Economic development spending in New York encompasses the billions of dollars in state and local tax incentives, direct grants, and capital projects intended to foster job growth and business investment. This page covers CBC’s work on program transparency and oversight, the effectiveness of tax credits like the film tax credit, the use of discretionary lump sum appropriations, the financial management of local development agencies, and the need for rigorous, performance-based evaluation of economic incentives.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
New York should evaluate economic development programs, expand those that are proven cost-effective, and reform or eliminate those that are not.
Rather than extending and expanding programs indiscriminately, New York State and its local governments should evaluate how effective existing economic development programs are and use those results to grow what works, and to shrink, eliminate, or reform what does not.
Absent paying for itself, an economic development tax break should only be renewed if there is clear evidence that the program is the most cost-effective way to deliver a critical, quantifiable public benefit.
New York’s State and local governments should focus their economic development activities on the fundamentals that drive New York’s competitiveness, such as affordability programs, job creation and retention incentives with proven benefits, higher education and training programs tied to actual jobs, and regulatory reforms.
Reject economic development spending unless it has proven effective, including the NYC Musical and Theatrical Production Tax Credit.
Key Data
In October 2026, the CBC reported that New York State and its local governments spent $12.7 billion on economic development in 2025, which included $5.5 billion in State spending and $7.2 billion in local spending.
According to an October 2026 report, State tax breaks are projected to increase from $3.3 billion in 2025 to $4.5 billion in 2026, even though independent evaluations found that film and theatrical credits returned less than 30 cents for every dollar awarded.
In August 2024, the CBC highlighted that the cost of New York City's Industrial and Commercial Abatement Program (ICAP) grew from $81.4 million in fiscal year 2017 to $506.3 million in fiscal year 2024, even though a 2016 evaluation found only 3.6% of projects actually required the tax breaks to be financially feasible.
In March 2023, the CBC noted that the state proposed to provide $455 million in cash or borrowing to renovate Belmont Park, which supports a downstate horse racing industry that likely could not exist without state subsidies.
In March 2022, the CBC analyzed the Buffalo Bills stadium proposal, noting that renovating Highmark Stadium would cost approximately $862 million, whereas building a new stadium was estimated to cost between $1.4 billion and $1.7 billion.
New York State and its local governments spent $12.7 billion on economic development in 2025, yet independent evaluations show that many of these programs, particularly film and theatrical tax credits, fail to generate a positive return on investment. Despite weak evidence of effectiveness, spending on tax incentives is projected to grow to $4.5 billion in 2026, shifting increasingly toward advanced manufacturing and semiconductor projects.
Recommendations related to Economic Development Spending
New York should evaluate economic development programs, expand those that are proven cost-effective, and reform or eliminate those that are not.
Rather than extending and expanding programs indiscriminately, New York State and its local governments should evaluate how effective existing economic development programs are and use those results to grow what works, and to shrink, eliminate, or reform what does not.
Absent paying for itself, an economic development tax break should only be renewed if there is clear evidence that the program is the most cost-effective way to deliver a critical, quantifiable public benefit.
New York’s State and local governments should focus their economic development activities on the fundamentals that drive New York’s competitiveness, such as affordability programs, job creation and retention incentives with proven benefits, higher education and training programs tied to actual jobs, and regulatory reforms.
Key Data
$12.7 billion
— Total amount spent on economic development by New York State and its local governments in 2025, including tax incentives, operating spending, and capital investment.
$4.5 billion
— Projected cost of New York State economic development tax breaks in tax year 2026, representing a 36 percent increase from 2025.
30 cents
— Amount returned in State tax revenue for every dollar of film and theatrical tax credits awarded, according to an independent evaluation.
$4.3 billion
— New York City's economic development spending in 2025, which accounts for three-quarters of all local economic development spending.
$7.0 billion
— Total performance-based tax credits, sales tax exemptions, and property tax abatements that Micron's semiconductor fabrication facility in Clay, NY is eligible to receive.
$2.3 billion
— State funding appropriated for advanced manufacturing initiatives in fiscal years 2027 to 2031.
New York State's budget includes $1.3 billion in new economic development capital spending, adding to the $13 billion already spent annually on such initiatives. To ensure fiscal responsibility, these expenditures should be restricted to programs that demonstrate proven success, including the rejection of subsidies like the New York City Musical and Theatrical Production Tax Credit.
Recommendations related to Economic Development Spending
Reject economic development spending unless it has proven effective, including the NYC Musical and Theatrical Production Tax Credit.
Key Data
$1.3 billion
— New economic development capital spending included in the Executive Budget.
$13 billion
— Annual spending by New York State and local governments on 'economic development' through capital projects and tax incentives.
$150 million
— Increase for the New York City Musical and Theatrical Production Tax Credit accepted by the Legislature.
New York State allocated $5.1 billion toward economic development in fiscal year 2025, with $3.3 billion directed to tax breaks and $1.8 billion to direct spending. To improve fiscal stability, the state should prioritize core programs and scale back less impactful expenditures, specifically targeting wasteful economic development initiatives.
Recommendations related to Economic Development Spending
The State should target programs to those in need and fund them by scaling back less impactful spending, including wasteful economic development programs.
Key Data
$5.1 billion
— Total amount New York State spent on economic development in fiscal year 2025.
$3.3 billion
— Portion of fiscal year 2025 economic development spending allocated to tax breaks.
$1.8 billion
— Portion of fiscal year 2025 economic development spending allocated to direct spending.
New York State faces significant fiscal challenges, including a structural budget gap and high tax burdens, necessitating a strategic reevaluation of state spending. To improve economic competitiveness and fiscal health, the state should prioritize cost-effective infrastructure investments, streamline public services, and eliminate ineffective economic development subsidies and tax incentives that fail to demonstrate job creation or output growth.
Recommendations related to Economic Development Spending
State leaders should phase out ineffective economic development subsidies, such as the film tax and theatrical tax credits that a State study found have low return on investment.
The State should eliminate environmental and economic development capital spending distributed by political prerogative, not a planning process to ensure cost-effective investment.
State leaders should leverage proven, cost-effective tax incentives to attract and retain businesses and shrink or eliminate tax incentives and economic programs that are not proven to create jobs or increase output.
To reduce the cost of doing business, the State should eliminate unnecessary regulations, reform the tort system to reduce insurance costs, and let the business tax surcharge expire.
State leaders should hold the line on taxes to demonstrate a commitment to a competitive future, as increasing already-high taxes threatens New York’s competitiveness and risks accelerating outmigration.
Key Data
$258 billion
— The amount the fiscal year 2026 All Funds budget exceeds.
$20 billion
— The amount by which State recurring spending exceeds its recurring receipts annually, creating a structural budget gap.
$2.6 billion
— The amount of school aid currently provided to wealthy school districts that fund a sound basic education locally.
4.7 percent
— The rate at which the State's population has grown since 2000.
20.9 percent
— The rate at which the nation's population has grown since 2000.
12 percent
— The decline in public school enrollment since 2021.
New York's Draft State Energy Plan lacks the necessary detail regarding fiscal and regulatory actions, cost-effectiveness, and economic impacts on businesses and households to effectively guide policy. The plan requires significant revisions to provide transparent, realistic estimates of costs and benefits, ensuring the energy transition does not undermine the state's economic competitiveness and job growth.
Recommendations related to Economic Development Spending
Identify specific financial and regulatory actions that would drive the energy transition for each scenario.
Quantify the costs and how they would be allocated to State government, other public entities, businesses, and households.
Quantify the impact on energy costs paid by businesses, by sector and geography.
Broaden the jobs analysis to all sectors and scenarios, and disaggregate by geography.
Quantify the benefits that accrue to New Yorkers.
Key Data
30 percent
— Portion of project costs that can be covered by Production and Investment Tax Credits for clean energy.
$146 per MWh
— Contractual strike price for one of the State's current Offshore Wind Renewable Energy Credit (OREC) contracts.
$155 per MWh
— Contractual strike price for one of the State's current Offshore Wind Renewable Energy Credit (OREC) contracts.
$125 per MWh
— Assumed cost of offshore wind in 2025 in the Draft SEP.
5 percent
— Share of the State's jobs that are in the energy sector.
$16 billion is the estimated cost to build the new rail tunnel under the Hudson River. Decades of delays and funding spats ultimately led to the creation of the Gateway Development Commission, the bi-state entity responsible for making the tunnel a reality. Joining the podcast is Alicia Glen, co-Chair of…
The NYC Ferry system, while improved, remains heavily subsidized, diverting significant resources from the Economic Development Corporation's core mission of fostering citywide economic growth. To protect these essential economic development funds, the city should reduce the ferry subsidy by eliminating low-ridership routes, targeting aid to those in need, and raising fares for non-commuting riders.
Recommendations related to Economic Development Spending
The EDC should eliminate the lowest-ridership routes to reduce the ferry subsidy and free up resources for economic development.
The EDC should target subsidies to those in the greatest need of affordable transit options.
