I wrote a piece last year titled, "Reform the Empire Zones...Or Kill Them". In that post, I quoted Assemblyman Richard Brodsky, who was proposing a moratorium on new Empire Zone activity as well as a top to bottom overhaul of the entire sad, corrupt program.
Brodsky, D-Greenburgh, wants to place a six-month moratorium on the approval of any new Empire Zone projects while the state performs a "thorough audit" of the program. He called the program a corrupt "special-interest feeding trough" that no longer serves its original purpose - to create jobs and stimulate local economies.
"The program, which was intended to jump-start urban economies, has turned into a scandalous, corruption-ridden giveaway," Brodsky said. "I've recently wondered if the entire program should be repealed, but for now we need to stop it and review it."
Brodsky has repeatedly criticized Empire Zones, which grant tax breaks and other benefits to companies that settle in economically distressed areas. The cost of the program jumped from $30 million in 2000 to $600 million last year, with more than $3 billion in taxpayer money spent overall, he said.
We knew 18 months ago that the program was an expensive, throughly corrupt charade that not only did not achieve what it was created to do, but actively hampered job creation in many ways by throwing tax credits at companies like big box retailers Wal-Mart and Target, effectively killing off locally owned businesses. We knew that a large portion of companies participating in the program never reached their job creation goals, but still collected the goodies for doing so. We knew that some companies were simply making employees up and in some cases companies were collecting hundreds of thousands of credits and benefits for the program for every $30,000 dead end job they created.
And that was all back when many still figured we could afford well over half a billion dollars a year on corporate pork. Things have certainly changed in the last year and a half as we face a rather severe economic crisis, one that is probably only really just beginning, and are seriously considering significant cuts to services used by, ya know, actual people.
Now comes a new report by Citizen's Budget Commission. Crain's has a rundown and it isn't pretty.
Report calls for ending Empire Zone tax breaks
The state's Empire Zone program, a $500 million economic development initiative launched in 1986, should be scrapped, according to a report published Tuesday.
The report, released by the Citizens Budget Commission, a business-backed watchdog group, says the Empire Zone program has become bloated and counterproductive. The group says the program should be a "prime target for elimination."
According to the study, 58% of Empire Zone participants fail to meet either their job creation or investment goals. Moreover, it states that most of the tax benefits actually go to large companies and end up hurting the smaller, grassroots firms it was intended to help.
Roughly 76% of the benefits claimed in 2006 went to just 500 companies, out of 5,000 program participants. One-fifth of the credits went to just 10 companies, a list that includes IBM, Geico General Insurance and NRG Energy.
And just why are we subsidizing the operations of big box, low wage retailers like Wal-Mart?
The program was designed to encourage businesses to maintain operations in New York. However, critics point out that credits often go toward helping large companies expand into new locations. Big-box retail chains like Wal-Mart, Lowe's and Target have all received credits. Home Depot received over $4 million in credits in 2006 for eight locations statewide, including two in Brooklyn and Staten Island.
"A lot of these larger companies would locate where they are in any event," said Elizabeth Lynam, deputy research director at CBC. "So the program is harmful for the large swathes of smaller businesses that are trying to compete."
The entire program is bloated, corrupt, expensive, ineffective and actually counterproductive to many of the aims it was created to achieve.
Last June I said that we should Reform the Empire Zones or simply kill them. Given the new fiscal realities we find ourselves in and even more data on what a complete and thorough boondoggle the program is, I now think the answer is simply to scarp the whole thing. I'm not saying we shouldn't be doing all that we can to encourage businesses to stay in New York or to make our state attractive to businesses looking to relocate here. But I am saying that the Empire Zones have proven to be an absolute disaster at doing either. The time for reforming the program has come and gone.
It's time to turn out the lights on the whole shebang. |
