IDAs retain right to give out state tax breaks in budget win

Toban B./via Flickr
March 27, 2013

New York's numerous economic development bodies will still have the ability to give out state-level tax breaks in a deal struck with Gov. Andrew Cuomo in state budget negotiations.

It's a win for the roughly 115 industrial development agencies, or IDAs, around state, that claimed shifting oversight of state sales tax exemptions to the Regional Economic Development Councils would slow down the development process.

Cuomo argued in his proposed budget that the change would improve economic development and save the state upwards of $14 million a year.

The power shift was removed from the state budget this week under a compromise between lawmakers and the IDAs.

Replacing the regional council oversight will be a return of a ban on giving tax exemptions to most retail projects, according to Brian McMahon, executive director of the New York State Economic Development Council, a group representing IDAs.

"We think this is good outcome," McMahon said. "We think it will actually save the state more money in sales tax abatements than they had budgeted in the governor’s proposal."

Exemptions for retail projects will still be allowed at tourist destinations and in severely economically depressed areas.

"The outcome will, I think, address many of the concerns I think the governor was interested in addressing," McMahon added. "And I think it will do so in a way that will continue to be supportive of local economic development."

Industrial development agencies aim to increase economic development and job growth through offering companies incentives, like property and sales tax breaks. A report from the State Authorities Budget Office released this month found IDAs gave out $5.6 billion in tax breaks from 2008-11.

Local IDAs say deal was worth it

Monroe County Executive Maggie Brooks says she is pleased the clause has been dropped as the ability to grant sales tax exemptions is very important to the Monroe County IDA.

“That is something that we do on a daily basis, on a weekly basis to support companies and to help us grow jobs and the economy in Monroe County.”

But the deal didn't come at a price. Brooks says that in order to keep their ability to grant exemptions, IDAs have agreed to more transparent and stringent monitoring.

“We agreed with the state that they could increase some of the reporting standards for the IDAs, so that there is more oversight. So in exchange for dropping the provision, we’ve agreed to increased oversight on the part of the State of New York, and I very much support that.”

Brooks says she hopes that some day businesses won't need incentives to operate in New York state, but she says we're not quite there.

“I think we would all like to see a day when we don’t have to level the playing field for companies because New York is just a great state to do business, and we’re moving in that direction, but until we get there we have to have an ability to support companies so they can create jobs.”

“At a time when the economy is struggling, when we still live in a state that has a lot of barriers to doing business, we don’t need one more obstacle to our ability to help companies grow and create jobs, and retain jobs in the community.”

Brooks says this is a good outcome for businesses in Monroe County and around the state.