The EDC should increase fares for other riders to match those of comparable premium transit services, like the $7 per trip charged for the MTA’s express bus system.
The EDC should continue to hold the line on service expansions absent rigorous analysis that they would be financially feasible.
Key Data
$8.55
— The per-trip operating subsidy for the NYC Ferry in fiscal year 2023.
$56.5 million
— The annual total subsidy for the NYC Ferry.
$429.2 million
— The capital committed by the City of New York for NYC Ferry to acquire boats, improve docks, and build homeports through fiscal year 2023.
$26.4 million
— The estimated annual debt service on NYC Ferry capital commitments.
$73.8 million
— The amount of retained rental payments from the 42nd Street Development Project in fiscal year 2023.
$25 million
— The deficit in the EDC's fiscal year 2025 adopted budget after accounting for depreciation.
New York City's Industrial and Commercial Abatement Program (ICAP) has seen its costs grow six-fold to over $500 million annually, yet evaluations suggest the vast majority of projects receiving these tax breaks do not require them to be financially feasible. The program should not be extended without a thorough, objective evaluation to ensure these significant public funds are actually serving the public interest.
Recommendations related to Economic Development Spending
The Governor should veto S9822/A10530 because it extends the Industrial and Commercial Abatement Program without assessing its necessity for economic growth.
The state should sign a one-year extension negotiated as a Chapter amendment to allow time for an objective evaluation of the program's cost-effectiveness.
Policymakers should implement stricter geographic boundaries, greater restrictions on benefits for retail space, and shorter benefit durations to reform the program.
Key Data
3.6%
— Only 3.6% of projects receiving ICAP benefits required the tax breaks to be financially feasible.
$81.4 million
— The cost of the ICAP program in fiscal year 2017 was $81.4 million.
$506.3 million
— The cost of the ICAP program grew to $506.3 million in fiscal year 2024.
Two-thirds
— Two-thirds of ICAP recipients receive 25-year abatements, even though shorter benefits were found to be sufficient.
$500 million
— The city is spending $500 million per year on the program without determining if it is an effective use of public funds.
New York faces a projected $9 billion budget gap that is expected to grow to $13 billion, necessitating immediate spending restraint to avoid future fiscal crises. To address these shortfalls, the state should avoid tax increases or reserve depletion and instead focus on curbing spending growth in major areas like Medicaid, education aid, and economic development programs with dubious impacts.
Recommendations related to Economic Development Spending
In economic development, the state should curtail — not expand — programs with dubious impacts.
New York State and its localities spent $10.7 billion on economic development in 2022, a figure projected to reach $13 billion annually by 2025 despite insufficient evidence that these programs effectively create jobs. To address this, officials should implement a unified budget, adopt performance-based incentives, and increase oversight to ensure these massive expenditures are actually beneficial.
Recommendations related to Economic Development Spending
Rigorously evaluate existing incentives and programs to determine their effectiveness.
Narrow, shrink, or eliminate programs that are not proven effective.
50,000 is the number of jobs New York State expects to be created over the next 20 years by attracting Micron to central New York with $7.2 billion of incentives. New York has long been a leader in economic development, with the State and localities offering tax incentives and spending…
At Empire State Development, New York State’s economic development agency, Commissioner Knight is dedicated to policies that advance sustainable and inclusive economic growth. She has been instrumental in the creation of the state’s Office of Strategic Workforce Development and has focused efforts on supporting New York State’s small businesses and…
New York State's proposed budget includes $14.8 billion in discretionary lump sum appropriations, which are allocated without public scrutiny or competitive bidding, creating significant risks of waste and corruption. A substantial portion of this funding is directed toward economic development and local capital projects, often lacking transparency and clear criteria for distribution.
Recommendations related to Economic Development Spending
The State should not enact lump sum appropriations that authorize spending on a broad range of projects or purposes to be determined and allocated at a later date.
Omit the $6 billion Special Public Health Emergency Appropriation from the budget.
Reduce the Special Emergency Appropriation to $1 billion, and ensure it is subject to OSC oversight and competitive procurement rules.
Fully and completely disclose distributions from all lump sum pots currently being spent.
Pass a law codifying the Governor’s discretionary lump sum database.
Provide full data for lump sum spending dating back to at least 2020.
Key Data
$14.8 Billion
— Proposed State FY 2024 Discretionary Lump Sum Spending Authority.
$8 Billion
— Lump sums for the COVID emergency included in the $14.8 billion total.
$6.8 Billion
— Standard lump sum appropriations in the FY 2024 Executive Budget.
$2.8 Billion
— Amount of non-emergency lump sums allocated for Economic Development.
$800 Million
— Funding for the Regional Economic and Community Assistance Program.
$350 Million
— Funding for the Long Island Investment Fund.
New York state spends approximately $10 billion annually on economic development incentives, yet many of these programs lack rigorous evidence of their effectiveness in driving job or economic growth. Instead of relying on unproven tax credits and subsidies, the state should prioritize investments in human capital, infrastructure, and essential public services to foster a stable and attractive business environment.
Recommendations related to Economic Development Spending
New York should conduct thorough, rigorous evaluations to identify whether incentive programs induce additional economic activity and compare benefits to costs and opportunity costs.
New York should focus on developing human capital by educating and training residents, attracting talent, providing high-quality public services, and maintaining infrastructure.
New York should ensure the state is an affordable, attractive, and fiscally stable place to live and operate a business to help grow jobs.
New York should stop funding evidence-baseless programs that are likely inefficient investments and perpetuate interstate competitive races to the bottom.
Key Data
$10 billion
— Annual economic development spending by New York state and its localities.
$14.6 billion
— Proposed lifetime cost of the film tax credit.
$9.6 billion
— Current lifetime cost of the film tax credit.
$44 million
— Annual cost of four city tax incentives.
$455 million
— Proposed cash or borrowing support to renovate and expand Belmont Park.
$6.5 billion
— Amount in film tax credits granted without rigorous analysis.
The New York State legislative budget proposals for fiscal year 2024 are criticized for adding approximately $5 billion in new spending and $2 billion in annual taxes, which threatens fiscal stability and economic competitiveness. The proposals are also faulted for supporting dubious economic development subsidies and failing to provide the necessary financial transparency to understand their impact on future budget gaps.
New York State's proposed budget includes a massive expansion of the film production tax credit to a $700 million annual cap and $455 million in new debt for Belmont Park, despite a lack of evidence that these economic development programs are effective. To improve fiscal health, the state should freeze new economic development programs and reject these costly subsidies until a rigorous evaluation of their actual benefits is completed.
Recommendations related to Economic Development Spending
The State should shrink rather than expand the film tax credit, reject State borrowing for Belmont Park, and reject extension of New York City economic development incentives absent rigorous evaluation of their effectiveness.
The State should freeze new economic development programming until comprehensive reforms are implemented.
The State should work toward re-evaluating the entirety of its subsidy arrangement instead of doubling down on subsidies for an amenity with withering popularity and no independent financial viability.
The State should ensure that any further changes to or increases in economic development funding wait until the release of the evaluation study of all economic development programs.
Key Data
$700 Million
— Proposed annual cap for the expanded film production tax credit.
30%
— Proposed expanded rate of the film production tax credit.
$455 Million
— Proposed new State debt to finance the renovation and expansion of Belmont Park.
4
— New York City tax exemptions to incentivize commercial activity proposed to be extended.
5 years
— Proposed extension period for the four New York City commercial tax exemptions.
20 years
— Proposed duration for the new State debt issued on behalf of the New York Racing Association.
The proposed expansion of the Empire State Film Tax Credit would increase the program's lifetime cost by 55 percent to $14.6 billion without evidence that it generates commensurate economic benefits. Instead of expanding the program, the state should reject the proposal and conduct a rigorous evaluation to determine if the credit is necessary or if it should be phased out.
Recommendations related to Economic Development Spending
The proposed expansion of the Empire State Film Tax Credit should be rejected due to the lack of rigorous evaluation demonstrating its economic benefits.
The State should be shrinking the film tax credit program rather than expanding it.
The Empire State Film Tax Credit should not be extended and expanded and should be phased out absent a rigorous evaluation of its need and cost-effectiveness.
Tax incentives should only be provided if justified by rigorous analysis that determines the economic activity induced by the incentive and compares it to the program's cost.
The forthcoming evaluation of State tax incentive programs should inform the existence and design of the film tax credit programs instead of actions by other states' legislatures.
Key Data
$14.6 billion
— Total maximum cost of the program under the proposed expansion.
$700 million
— Proposed annual credit cap starting in 2024.
55 percent
— Increase in the lifetime maximum cost of the program.
$6.5 billion
— Total credits provided since the start of the program.
25 percent
— New York's current base rate for the film tax credit.
$509.5 million
— Actual cost of the film production credit in tax year 2018.
