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Businesses getting
tax breaks must be accountable
Barbara Orsino
Guest essayist
(June 26, 2006) —
Industrial development agencies initially were developed to bring back
businesses to depressed areas in hopes of creating good jobs. IDAs use tax
breaks to lure businesses or keep them here. New York has 115 IDAs throughout
the state, but the system is not working.
A recent Metro Justice
report on our local IDA (County of Monroe Industrial Development Agency) shows
that town governments lost $1.7 million to COMIDA projects during 2002-2004 and
that Monroe County gave up $3.6 million in revenue. School districts in Monroe
County were the biggest losers, sacrificing more than $13 million in revenue.
Town and school boards
have no say in this process; the IDAs don't have to consult them before giving
away their tax revenue. With homeowners paying more in property taxes to make up
the difference (we already pay the nation's highest state and local taxes) and
with school districts laying off teachers, we have to ask what we are getting
for these tax breaks.
Metro Justice found that
more than 63 percent of COMIDA-subsidized projects hadn't delivered the jobs
that the businesses promised and more than a quarter of COMIDA-subsidized
businesses laid off workers after receiving subsidies (yet they kept the
subsidies). Seven other IDAs were net losers of jobs in 2004.
There are other problems
with the IDA system. COMIDA has also subsidized local restaurants, collision
shops, dentist offices, CPAs and spas. Other small-business owners are upset
that the county is helping their competition steal customers. Moreover, the
businesses that are given tax breaks don't have to pay a decent wage. IDAs have
subsidized Wal-Mart, McDonald's and Cintas, an industrial laundry paying $8.50
an hour. Nor do IDAs around the state have to hire local workers at prevailing
wages for IDA-subsidized construction. Why would we use our tax dollars to pay
construction workers from outside the area while local workers are unemployed?
It is unacceptable to have
such a systemic lack of accountability within the state IDA system. We need to
encourage businesses that are going to create good jobs, not businesses that
contract outside our area because they are getting cheap labor or businesses
that are going to cut jobs. We want businesses that are going to commit to our
community, creating jobs that keep people off public assistance.
If the businesses aren't
creating the promised jobs, then towns and school districts need to be able to
recoup their tax revenue. According to George Maziarz, a Republican state
senator who is sponsoring an IDA reform bill: "Companies should not continue to
get tax breaks if they don't live up to their end of the bargain. If
hard-working New Yorkers don't do their job well, they get fired. Companies that
get tax breaks should not be rewarded for failing to meet their commitments."
In order to increase
accountability, there must be transparency. IDA records around the state are
notoriously sloppy. Seventeen IDAs didn't have enough data to assess their
job-creation performance. Here in Monroe County, COMIDA did not report any sales
tax exemptions in 2003 or 2004.
Opponents of IDA reform
say that increasing accountability will impose "too many requirements and slow
the process." Apparently they want to continue the current quick and dirty
process that gives away taxpayer dollars with zero accountability.
During these challenging
times, we need to make sure our elected officials are encouraging the creation
of good jobs. It is time to reform the IDA system.
Orsino is a council
member, Metro Justice.
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