Cautious optimism with a healthy dollop of wait-and-see are the predominant reactions to plans for replacing the state Empire Zone program with a new Excelsior jobs program that were outlined by Gov. David Paterson in his state of the state address Jan. 5.
Some observers predict the state Legislature, which must approve the new proposal, will punt the matter into next year, which would avoid making decisions in the current election year. If that were to occur, it could mean that the current EZ programs would be extended beyond June 30, the date the program is currently slated to expire.
As for Excelsior, local officials worry that the new program would not provide for any input from local economic development corporations when state officials are making decisions in awarding benefits to companies under the new program.
Details were expected to become clearer when Paterson releases his proposed 2010-2011 budget Jan. 19.
What is proposed thus far would replace the EZ program with the Excelsior program, “to ensure a more-targeted, cost-effective and transparent economic development initiative,” according to a press release describing the initiative.
The new program would have three main elements, all built around tax credits targeted to companies in high tech and emerging green industries. The main thrust of the program is the job-tax credit that goes to companies that pledge to create and maintain a set number of new jobs for five years.
Unlike the EZ program, the benefits will not be awarded until companies demonstrate they have kept their job-creation pledges. Also unlike EZ, companies will not qualify for benefits if they simply shift jobs from a locale inside New York state, but must create new jobs or bring in jobs from beyond state borders.
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The tax credit will be based on a portion of the payroll costs associated with those new jobs, rather than simply the number of jobs being added or retained. The Excelsior program also would not target any particular geographic area, as the EZ program does.
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The other two pillars of the program are a research-and-development tax credit and an investment tax credit whose parameters would be broadened beyond its current limitation that provides credits only to companies making certain capital investments.
Paterson promised new transparency and increased scrutiny of companies overall performance before any benefits are awarded under the proposed programs. Companies would have to be current with all state and local taxes and in compliance with all labor and environmental laws, and would have to provide information, including annual performance reports, to the Empire Development Corp. to qualify for benefits.
Jackie Fiori, press officer for state Sen. William T. Stachowski, chairman of the state Senate economic development committee, said reaction to the Excelsior idea thus far has been “pretty positive.” But she said Albany is awaiting more details before giving any detailed reaction. She said she is not aware of any plans to extend the EZ program past Election Day.
New York State has an unprecedented election-year calendar in 2010, with the governor, and the entire Legislature facing voters, along with both U.S. senators and its entire House delegation.
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But Ronald Hicks, president and CEO of the Rockland County Development Corp., said he would prefer to see the EZ program extended rather than rush an Excelsior program into being in a contentious political year.
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“I would prefer that they extend it until I trust they can put forth a program that will help this economy,” said Hicks. “That means consensus from both political parties and all three branches (executive, Senate and Assembly) of the state government.”
Hicks said that though it has shown flaws in the past, the Empire Zone programs are crucial in attracting jobs to Rockland County. “EZ is the only thing that is attracting jobs to Rockland,” said Hicks. “If it were not for EZ, we would not be getting any activity.”
“I wasn”™t unhappy with what I”™ve read,” Hicks said, regarding the current version of the Excelsior program being discussed thus far. “But I want to see the details.”
John MacEnroe, president and CEO of the Dutchess County Economic Development Corp. said he is concerned there is no mechanism for state economic development officials in Albany to garner and incorporate local viewpoints when making decisions on awarding benefits under the Excelsior program.
“I think there definitely has to be a local component,” said MacEnroe. “Someone in Albany is not as able to determine what a regionally significant project would be for the Poughkeepsie area as someone actually sitting in Poughkeepsie can.”
He also expressed concern that the research and development funds will largely bypass the Hudson Valley and be awarded in much the same manner as in the past, going primarily to university centers in Buffalo, Albany, New York City and Long Island.
The EZ program currently costs state taxpayers about $600 million annually in tax credits and other benefits and affects thousands of companies statewide. Officials are currently in the process of purging the rolls of companies that cannot prove they are meeting the eligibility criteria they pledged to meet, such as job creation performance, that originally won them admission into the program. Those who can show they are meeting the criteria will continue to receive their benefits through the expiration date of their particular EZ agreement, no matter if a new Excelsior program is adopted this year.