New York should prioritize data-driven evaluation and cost-effective strategies when allocating funds for economic development and climate investments to ensure actual job creation. By basing these significant expenditures on thorough needs assessments and holistic planning, the state can better manage its fiscal future and avoid the pitfalls of past spending patterns.
Recommendations related to Economic Development Spending
Maximize job creation and environmental benefits by basing economic development and climate investments on data, evaluation and tradeoffs.
Environmental investments should be based on a thorough needs assessment, holistic planning and prioritizing cost-effective strategies.
New York City's land use review process is overly complex, uncertain, and time-consuming, which discourages development and hinders the creation of necessary housing and jobs. The current system, which often takes years to secure approvals, increases development costs by 11% to 16% and requires significant reform to better align with the city's long-term economic and housing goals.
Recommendations related to Economic Development Spending
New York State should amend environmental review laws to reduce barriers to beneficial growth and development.
New York State should encourage local governments to streamline approvals of projects that help achieve identified regional housing and job-creation goals.
New York City should create a process that evaluates proposals based on potential benefits and alignment with goals of its Charter-mandated strategic plan and other plans.
New York City should make advisory reviews at the community level more collaborative, participatory, and productive.
New York City should streamline and rationalize environmental review within limitations of State law.
New York City should better balance citywide needs and neighborhood concerns through an appeals process or requirement of a City Council supermajority to reject an application.
Key Data
171
— Number of private rezoning applications citywide initiated between 2014 and 2017.
60 percent
— Share of the 171 private rezoning applications that were approved.
11 percent to 16 percent
— Range by which a two-year-long discretionary approval process can increase development costs.
30 months
— Median length of time to secure approval for the 103 projects that were approved.
80 percent
— Share of time spent in public review that was taken up by completing pre-certification and environmental review for the median project.
7.8 months
— Median time to certification for dispositions of city-owned land through the Urban Development Action Area Program (UDAAP).
The proposed Penn Station Area project aims to rezone the surrounding blocks to fund station improvements, but it faces significant financial risks due to its high costs and the use of complex value capture financing. It is essential that the project is designed to be cost-effective and that local decision-making authority regarding the use of future property tax revenue is preserved.
Recommendations related to Economic Development Spending
Before any financing plan is approved, the scope of work should be reasonably detailed, scrutinized, and streamlined as much as possible.
The State and the railroads should focus on improving safety, circulation, and functionality and doing so in the most cost-effective manner.
They should avoid costly, non-essential, cosmetic improvements and should not preclude the possibility of future capacity or service enhancements.
It is important to evaluate how the State will manage and mitigate the financing risks inherent to value capture projects, including who will be responsible for interest payments until revenue from new development comes online or who will be responsible for paying for cost overruns.
The Mayor and City Council should guide whether and how much of the City’s future property tax revenue should be dedicated to specific needs, such as a mass transit project, instead of other needs like public safety, education, or housing.
Key Data
$6 to $7 billion
— Estimated cost just for the renovation of Penn Station.
$12 billion-plus
— Estimated cost for the expansion of Penn Station.
New York has codified a 'Database of Deals' to improve transparency in economic development spending, though the legislation contains loopholes that require vigilant implementation. Additionally, the state's film tax credit, which lacks commensurate economic impact, was extended for three years despite calls for it to be phased out and eliminated.
Recommendations related to Economic Development Spending
The state should continue to support additional economic development reforms, including bolstering the Database of Deals, compiling a unified economic development budget, and pursuing other programmatic reforms.
The film tax credit, which does not provide commensurate economic impact, should be phased out and ultimately eliminated.
Key Data
three years
— The duration for which the film tax credit, a major economic development tax break, was extended in the fiscal year 2023 enacted budget.
New York State's budget negotiations should prioritize implementing a performance management system to ensure accountability across all government programs, including those focused on economic development that have historically underperformed. This approach would help lawmakers make informed fiscal decisions and demonstrate the value of the state's record-breaking spending plans to the public.
Recommendations related to Economic Development Spending
Final budget negotiations should include provisions to manage state programs actively to deliver results and to report publicly metrics of state performance, specifically covering economic development programs that historically have failed to deliver value.
Key Data
$6 billion
— Likely amount of flexible funding available to the state for the new fiscal year.
Public subsidies for sports stadiums should be based on a rigorous, transparent analysis that proves incremental economic benefits will exceed the costs to taxpayers. New York should adopt best practices for economic development spending, including establishing a unified budget, requiring private investment, and including clawback provisions.
Recommendations related to Economic Development Spending
All economic development spending, whether direct, through tax incentives, or through reduced utility or other costs, should be justified by a rigorous analysis that shows that the public benefits that would accrue will exceed the public’s costs.
As part of shaping any policy to publicly subsidize a capital investment, these impacts and their level should be quantified.
The State should transparently provide an analysis that identifies the benefits and full costs for any proposed subsidy.
The analysis should credibly identify the incremental economic and fiscal impacts attributable to a proposed subsidy and use them in conjunction with the length of time the subsidy would provide benefit to calculate a proposed subsidy’s value.
Any subsidy should be after private investment and include clawback provisions.
The process should also provide sufficient time for the public and lawmakers to evaluate the terms and justification for any deal.
Key Data
$1 billion
— Potential public funding sought by the Buffalo Bills owners for a new stadium.
$862 million
— Estimated cost to renovate the existing Highmark Stadium.
$1.4 billion and $1.7 billion
— Estimated cost range for constructing a new stadium.
$350 million
— Additional cost for a stadium in downtown Buffalo due to site acquisition.
$450 million
— Total taxpayer support for 30 stadiums built between 1953 and 1970.
$27 million
— Estimated annual fiscal impact in tax revenue generated by the presence of the Bills.
New York spends roughly $10 billion annually on economic development programs, yet the state lacks a unified budget and standardized metrics to ensure these investments effectively create jobs. Reforms are needed to establish a unified economic development budget, improve program design and evaluation, and increase oversight to ensure these significant expenditures deliver actual results.
Recommendations related to Economic Development Spending
The State should establish a unified economic development budget to improve oversight and management.
The State should standardize metrics for economic development programs to ensure results are tracked effectively.
The State should enhance the Database of Economic Incentives to improve transparency and public reporting.
The State should improve program design and evaluation to ensure economic development spending is effective.
The State should support oversight authorities by restoring procurement powers to the Comptroller and increasing funding for the Authorities Budget Office.
Key Data
$10 billion
— The annual price tag of the State’s economic development spending.
New York State's economic development deals, including tax breaks and subsidies, cost $10 billion as of 2019, yet accountability for these expenditures remains chronically inadequate. Reforms are needed to consolidate local development authorities, implement standardized metrics, and improve the transparency and oversight of economic development programming.
Recommendations related to Economic Development Spending
The State budget should include overdue reforms to the management, transparency, and accountability of economic development programming by State agencies and authorities.
The State should implement a unified economic development budget to improve fiscal oversight.
The State should adopt standardized metrics for economic development programs to ensure consistent evaluation.
The State should create an enhanced Database of Economic Incentives to improve transparency.
The State should provide appropriate oversight by restoring procurement powers to the Comptroller and increasing funding for the Authorities Budget Office.
Local development authorities should be consolidated, subject to stronger oversight, and regularly evaluated in conjunction with other State economic development agencies and authorities.
The State should consider how economic development programs align with other State goals, such as climate and greenhouse gas reduction targets.
Key Data
$10 billion
— The cost of State and local economic development deals, including tax breaks and direct subsidies, as of 2019.
roughly half
— The portion of the State’s economic development costs made up by local development authorities.
New York State spends $10 billion annually on economic development programs, yet fails to rigorously evaluate their effectiveness or demonstrate sufficient results. To improve oversight and management, the state should implement a unified budget, standardize performance metrics, and require private investment commitments for all subsidized projects.
Recommendations related to Economic Development Spending
The State should present a unified economic development budget so that New Yorkers know how much is really being spent.
The State should establish standardized metrics for economic development initiatives to identify the impact of each deal and program.
The State should improve its Database of Deals to publicly and regularly report on the cost, progress, and evaluation of all economic development initiatives statewide.
Program design should be improved by requiring private “skin in the game,” performance metrics, and penalties for non-performance.
Oversight should be improved by restoring the procurement oversight powers of the Comptroller’s Office and increasing funding for the Authorities Budget Office.
Key Data
$10 billion
— Total annual cost of economic development programs administered by New York State agencies and entities in 2019.
8
— Number of criteria for a sound database that the current Database of Economic Incentives meets out of 20 identified by watchdogs.
20
— Total number of criteria for a sound database identified by watchdogs in 2018.
New York State should implement a Unified Economic Development Budget to consolidate the costs of all economic development programs and improve transparency. Additionally, the state must standardize performance metrics and job creation definitions across all programs to better evaluate the effectiveness of subsidies and tax expenditures in creating and retaining jobs.
Recommendations related to Economic Development Spending
The Executive and Enacted budgets should include a Unified Economic Development Budget (UEDB) that includes the costs of all economic development programs for the coming fiscal year.
