Almost lost among the numbers of the contentious state budget process is the fact that New York vastly reduced its top program to provide economic incentives.
The Empire Zone program, which provided $550 million annually in incentives for business development, ended June 30 and was replaced by the Excelsior Jobs program, which will provide $50 million in new annual incentives for five years and then be capped at $250 million in annual incentives.
“This is a huge reduction in resources at a time when New York needs to invest in job growth,” said Ken Pokalsky, the senior director of government affairs for the Business Council of New York State. The Excelsior program “will limit New York”™s ability to compete in the race to create and retain jobs.”
New York state had 82 Empire Zones that, at its peak, involved 9,200 businesses employing some 380,000 people. There are zones in Ulster, Dutchess, Orange, Rockland and Westchester counties in the Hudson Valley. The Empire Zone program supplies $550 million of annual tax credits statewide, in exchange for pledges to create and retain jobs, ideally in poorer, urban areas. Companies who are enrolled in Empire Zones will continue receiving their benefits for the full term of the agreements, generally a 10-year time frame.
Critics long attacked the EZ program as corporate welfare, giving away benefits to firms that actually created few jobs. But supporters called the Empire Zone flawed but essential, and said it was the state”™s most effective economic development tool for attracting companies to New York.
The Excelsior program proposed by Gov. David Paterson in his January budget message was ultimately and quietly adopted by the state Legislature and signed into law June 22. The relatively meager funding reflects the $9 billion budget deficit state lawmakers had to address in the budget process.
The Excelsior Jobs program will provide tax credits to targeted industries, such as biotech and nanotech and implement stringent accountability standards and cap program spending as it seeks to ensure prudent use of taxpayer dollars.
But though the size of the program is smaller, there will be no immediate savings to state coffers, as tax breaks continue from ongoing EZ benefits, even as new Excelsior benefits begin to accrue.
“Savings will be achieved in out years, as the EZ program phases out over next five years,” said Maggie McKeon, a deputy press secretary for Paterson. “Once that is phased out, savings will be achieved, because we are placing a cap on the program itself.”
She said in addition to savings, the program is aimed at targeting key industries, being transparent in who is awarded benefits and diligent in ensuring that job creation pledges made by businesses are achieved before benefits are disbursed.
