A television ad campaign mounted by Empire State Development Corp. that touts New York as business-friendly does, in fact, have some feeling good. The numbers are positive. The can-do energy is palpable. Robert DeNiro is convincing.
Its message is one often voiced by Gov. Andrew Cuomo during his election campaign and since taking office in 2011: New York is back and open for business.
Both the message of the marketing campaign and its reported $140 million price tag, however, have their critics, such as Orange County businessman Edward Arace, who sees form over substance.
“The point is to get (business) site selectors to take a second look at New York,” said Arace, principal of A&R Global Consulting in Warwick. “Once they take a second look at New York and compare costs to other locations, when they do that, despite all the ad material or puff pieces, New York is still one of the most expensive places to do business.
“Look at cost of housing, sales tax costs, cost of living, property taxes, utility costs in New York. It’s a nice idea to say we are so good; you see these types of ads all over the country, getting good penetration. What happens when you get down to the nitty-gritty of costs here versus someplace else? Does the ad hold up?”
The New York State Open for Business campaign reportedly runs half of its ads in-state and half beyond New York’s borders. National outlets like CNN and cross-border television markets by the dozens confuse the issue of where they are running.
A 10-month study of tax incentives by The New York Times provides data that dwarf the ad campaign’s costs. The state offers some $4 billion per year to make or keep New York attractive to businesses as a place to live and work, according to the study. Incentives include $1.82 billion in corporate income tax rebates and reductions, $1.11 billion in property tax abatement and $871 million in sales tax refunds and exemptions. Manufacturing, the film industry and agriculture all benefit with incentives topping the $100 million mark for each.
The ads are paid for through Empire State Development (ESD), the state’s chief economic development arm, which operates in this fiscal year on a $53.25 million budget authorized by the state Legislature. The ad campaign, though, is not included in the agency’s operating budget.
The New York Times reported that funding comes in part from the state’s public authorities, including the New York Power Authority, New York State Energy Research and Development Authority and Dormitory Authority of the State of New York. The federal government’s $40 million contribution to promote New York businesses and tourism in the Hurricane Sandy disaster area also reportedly will be channeled into the ad campaign.
Of the nearly $140 million marked for the campaign, the state reportedly spent $24 million on ad buys in 2012 and $12 million so far this year.
The governor’s office said it is necessary for the state to market itself.
“New York state has sat on the sideline for years as other states have spent hundreds of millions of dollars making the case that theirs is a place people should visit and do business,” said Melissa DeRosa, the governor’s director of communications. “We are doing everything we can to level the playing field to bring businesses and jobs to the state of New York, and will continue to double down on those efforts as long as this governor is in office.”
“It has to be a substantive campaign with real updates and news,” said John Ravitz, executive vice president of The Business Council of Westchester. “Four to five years ago, businesses weren’t looking at New York. We need to make it more of a level playing field. We lost many businesses to other states.”
Ravitz said the state must use the media to tell its story. He feels the state has found its footing, particularly as a biotech capital. “We’ve seen a lot of businesses come here,” he said. “Hopefully we’re moving in a positive direction. We are trying to make New York friendlier for businesses.”
Michael Durant, executive director of the state chapter of the National Federation of Independent Business, was critical of the campaign, disagreeing that New York is truly open for business.
“We have a long way to go,” Durant said. “The work to be done that the campaign states we’re at is pretty extensive. Our members do not feel as optimistic as the ad campaign leads you to believe.”
Durant said while an ad campaign is important, the state should first work on easing the regulatory and tax burdens placed on businesses.
“An ad campaign will not change anyone’s mind about New York’s business climate,” he said. “It’s a pretty ugly picture. We need to find a sensible balance in the needs of labor and business.
Marissa Brett, executive director of the Westchester County Association’s Blueprint for Westchester, said the state must market itself to further economic development.
“It is a commonly accepted practice to have an aggressive marketing campaign,” she said. “New York being open for business is a great message. We need to increase incentives for businesses and cultivate global partnerships. It’s a winning formula.”
Assemblywoman Sandra Galef, D-Ossining, said the ads are effective and that New York needs to do all it can to recruit businesses to reduce the tax base.
“It’s always expensive when you’re using the media,” Galef said. “We want to show that we’re not the same high-tax, tax-and-spend state as before. We want to show that we can provide low-cost power and that taxes have a cap on them.
“It’s worth a try. You have to do promotion” in media markets. “You cannot have everybody standing on a street corner.”
“We want people to know there’s an upstate,” she said. “There are good energy and water resources. It’s a great place for companies to live. We don’t need a campaign like this for New York City.”