The State should improve its reporting of economic development activities in the Database of Economic Development Incentives, which should report standardized performance metrics across all programs.
Definitions for job creation and retention should be standardized for all programs, and metrics should differentiate between full-time, part-time, and temporary jobs.
For each of the 10 economic regions, the State should measure broader outcomes, including growth in targeted industries, overall economic growth, and changes in poverty levels.
Existing programs—including Regional Economic Development Council spending, film and television subsidies, horse racing industry subsidies, and fossil fuel tax breaks—should be evaluated to determine how effectively the resources are creating and retaining jobs.
New York City's proposed small business recovery programs risk duplicating existing federal and state aid, potentially wasting resources that could be better used elsewhere. To maximize the impact of economic recovery efforts, the City should prioritize identifying gaps in current coverage and providing technical assistance to help businesses access available funding rather than creating redundant programs.
Recommendations related to Economic Development Spending
The City should focus on filling gaps left by the federal and State programs to maximize the impact of its economic recovery efforts.
The City must identify potential gaps first by determining which businesses are eligible for existing programs and whether those programs meet their needs.
The City should avoid potential redundancies in program implementation to maximize the value of its efforts.
The City should consider whether increasing efforts to help small businesses access federal and State support would be a more efficient use of resources.
The City should clearly identify gaps where federal and State programs do not provide sufficient support and where City technical assistance would be most valuable.
Key Data
$813 billion
— Total appropriation for the Paycheck Protection Program.
$30 billion
— Total value of PPP loans received by New York City businesses.
$800 million
— Total grant fund established by the Small Business Recovery Grant Program.
$140 million
— Total funding for three proposed New York City small business support programs.
$28.6 billion
— Total funding for the Restaurant Revitalization Fund.
$16 billion
— Total funding for the Shuttered Venue Operator Grant.
New York's proposed fiscal year 2022 budget plans include significant tax increases on high earners and businesses alongside increased spending, despite projections showing revenues are higher than pre-pandemic levels. To ensure long-term fiscal stability and economic competitiveness, the state should avoid unnecessary tax hikes, restructure school aid, and curtail unproductive economic development programs.
Recommendations related to Economic Development Spending
The state should curtail unproductive economic development programs to strengthen New York's future.
Federal aid from the American Rescue Plan provides a critical opportunity for New York to stabilize its finances and restructure government operations rather than funding new programs or ongoing expenses. By eliminating unproductive economic development programs and implementing efficiency initiatives, the state and city can close future budget gaps without resorting to tax increases.
Recommendations related to Economic Development Spending
The state should eliminate unproductive economic development programs and temporarily change financing of some capital programs, all actions that could narrow future budget gaps — without raising taxes.
New York State should reduce unproductive economic development spending and modify capital financing to offset harmful spending reductions. These actions could provide up to $7 billion over four years, which could be used to reevaluate and potentially offset ongoing cuts to local programs.
Recommendations related to Economic Development Spending
The State should reduce unproductive economic development spending and modify capital financing to offset harmful spending reductions.
The State should temporarily shift more capital financing to long-term debt to help offset harmful spending reductions.
The State should reduce low priority capital spending as part of a broader effort to identify alternative spending reductions.
Key Data
$7 Billion
— The amount of potential savings over four years that could be generated by reducing unproductive economic development and low priority capital spending.
5 percent
— The ongoing cuts to some aid to localities programs in the proposed budget that should be reevaluated.
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
New York State can balance its budget without raising personal income taxes by utilizing updated tax receipt projections and federal aid, rather than relying on tax hikes that risk driving away high-income earners. To achieve long-term fiscal stability, the state should prioritize restructuring spending, specifically by eliminating unproductive economic development programs.
Recommendations related to Economic Development Spending
The State should eliminate unproductive economic development spending to help balance the budget.
New York State should reduce its proposed economic development capital spending by 50 percent to help close budget gaps without raising taxes or cutting essential services. This strategy, combined with financing a portion of remaining capital projects with debt, would generate significant savings to help balance the state's fiscal plan.
Recommendations related to Economic Development Spending
The State should implement a pause in economic development spending to fully evaluate and understand its benefits.
The State should enact a 50 percent reduction in proposed economic development capital spending to help close budget gaps.
The State should finance 50 percent of the remaining paygo economic development capital spending with debt to generate additional budget savings.
Key Data
$713 million
— Savings in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of the remaining paygo spending with debt.
$510 million
— Savings in fiscal year 2023 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of the remaining paygo spending with debt.
$388 million
— Savings in fiscal year 2024 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of the remaining paygo spending with debt.
$333 million
— Savings in fiscal year 2025 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of the remaining paygo spending with debt.
New York State faces significant long-term fiscal challenges and budget gaps that extend beyond fiscal year 2023, with the state hoping to receive $15 billion in federal aid to address near-term deficits. To ensure long-term stability, the state should pursue structural reforms, including eliminating wasteful economic development spending and reducing aid to wealthy school districts.
Recommendations related to Economic Development Spending
The State should eliminate wasteful economic development spending before considering personal income tax increases.
New York provides $1.8 billion in annual economic development grants to companies, which should be reformed to stop subsidizing fossil fuel-dependent infrastructure. Aligning these and other state spending programs with climate goals will help the state meet its greenhouse gas reduction targets.
Recommendations related to Economic Development Spending
The State should stop reimbursing the cost of installing fossil fuel dependent building infrastructure or vehicles when providing economic development grants to companies.
The State should limit residential energy sales tax exemptions only to zero emission fuels and renewable energy sources to better target benefits toward climate goals.
The State should transition public facilities away from fossil fuels wherever cost-effective and feasible when replacing aging heating systems.
The State should incentivize school districts to purchase zero-emission school buses and build the necessary charging infrastructure through state aid.
The State should eliminate sales tax exemptions for fossil-fuel based energy used for non-residential purposes, such as research and development.
Key Data
$1.8 billion
— Annual economic development grants provided to companies to subsidize expansion or relocation to New York.
$800 million
— Annual tax exemptions provided by the State that reduce the cost of consuming fossil fuels.
$5 billion
— Annual state budget allocation for school building aid and transportation aid.
$200 million
— Amount spent by the State on utilities for public buildings in fiscal year 2019.
$3,207 million
— Fiscal year 2020 cost of the School Building Aid program.
$1,990 million
— Fiscal year 2020 cost of the School Transportation Aid program.
The state spends $4.4 billion on economic development programs that have shown little impact, particularly in upstate communities. This funding could be curtailed to help balance the state budget without negatively affecting essential services.
Recommendations related to Economic Development Spending
The state should curtail the $4.4 billion in economic development spending that has demonstrated little impact, particularly in upstate communities.
Key Data
$4.4 billion
— spent in economic development that has demonstrated little impact, particularly in upstate communities.
The Economic Development Corporation has faced significant financial strain due to rising expenses, particularly from the operation of the NYC Ferry system, which has led to an operating loss. To restore fiscal stability, the agency must implement cost-saving measures, including service reductions and adjustments to ferry fare policies and expansion plans.
Recommendations related to Economic Development Spending
EDC should continue to identify ways to make its ferry operations more efficient, such as implementing dynamic fare pricing and delaying the launch of costly planned expansions.
EDC could generate additional recurring savings by modifying the ferry system’s fare policy and planned expansions.
NYC Ferry should charge higher fares on weekends and for noncommuters.
NYC Ferry should not run or expand routes to Coney Island and Ferry Point that will require extraordinarily high subsidies.
Key Data
$130 million
— Average annual operating surplus between 2012 and 2014.
35 percent
— Average operating margin between 2012 and 2014.
$382.7 million
— Operating revenue in 2019.
$384.2 million
— Operating expenses in 2019.
$1.8 million
— Operating loss in 2019.
$53 million
— Amount spent to subsidize NYC Ferry in 2019.
To address fiscal stress, the state should eliminate unproductive economic development capital spending, including 50 percent of Empire State Development capital projects, to reduce debt service costs. Additionally, shifting 90 percent of capital projects from pay-as-you-go funding to debt financing could generate net savings of $3.2 billion in fiscal year 2021.
Recommendations related to Economic Development Spending
The State should modify its capital plan for the current period of fiscal stress and eliminate unproductive economic development capital spending.
The State should eliminate 50 percent of most Empire State Development (ESD) economic development capital spending to decrease projected debt service.
The State should prioritize essential projects to allow an additional 10 percent reduction in capital spending.
The State should use debt to finance the remaining 90 percent of capital projects now funded on a pay-as-you-go basis to save a net $3.2 billion in fiscal year 2021.
Key Data
$1.45 billion
— Amount of Empire State Development (ESD) capital spending to be eliminated in FY 2021 to achieve debt service savings.
$3.2 billion
— Net savings in fiscal year 2021 from using debt to finance 90 percent of capital projects currently funded on a pay-as-you-go basis.
