One of the strongest critics of these programs has been the New York State Comptroller:
An audit of 11 Empire Zones located around the State, including 3 in New York City, found that the Zones are poorly administered, keep inadequate records and do not hold firms that receive tax breaks accountable for actually producing jobs.
Despite the obvious irony, I still look to the state comptroller's office as a major vehicle for reform in the state.
There has been more news coming out from Syracuse, which points to more widespread abuse of the tax-payer money. According to an investigation by the Syracuse Post Standard, millions of dollars worth of tax breaks have been given to a New Jersey company, which has not lived up to its part of the bargain to supply jobs in the region:
Taxpayers paid $22 million to NRG Energy for one year, and it did almost nothing to deserve it. The New Jersey company added one-half of one employee. It operated Upstate electric plants built decades ago by someone else. Two of these plants are the state's worst polluters and a third rarely operates. Despite this, NRG grabbed a bigger Empire Zone tax break than any of the 8,300 other eligible businesses, an investigation by The Post-Standard reveals. No. 2 was another out-of-state energy conglomerate: Reliant Energy of Texas. State taxpayers reimburse the companies for their property taxes, making them, in effect, as property tax-free as a hospital or church.
Since when do we treat corporations like churches and hospitals? But in light of the recent Berger Commission's recommendations and an editorial from Buffalo News, I guess hospitals should be in the same category.
"These nonprofits are huge and they are major employers," said Lindalee A. Lawrence, founder and president of Lawrence Associates, a health care compensation consultant in Massachusetts. "They're businesses, even though they are nonprofit."
It seems that even this amount of abuse has been too much for our soon-to-be-former Republican governor to stomach and lead to his attempts to cap the credits on a per new employee basis, but the Republican State Senate blocked this reform and the proposal from the Democratic-controlled Assembly to cap all companies, not just those in the energy industry. Again from the Syracuse Post Standard:
In 2004 and 2005, the governor proposed capping their credits at $10,000 for each new employee. That would've dramatically cut NRG's property tax benefit. In both years, the Legislature and Pataki let the idea die in their private budget negotiations. Assembly Speaker Sheldon Silver wanted a cap on benefits for every business, not just energy companies, spokesman Brian Franke said. In the end, the leaders agreed to reforms that would apply to only companies approved after April 1, 2005, not the 9,000 businesses already in the program, he said. A spokesman for Senate Majority Leader Joseph Bruno did not respond to questions.
And of course the money has been flowing...
NRG, Reliant, Brookfield Asset and their subsidiaries contributed $48,700 to the campaigns of state politicians since 1999. That includes $27,800 to Pataki, $6,450 to Wright and $7,200 to Assemblymen. The companies also gave $29,560 to the political action committee of the Independent Power Producers of New York, a trade association. The IPPNY gave more than $70,000 to state politicians since 1999.
So, what can be done to reform the Empire Zone and make it a vehicle for real economic development reform? For that answer, we can look again at the State Comptroller's Agenda for Reform:
Reforms were offered by the Comptroller to correct the flaws in program administration and reporting identified through the Comptroller's audits. The reform plan outlined strategies for improved oversight of the program and more comprehensive data collection from participating businesses and from the Zones themselves.
And while we are at it, let us make Clean Elections a priority, since changes of this nature will not be made until our elected leaders are beholden to tax-payers and not corporations. |
