Subsidy Sheet: Secret optimist edition, plus latest $100 billion Micron overhype

Here at Subsidy Sheet, we do what we do because we love New York. We are optimists who believe in the power of government investment to make New York a better place to live and work. To us, that means our taxes being invested in world-class public health and education, workforce development, and public infrastructure. We are wonks. We look at data and expert analysis. The cold hard reality is that most of the billions in subsidies New York lavishes on corporations are wasted. 

Still, despite opposing wasteful and irrational state subsidies, we want subsidized projects to succeed. We are not haters – we want New York to prosper. But no amount of hype, hope, and hoopla can change the fact that one year in, the state’s deal to subsidize a Micron chip fab on the outskirts of Syracuse in Clay, New York is not what our state’s leaders claim it is (CNY Central). Governor Hochul claims the fab will “transform the lives of New Yorkers for generations to come,” while Senator Schumer said Micron will “fundamentally transform Central NY’s economy.” 

That all sounds wonderful, but here are the facts as of October 6, 2023:

• The much touted “$100 billion investment” in Micron’s Clay chip fab is a pie-in-the-sky fantasy. A Micron press release – not company financial documents – says this is what Micron intends to spend “up to” over the “next 20-plus years.”
• 2030 is when Micron “plans” to open the first phase of its Clay chip fab at a cost of $20 billion, including $3 billion in federal CHIPS aid.  
• Micron is also seeking state and local tax breaks worth billions – including state-generated electricity at $41 per megawatt hour – far less than the $233 per megawatt hour paid by home and apartment dwellers.
• Will Micron be around in 2030? The chip industry is volatile and rapidly consolidating. Micron’s 4th-quarter report shows FY 2023 year-over-year revenue down 49%. 
• Micron intends to employ 9,000 people at its fab by around 2030 – a lot, but nowhere near the mythical 50,000 claimed by politicians. Most of the “50,000” number is from jobs that would supposedly be created as a byproduct of Micron’s presence. 
• Project boosters imply the new jobs will go to current local residents. However, research by Tim Bartik, the top U.S. expert on job creation, shows that for government-subsidized projects, 4 out of 10 jobs initially go to non-locals, later growing to 7 to 9 jobs out of 10.

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Other NY corporate giveaway news:

• A bill that would extend the federal Opportunity Zone program was reintroduced in the House of Representatives (Bloomberg).
• At Boondoggle, Pat Garofalo writes about how public dollars helped build Amazon’s monopoly.
• Environmental groups urged NYS agencies and Empire State Development to reject subsidies for a plastics manufacturer (Spectrum).
• More updates on NYS and NYC’s “synthetic 421-a” programs (The City).

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If you got this from a friend, sign up here. This week’s Subsidy Sheet was written by John Kaehny, with additional writing by Tom Speaker.

Please send questions and tips to tom [at] reinventalbany [dot] org. We look forward to hearing from you!