$2.1 billion
— Net savings in fiscal year 2024 from using debt to finance 90 percent of capital projects currently funded on a pay-as-you-go basis.
$36 million to $134 million
— Annual debt service savings range during the financial plan period from eliminating 50 percent of most Empire State Development (ESD) economic development capital spending.
The New York State fiscal year 2021 budget continues various economic development programs, such as the Film Tax Credit and STARTUP-NY, without requiring serious evaluation or evidence of their effectiveness. These costly initiatives, along with new prevailing wage requirements for subsidized projects, were enacted with little analysis or debate regarding their potential economic impacts.
Recommendations related to Economic Development Spending
The State should require serious evaluation or evidence of effectiveness for all economic development programs before continuing them.
Lawmakers should conduct analysis or debate regarding the potential costs and economic impacts of new programs, such as the expansion of prevailing wage requirements to publicly subsidized private construction projects.
New York State faces a cumulative $28.8 billion budget gap over four years, necessitating a strategy that prioritizes fiscal transparency and spending restraint. To ensure long-term stability, the state should limit economic development spending to investments with a high likelihood of success while avoiding gimmicks that obscure actual financial health.
Recommendations related to Economic Development Spending
Economic development spending should be limited to long-term investments tied to sustained strategies with high likelihood of producing results.
New York State provides $5.6 billion annually in financial assistance to businesses through local development corporations and industrial development agencies, yet these entities lack sufficient oversight to ensure taxpayer funds are used effectively. Signing legislation to authorize the Office of the State Comptroller to audit these corporations is necessary to improve accountability and safeguard public resources.
Recommendations related to Economic Development Spending
The Governor should sign A7476/S5445, which will provide needed oversight by authorizing the Office of the State Comptroller (OSC) to audit local development corporations (LDCs).
New York State should authorize the Office of the State Comptroller to audit LDCs to safeguard against the misuse of public resources.
Key Data
$5.6 billion
— Annual financial assistance provided by local governments in New York State to businesses directly or through municipally controlled Industrial Development Agencies (IDAs) and LDCs.
$1.2 billion
— Amount spent by at least 192 LDCs focused on economic development in 2017.
192
— Number of LDCs focused on economic development in 2017.
New York State has spent billions on economic development through Regional Economic Development Councils, yet the program suffers from a lack of strategic alignment and transparency in project selection. To improve effectiveness, the state should mandate standardized performance metrics, prioritize projects in major population centers, and ensure funding is strictly tied to established economic strategies.
Recommendations related to Economic Development Spending
Only projects tied to an established regional or State strategy should be eligible for economic development-related financial assistance.
The REDC process should utilize quantifiable criteria by which target industries are identified.
REDCs should focus projects in major population centers—the anchor metropolitan areas in a given region—where projects are more likely to contribute to the development of sustainable industry clusters.
The State should establish standardized metrics for regional performance and require project-level reporting on progress, employment, and spending.
The REDCs’ project scores should count as a greater proportion of the total assessment.
Key Data
$6.2 billion
— Total State grants, tax credits, and other funding allocated since the REDCs’ 2011 inception.
$773 million
— Average annual funding allocated through REDCs since 2011.
$4.4 billion
— Total State spending on economic development, including direct expenditures and forgone tax revenue, in 2018.
$2.5 billion
— Total State economic development-related tax expenditures in 2018.
$1.8 billion
— Total State economic development direct spending in 2018.
New York faces a significant fiscal imbalance that requires immediate action to restrain spending rather than increasing taxes. To address this, the state should prioritize recurring savings, including reducing unproductive economic development program spending and reforming Medicaid and education aid.
Recommendations related to Economic Development Spending
New York State should reduce unproductive economic development program spending, as there is little evidence that many of these investments produce results.
Key Data
$4.4 billion
— Annual spending on economic development programs in New York, which lacks evidence of producing results.
New York State's fiscal plan faces a significant budget gap, exacerbated by $4 billion in unbudgeted Medicaid spending in fiscal year 2020 and billions more annually. To address this structural deficit, the state should look beyond Medicaid and evaluate other areas of the budget, such as unproductive economic development programs and mistargeted school aid.
Recommendations related to Economic Development Spending
The state should consider other portions of the budget to solve the budget problem, including unproductive economic development programs.
New York's economic development landscape is fragmented, with over 100 Industrial Development Agencies and nearly 300 Local Development Corporations managing billions in taxpayer funds with minimal accountability and overlapping efforts. These entities often provide significant financial benefits to projects that fail to create new jobs, necessitating a consolidation of these agencies and stricter oversight to improve fiscal efficiency.
Recommendations related to Economic Development Spending
Consolidate local IDAs into regional IDAs and prohibit LDCs from engaging in economic development activities.
Improve reporting requirements to ensure data on projects is consistent, accurate, and timely.
Improve accountability by allowing the State Comptroller to audit LDCs to ensure appropriate internal controls are in place.
Increase resources for the Authorities Budget Office (ABO) to allow it to conduct its full scope of work.
Key Data
$10 billion
— Total allocated to economic development by state and local governments in 2018.
$29 billion
— Combined debt outstanding for LDCs and IDAs at the end of 2017.
$272 million
— Amount in grants provided by LDCs in 2017 to economic development projects that planned zero new jobs.
$100 million
— Amount spent by IDAs and LDCs on staff wages, salaries, and benefits in 2015.
$700 million
— Tax benefits provided by IDAs in 2017.
$2 million
— The current budget of the Authorities Budget Office, which is approximately 40 percent of what was envisioned.
New York State's fiscal condition is obscured by Medicaid payment delays, which contribute to a projected budget gap exceeding $20 billion over four years. To address these financial imbalances, the State should implement cost-control measures, including the reduction of wasteful economic development spending and the targeting of school aid.
Recommendations related to Economic Development Spending
The State should cut wasteful economic development spending to help bring the State's finances into balance.
The 2019 Economic Development Sweetener Scorecard tracks 69 legislative bills aimed at providing tax incentives, grants, and loans to various industries and small businesses across New York. These proposed programs represent significant fiscal commitments, including hundreds of millions of dollars in potential tax exemptions and credits for sectors ranging from manufacturing to agriculture and technology.
Key Data
$275 Million
— Fiscal impact of the School Tax Relief (STAR) property tax exemption for small businesses.
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$100 Million
— Annual cap for the music and video game production tax credit.
$30 Million
— Fiscal impact of the Farm Workforce Retention Credit.
$10 Million
— Annual grants for the GrowNY pilot program for growing businesses.
$8.25 Million
— Fiscal impact of the Capital Investment Jobs Retention Program.
The 2019 Economic Development Sweetener Scorecard tracks 67 legislative proposals aimed at providing tax incentives, grants, and loans to various industries and small businesses across New York. These proposed economic development measures include significant fiscal commitments, such as a $275 million expansion of the School Tax Relief program and a $140 million tax break for manufacturers.
Key Data
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$30 Million
— Fiscal impact of increasing the credit per eligible farm employee under the Farm Workforce Retention Credit.
$275 Million
— Fiscal impact of making real property owned by small businesses with 100 employees or fewer eligible for the STAR property tax exemption.
$10 Million
— Annual grant authorization for the GrowNY pilot program to provide technical assistance to growing businesses.
$8.25 Million
— Fiscal impact of the Capital Investment Jobs Retention Program, a refundable tax credit for eligible businesses making significant capital investments.
$1 Million
— Fiscal impact of the Transitional Green Development Program to assist upstate communities with development plans.
The New York State Legislature introduced 67 economic development bills in 2019, proposing a wide array of tax incentives, grants, and loan programs aimed at various industries and small businesses. These legislative proposals include significant fiscal commitments, such as $275 million for small business property tax relief and $140 million for corporate franchise tax exemptions, reflecting a broad effort to stimulate economic activity through targeted subsidies.
Key Data
$275 Million
— Fiscal impact of making real property owned by small businesses eligible for the School Tax Relief (STAR) property tax exemption.
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$100 Million
— Annual cap for the new tax credit replacing Excelsior Jobs Program eligibility for the music and video game production industries.
$30 Million
— Fiscal impact of increasing the credit per eligible farm employee under the Farm Workforce Retention Credit.
$10 Million
— Annual grant authorization for the GrowNY pilot program to provide technical assistance to growing businesses.
$8.25 Million
— Fiscal impact of the Capital Investment Jobs Retention Program, a refundable tax credit for eligible businesses making significant capital investments.
The 2019 legislative session saw the introduction of 69 bills aimed at economic development, ranging from tax credits for specific industries like manufacturing and agriculture to grants for small businesses and microbusinesses. These proposals carry varying fiscal impacts, with some initiatives requiring millions in state funding to incentivize job creation and business growth.
Key Data
$275 Million
— Fiscal impact of the School Tax Relief (STAR) property tax exemption for small businesses.
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$100 Million
— Annual tax credit cap for music and video game production industries.
$30 Million
— Fiscal impact of the Farm Workforce Retention Credit.
