’s potential to alleviate poverty, as opposed to Opportunity Zones (NYT).
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Liz’s Library
Welcome to Liz’s Library, where our Senior Research Analyst Elizabeth Marcello highlights timely research on corporate welfare.
“No evidence that “firm-specific tax incentives increase broader economic growth at the state and local level.” Slattery and Zidar (2020) evaluate state and local business subsidies including state corporate tax credits, state tax credits, and firm-specific tax credits in the U.S. Specifically, the authors examine the spillover effects of such credits in addition to the trade-offs involved with using them. They find that although localities often use business subsidies to attract and retain firms that will have high spillover effects (i.e., grow the economy), the evidence on spillovers is mixed. Slattery and Zidar note that if subsidy deals do not lead to high spillovers, justifying these incentives requires substantial equity gains, which are also unclear empirically. This suggests that there may be potentially large gains from reforms that direct resources to where efficiency and equity gains are largest.
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Fun fact: Despite skyrocketing property tax abatements, New York State’s labor force decreased by 1% from 2011 to 2021 – compared with a nationwide increase of 5.1%. Only three of the state’s 10 labor markets (Long Island, New York City, and Hudson Valley) grew. New York is ranked 40th in the country for working age people with jobs.
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Another Heaney shout-out! Thanks to the Investigative Post team for all your great work.
If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker and Elizabeth Marcello, and edited by John Kaehny. Please send questions and tips to tom [at] reinventalbany.org. We look forward to hearing from you!