$10 Million
— Fiscal impact of the GrowNY pilot program for economic gardening.
$8.25 Million
— Fiscal impact of the Capital Investment Jobs Retention Program.
The FY 2020 budget allocates $820 million to economic development capital spending and adds $840 million to the film tax credit, which is criticized for being wasteful and lacking transparency. These allocations occur despite concerns about the state's fiscal preparedness for a potential economic downturn and the need to restrain spending growth.
Key Data
$820 million
— Amount allocated to economic development capital spending in the FY 2020 budget.
$840 million
— Amount added to the wasteful film tax credit with minimal commitment to increased transparency.
The NYC Ferry system requires significant public subsidies, with per-ride costs far exceeding those of other transit options, and these costs are projected to rise further with planned service expansions. The current funding model, which relies on the Economic Development Corporation rather than the city budget, obscures the true financial impact and limits the ability to evaluate the efficiency of these transportation investments.
Recommendations related to Economic Development Spending
City officials should reconsider the policy choices that contribute to the high subsidies associated with the ferry system.
The City should evaluate options that would reduce the level of subsidy required to operate the ferry network.
Officials should consider whether alternative uses would meet the city’s transportation needs more efficiently and effectively.
The City should charge higher fares on weekends and for noncommuters to offset the cost of subsidies for daily commuters.
Implementing dynamic pricing models could be more appropriate for long, low-productivity routes that require substantial subsidies and see demand spikes on weekends.
Key Data
$10.73
— The per-ride operating subsidy for NYC Ferry in fiscal year 2018.
$56.7 million
— The operating costs for NYC Ferry in fiscal year 2018.
22%
— The farebox operating ratio for NYC Ferry in 2018, indicating the share of operating costs covered by fare revenue.
$24.75
— The projected per-ride subsidy for the planned Coney Island route.
$638.5 million
— The total capital commitments for the NYC Ferry system as of February 2019.
4.1 million
— The number of rides provided by NYC Ferry in 2018.
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New York State's economic development strategy relies heavily on costly, poorly designed tax breaks and project-based spending that often lacks transparency and standardized evaluation metrics. To improve outcomes, the state should eliminate ineffective expenditures like film tax credits and discretionary capital spending, while reorienting Regional Economic Development Councils to prioritize high-return investments and data-driven workforce training.
Recommendations related to Economic Development Spending
The state should eliminate film and production tax credits to generate savings for reinvestment.
State leaders should reduce Empire State Development discretionary capital spending by half to improve fiscal efficiency.
Policymakers should align funding with regional strategies to focus on projects in thriving industries and large cities to foster agglomeration effects.
The state must implement a stricter prioritization of projects based on potential return on investment to ensure sustained funding for long-term goals.
State agencies should standardize metrics across initiatives to improve transparency and evaluation of current programs.
Key Data
$570 million
— Potential savings from eliminating film and production tax credits.
$570 million
— Potential savings from reducing Empire State Development discretionary capital spending by half.
$1.1 Billion
— Total amount available for reinvestment by eliminating ineffective economic development expenditures.
$175 million
— Amount allocated in the NYS FY2019 budget for workforce training.
$750 million
— Annual awards provided to regional projects based on REDC rank and State agency scores.
New York's state and local economic development spending rose to $9.9 billion in 2018, an increase of $1.4 billion from 2016, while transparency and accountability measures remain insufficient. To address these issues, the state should codify transparency reforms into law, establish a unified budget, and implement standardized metrics and improved program design to ensure benefits align with private sector investment.
Recommendations related to Economic Development Spending
The state should codify the gubernatorial proposals for a "database of deals" and procurement reform into law to ensure transparency.
New York needs to establish a forward-looking unified economic development budget to better track and manage spending.
The state should standardize metrics across programs to allow for the comparability of results.
The state should improve program design so that benefits follow private sector investment, eligibility is standardized, and results are evaluated regularly.
Key Data
$9.9 billion
— Total amount New York spent on state and local economic development efforts in 2018.
$8.5 billion
— Total amount New York spent on state and local economic development efforts in 2016.
$4.4 billion
— Total state costs for economic development in 2018.
$5.6 billion
— Total local costs for economic development in 2018.
$1.2 billion
— Spending by the Empire State Development Corporation in 2018.
$739 million
— Spending by the Empire State Development Corporation in 2016.
New York State faces a $2.3 billion revenue shortfall due to the federal SALT cap, stock market volatility, and an economic slowdown. To address this deficit, the state should restrain spending growth, repeal the property tax relief credit, and reduce ineffective economic development programs.
Recommendations related to Economic Development Spending
The State should decrease State economic development programs that have not been proven effective, including the film tax credit.
New York State has directed over $28 billion toward economic development initiatives with underwhelming outcomes, prompting calls for greater transparency and oversight. Reforms such as establishing statutory reporting requirements, implementing a unified budget, and adopting standardized metrics are essential to ensure accountability for these expenditures.
Recommendations related to Economic Development Spending
The state should establish new reporting and restored oversight of economic development spending by statute to ensure that both continue under future administrations.
The state must implement a unified economic development budget to ensure accountability to taxpayers.
The state should adopt standardized metrics and improved program design to ensure accountability to taxpayers.
Key Data
$28 billion
— Total amount allocated to economic development by the State since Governor Cuomo took office.
The state has failed to enact significant reforms to prevent the rigging of over $1 billion in economic contracts, despite previous corruption scandals. Legislative leaders and the Governor are urged to fulfill campaign promises by establishing a database of business subsidies and prohibiting campaign contributions from state vendors.
Recommendations related to Economic Development Spending
Governor Cuomo should honor his campaign commitments to establish a Database of Deals to track business subsidies.
The Governor and legislature should enact legislation to ban campaign contributions by vendors doing business with the State.
Legislative leaders should pass legislation to reform the state’s contracting process to mitigate corruption risks.
The Governor and legislature should act on clean contracting reforms to prevent the rigging of state economic contracts.
Key Data
$1B
— Amount of state economic contracts rigged by top aides and campaign contributors to the Governor.
The Amazon HQ2 incentive package, totaling between $2.8 billion and $3.5 billion in state and city benefits, highlights significant flaws in current economic development strategies, including the use of discretionary grants and as-of-right tax expenditures. Policymakers should prioritize general infrastructure investment over company-specific subsidies and reform existing tax incentive programs to ensure they only induce job creation that would not otherwise occur.
Recommendations related to Economic Development Spending
The state should ensure that the Excelsior Jobs Program is not expanded to accommodate the needs of a single company, as this sets a concerning precedent.
Policymakers should implement caps on the level of wages eligible for reimbursement under the Excelsior jobs program to minimize the state’s financial exposure.
State capital funding is best invested in general infrastructure, not for the direct benefit of an individual company.
Amazon should pay the full value of the PILOT directly to the City rather than diverting some funds to the surrounding neighborhood.
New York City’s as-of-right tax incentives should be evaluated and potentially narrowed or eliminated to ensure benefits are only spent to induce job creation that would not otherwise occur.
Key Data
$1.2 billion
— Maximum Excelsior tax credits Amazon could receive over the 2019-2028 period.
$505 million
— Maximum total capital grant available from Empire State Development if job creation reaches 40,000.
$386 million
— Estimated total value of the Industrial and Commercial Abatement Program (ICAP) property tax abatement.
$900 million
— Potential total Relocation and Employment Assistance Program (REAP) credit by 2039 assuming the creation of 25,000 jobs.
$2.8 billion
— Total benefits available to Amazon from New York State and City if 25,000 jobs are created.
$3.5 billion
— Total benefits available to Amazon from New York State and City if 40,000 jobs are created.
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New York State allocated over $28 billion toward economic development initiatives between fiscal years 2012 and 2019, with $18.7 billion directed toward tax expenditures for businesses. An additional $8 billion was allocated by the Department of Economic Development and the Empire State Development Corporation for various projects, including significant investments in the Tesla SolarCity factory and the Moynihan Station development.
Key Data
$28 billion
— Total state allocation for economic development between fiscal year 2012 and fiscal year 2019.
$18.7 billion
— Portion of economic development spending allocated for tax expenditures for firms that commit to create or retain jobs or make significant capital investments.
$8 billion
— Total spending allocated by the Department of Economic Development (DED) and the Empire State Development Corporation (ESD) between fiscal years 2012 and 2019.
$750 million
— Cost of the Tesla SolarCity factory project, one of the largest economic development projects.
$276 million
— Cost of the Moynihan Station development project, one of the largest economic development projects.
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New York State legislators introduced numerous bills in 2018 aimed at expanding economic development programs, with fiscal impacts ranging from $0.21 million to $440 million. These proposed expansions, which include tax credits and grant programs for various industries, warrant a veto to prevent unnecessary growth in state spending.
Recommendations related to Economic Development Spending
The Governor should veto the ten bills that expand economic development programs to curb unnecessary state spending.
State policymakers should reject new tax credits and grant programs that increase the fiscal burden without proven economic benefits.
Legislators should prioritize fiscal restraint by halting the proliferation of targeted economic development initiatives.
Key Data
$440 Million
— Proposed increase in total funding for the Excelsior Linked Deposit Program.
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$100 Million
— Annual cap for the music and video game production tax credit.
$65 Million
— Proposed increase for the Excelsior Linked Deposit Program.
$25 Million
— Annual cap for the video game production tax credit.
$10 Million
— Annual grant authorization for the GrowNY pilot program.
New York State has allocated $2.8 billion of its $11 billion in litigation settlement funds to economic development programs, despite a poor record of efficacy and transparency in these initiatives. Rather than continuing to fund these programs, the state should reappropriate unused settlement funds to bolster its rainy day reserves, which currently sit at only 2.7 percent of general fund tax revenues.
Recommendations related to Economic Development Spending
Where practical, funds allocated to economic development should be reappropriated to the State’s reserves.
At a minimum, the recently realized $205 million, and $76 million that remains unallocated, should be deposited directly into the State’s rainy day fund instead of being used for economic development.
Key Data
$2.8 billion
— Amount of litigation settlement funds allocated to economic development.
$1.5 billion
— Amount of settlement funds allocated to the Upstate Revitalization Initiative in 2015.
$500 million
— Amount awarded to each of three Regional Economic Development Councils.
$1.3 billion
— Unused settlement funds for the Upstate Revitalization Initiative at the end of fiscal year 2018.
$386 million
— Unused settlement funds of the $400 million allocated to the second phase of the Buffalo Billion.
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New York state legislators proposed numerous economic development bills in 2018 that would create or expand various tax credits, grants, and loan programs, with some individual proposals carrying fiscal impacts as high as $140 million. These legislative efforts, which include initiatives for industries ranging from manufacturing to video game production, represent a significant expansion of state-funded economic incentives that warrant careful scrutiny and rejection.
Recommendations related to Economic Development Spending
The Governor should reject the ten economic development bills identified in the report to prevent unnecessary fiscal strain.
State leadership should refrain from enacting new targeted economic development programs that lack clear, proven economic benefits.
Policymakers should prioritize fiscal responsibility by vetoing legislation that expands tax credits and subsidies without rigorous cost-benefit analysis.
Key Data
$140 million
— Fiscal impact of the proposed zero-percent Corporate Franchise Tax rate for manufacturers.
$100 million
— Annual fiscal impact of the proposed tax credit for music and video game production.
$25 million
— Annual fiscal impact of the proposed tax credit for video game production.
$7 million
— Annual fiscal impact of the proposed extension of the Empire State Commercial Production Tax Credit.
$2 million
— Fiscal impact of the proposed Transitional Green Development Program.
$1.5 million
— Fiscal impact of the proposed Microenterprise Development Fund.
New York State legislators introduced numerous bills in 2018 aimed at expanding economic development programs, including tax credits for manufacturing, small business grants, and industry-specific incentives. These proposals reflect a broad effort to stimulate growth through targeted financial assistance, though many faced vetoes or remained in committee throughout the legislative session.
Key Data
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$100 Million
— Annual cap for the music and video game production tax credit.
$25 Million
— Annual cap for the video game production tax credit.
$20 Million
— Funding for the HIRE NY act to provide loans for microbusiness hiring.
$10 Million
— Fiscal impact of the GrowNY pilot program for economic gardening.
$7 Million
— Annual cap for the Empire State Commercial Production Tax Credit.
New York state legislators have introduced numerous bills aimed at expanding economic development programs, including tax credits, grants, and loan funds for small businesses, manufacturers, and startups. These proposed initiatives represent a wide range of fiscal commitments, with some programs seeking hundreds of millions of dollars in funding to stimulate job creation and industrial growth.
Key Data
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$440 Million
— Total funding increase for the Excelsior Linked Deposit Program.
$200 Million
— Portion of the Excelsior Linked Deposit Program dedicated to business startups.
$20 Million
— Fiscal impact of the HIRE NY act, which provides loans for microbusiness hiring.
$1.5 Million
— Fiscal impact of the Microenterprise Development Fund.
$1-$2 Million
— Fiscal impact of the Small Business Innovation Research Program.
New York State continues to allocate billions of dollars annually toward economic development programs despite a lack of evidence regarding their effectiveness and significant transparency issues. Instead of continuing these costly and often ineffective initiatives, the state should implement comprehensive reforms, including a unified budget and standardized performance metrics, while shifting focus toward broad investments in infrastructure and workforce development.
Recommendations related to Economic Development Spending
The state should publish a “database of deals” that includes funds committed and disbursed to each recipient across all programs, as well as project progress and results.
The state should use a unified economic development budget, reflecting the full scope of costs including tax expenditures, agency and authority spending, and the value of discounted power, to plan for future years.
The state should standardize metrics across economic development programs, so that results can be compared.
The state should improve program design so that benefits are provided retroactively based on performance, not up front; eligibility is standardized rather than discretionary; and results are regularly evaluated.
The state should make administrative reforms to ensure transparent, competitive procurement and stronger oversight.
Key Data
$4 billion
— Amount spent on economic development programs in fiscal year 2016.
$1.7 billion
— New appropriations for economic development in the fiscal year 2019 budget.
5 percent
— Total job growth outside of New York City between 2010 and 2016.
11 percent
— National job growth rate between 2010 and 2016.
$250 million
— Cost of the photonics consortium in Rochester.
$105 million
— Cost of the high-tech factory in Syracuse.
New York State's fiscal year 2019 budget increases economic development spending by at least $600 million without implementing necessary transparency or accountability measures. This growth occurs despite the lack of a "database of deals" or other reforms required to ensure the efficacy of these state investments.
Recommendations related to Economic Development Spending
The State should implement a "database of deals" and other actions to improve the transparency, accountability, or efficacy of economic development investments.
Key Data
$600 million
— The minimum amount by which economic development spending will grow in the New York State Fiscal Year 2019 Budget.
New York State's economic development spending has expanded significantly, reaching $4.0 billion in fiscal year 2016, with further increases proposed in the executive budget. To ensure accountability, new projects should be rejected and a moratorium imposed until transparency, consolidated budgeting, and improved program design are established.
Recommendations related to Economic Development Spending
The State should reject new economic development proposals and impose a moratorium on new economic development projects until transparency and documentation of results are achieved for existing programs.
Legislators should require the creation of a consolidated economic development budget to improve oversight and fiscal clarity.
The State must implement universal reporting requirements for all economic development programs to ensure accountability.
The State should pursue improved program design and administrative reforms to ensure economic development spending is effective.
Key Data
$4.0 Billion
— New York State spending on economic development in fiscal year 2016.
$338 Million
— The increase in Empire State Development (ESD) capital spending proposed in the executive budget.
$234 Million
— The increase in non-ESD economic development capital spending proposed in the executive budget.
$600 Million
— The cost of the proposed new Life Sciences Laboratory.
$300 Million
— The cost of the proposed new High Tech Innovation and Economic Development Infrastructure Program.
New York City's economic development efforts, which cost $3.2 billion in 2016, require reforms to improve transparency, standardize discretionary tax benefits, and refocus the Economic Development Corporation on job creation. The city should prioritize infrastructure investments in neighborhoods and utilize conduit financing for cultural, health, and educational sectors rather than direct capital investment.
Recommendations related to Economic Development Spending
The City should establish more detailed standards for awarding discretionary tax expenditures to ensure they are effective.
The City must improve transparency and reporting on EDC projects to allow for a full evaluation of benefits provided to recipients.
The City should make capital investments in infrastructure to support job growth in underdeveloped neighborhoods rather than for the benefit of individual firms.
The City should use conduit financing to support growth in the arts, health, and educational sectors as its main form of support for these areas.
The City should refocus the Economic Development Corporation on its mission of job creation by limiting its management of projects unrelated to economic development.
Key Data
$3.2 billion
— The total annual cost of the City's economic development efforts in 2016.
$548 million
— The value of discretionary tax benefits awarded by the City in 2016.
$30,000
— The threshold below which most projects received benefits per job created.
$100,000
— The amount of benefits per job created that three specific projects exceeded.
87 percent
— The portion of conduit debt issued since 2016 that was allocated to the cultural, educational, and health sectors.
New York City's capital spending on economic development projects, such as the redevelopment of Willets Point and Coney Island, often lacks rigorous cost-benefit analysis or clear evidence of expected returns. These investments are frequently made at the request of local officials and bundled into large appropriations, making it difficult to isolate specific costs and benefits or ensure they generate meaningful economic activity.
Recommendations related to Economic Development Spending
The next administration should enact clear guidelines or directives for performing routine maintenance and regular replacement of assets to prevent the state of good repair backlog from growing.
All city agencies and component units should undertake a comprehensive needs assessment that details the condition of major asset classes and the cost to fix those in disrepair.
The City should adopt a “fix it first” strategy, in which state of good repair projects receive priority at each agency.
Proposed expansion projects should be accompanied with rigorous cost-benefit analysis demonstrating service improvements or economic enhancements, and only projects with the greatest potential return on investment should be included in the capital plan.
The City should renew its Project Labor Agreements to reduce labor costs and improve managerial flexibility.
City leaders should advocate for a repeal of Wicks Law and an expansion of the city’s toolbox for effective contracting, including the latitude to award construction contracts on a “best value” basis.
Key Data
$4.016 Billion
— Total capital commitments devoted to stimulating economic development between fiscal years 2003 and 2014.
$100 Billion
— Total debt outstanding for the City as of fiscal year 2014.
$53.7 Billion
— Total capital commitments outlined in the final Ten-Year Capital Strategy spanning fiscal years 2014 to 2023.
$300 Million
— Estimated capital budget savings over four years derived from Project Labor Agreements.
$20 Billion
— The total price tag of the resiliency plan issued after Hurricane Sandy.
$4.5 Billion
— The stated funding gap for the resiliency plan after accounting for federal funds and authorized capital strategy funds.
$168.2 billion is the NYS Executive Budget for Fiscal Year 2018-2019. Dave Friedfel joins WT[D]P to discuss budget growth, school aid, medicaid, economic development, and proposals to deal with the impact of federal tax law changes.
New York State's economic development subsidy programs remain at high risk for corruption and waste, necessitating a freeze on $3.2 billion in proposed new spending until significant transparency and oversight reforms are enacted. Essential reforms include requiring competitive contracting, centralizing grant awards under the Empire State Development Authority, and creating a public database to track subsidy values and performance targets.
Recommendations related to Economic Development Spending
The state should require competitive and transparent contracting for the award of state funds, including those managed by authorities and affiliates.
The state should have the Empire State Development Authority award all state economic development grants and contracts, rather than using SUNY or state-controlled non-profits.
The state should empower the Comptroller to pre-approve all SUNY and OGS central contracts over $250k to ensure oversight.
The state should prohibit all state-affiliated entities from doing business with their boards of directors to reduce conflicts of interest.
The state should create a Database of Deals that shows the total value of subsidies awarded to a business, including job targets and “clawback” provisions.
The state should explore options to limit campaign contributions from anyone seeking a state contract to reduce potential conflicts of interest.
Key Data
$3.2 billion
— New proposed spending in the Executive Budget on economic development and business subsidies.
$250k
— Threshold for SUNY and OGS central contracts that should require Comptroller pre-approval.
New York's executive budget continues to prioritize excessive spending on economic development initiatives despite a lack of tangible success from these programs. The state should implement significant reforms to its economic development strategy rather than continuing to fund projects like the $300 million High Technology Innovation and Economic Development Infrastructure Program and the $600 million life sciences laboratory.
Recommendations related to Economic Development Spending
The Governor and Legislature need to adopt significant reforms to the State's economic development program.
Key Data
$300 million
— Proposed funding for the High Technology Innovation and Economic Development Infrastructure Program.
$600 million
— Proposed funding for a life sciences laboratory in the Capital District.
New York allocates over $4 billion annually to economic development, yet often funds projects without clear criteria or accountability, leading to poor returns on investment. To improve outcomes, the state should implement reforms such as creating a unified budget, standardizing performance metrics, and ensuring incentives are only awarded after job creation promises are met.
Recommendations related to Economic Development Spending
The state should establish a unified economic development budget to provide a clear overview of all spending.
New York should standardize metrics across all economic development initiatives to allow for accurate comparisons.
The state should establish a database of deals outlining every economic development incentive to ensure transparency.
Policymakers should improve program design so that incentives are only provided after an employer has fulfilled its promises to protect taxpayer funds.
The state should adopt administrative reforms to ensure procurement integrity within economic development projects.
Key Data
$4 billion
— annual allocation by New York state to economic development, including tax benefits.
$1 billion
— taxpayer money allocated to 'silver-bullet' projects before a single new job was created.
$83 million
— investment by the state in a factory for an LED light company that failed to lure the business.
$15 million
— additional cost to taxpayers to properly equip the factory building for a new tenant.
290 jobs
— number of jobs the new company promised to create at the facility.
$337,931
— cost per job for the state's investment in the new company.
$3.2 billion -- how much New York City spent on economic development in 2016, including tax expenditures, operating costs, and capital spending. NYCEDC President and CEO James Patchett joins the podcast to discuss the City's development strategy, tax breaks, NYC Ferry and the BQX project.
New York City spends billions annually on economic development through tax expenditures, capital projects, and conduit financing, yet the sectors driving job growth often pay low wages. While some progress has been made in managing these programs, the city needs to implement stricter standards for discretionary tax benefits and improve the cost-effectiveness of its investments.
Recommendations related to Economic Development Spending
The city should make as-of-right tax expenditures more cost-effective with continued reform.
The administration should create more detailed standards for awarding discretionary tax expenditures.
The city should make capital investments in infrastructure to support job growth in underdeveloped neighborhoods.
The city should manage EDC programs with a focus on job creation and improving transparency.
The city should use conduit financing to support growth in the arts, health, and educational sectors.
Key Data
$3.2 billion
— The annual cost of the City’s economic development efforts in 2016.
$622 million
— Capital spending on economic development in 2016.
$534 million
— Operating costs for SBS, EDC, and various LDCs in 2016.
$590,269
— The high end of the per-job subsidy range for projects initiated in fiscal years 2015 and 2016.
$55 million
— The New Markets Tax Credits allocation received by the New York City Neighborhood Capital Corporation in 2016.
Tax Increment Financing (TIF) is a tool used to fund infrastructure and economic development by capturing future property tax revenue, but it carries significant risks if not properly planned or if it fails to generate net new growth. Governments should conduct rigorous due diligence, including 'but for' analyses, to ensure projects are truly necessary and financially viable before diverting public funds.
Recommendations related to Economic Development Spending
Governments should determine if the proposed development would occur in the absence of the TIF-funded capital project by conducting a 'but for' analysis.
Policymakers should evaluate whether the investment will generate new economic activity or simply shift existing activity from elsewhere.
Officials must assess if the project's expected return on investment is strong enough to justify diverting revenue from other prospective needs.
Cities should test their revenue projections against a range of economic scenarios, including the impact of possible cost overruns, revenue shortfalls, and economic downturns.
Governments should implement strong transparency provisions to help protect future taxpayers against the risks associated with TIF projects.
Key Data
$3 billion
— The projected cost of the Hudson Yards project, which public investments and actions were expected to finance.
$359 million
— The amount New York City paid from its general fund to subsidize Hudson Yards’ interest payments after the Great Recession.
$266 million
— The amount of capital cost overruns incurred by the Hudson Yards project after it went over budget.
$14 million
— The amount of TIF debt the Troy Downtown Development Authority in Michigan defaulted on after assessed property values fell.
$75.4 million
— The total outstanding Pilot Increment Financing (PIF) debt in New York as of June 2017.
$10 million
— The amount that a majority of Chicago's TIF districts raised and spent over a 13-year period.
New York State currently spends $5 billion on economic development programs, yet new initiatives should be halted until comprehensive reforms regarding evaluation, procurement, and disclosure are implemented. Narrowly focused incentives often fail to provide a return on investment and risk expanding beyond their initial caps, as seen with the Film Tax Credit Program.
Recommendations related to Economic Development Spending
The Governor should veto the three bills that would expand the State’s economic development programs.
No new programs should be approved until reforms are put in place to improve evaluation, procurement, and disclosure requirements.
Existing spending must be effectively evaluated before any new spending or tax programs are considered.
Narrowly focused economic development incentives should be curtailed because they do not provide a return on investment.
Key Data
$5 billion
— Annual state spending on economic development programs.
$100,000
— Maximum grant amount for small businesses supporting commercialization of innovative energy and environmental technology under A6110/S1120.
$5 million
— Annual cap for the new refundable tax credit for companies that hire female and minority writers and directors under A7270-c/S4999-d.
$25 million
— Original annual cap for the Film Tax Credit Program when it was first adopted.
$420 million
— Current annual cost of the Film Tax Credit Program.
Read original article here . Governor Andrew Cuomo is back in New York after a rare, overnight trip to California, fundraising with Hollywood executives whose industry has benefited from New York's $420 million film tax credit program. "It's a glamorous form of coporate welfare," said Ken Girardin, Empire Center analyst.…
New York State spends $4 billion annually on economic development programs, yet nearly $1.4 billion of the 2017-2018 budget was allocated to initiatives lacking clear eligibility or programmatic parameters. To improve accountability and oversight, the state should implement a unified budget, standardize performance metrics, and require the State Comptroller to review all contracts exceeding $250,000.
Recommendations related to Economic Development Spending
The State should establish a unified economic development budget to list and quantify all state economic development spending, including tax expenditures and subsidies.
New York should use standardized metrics across economic development initiatives regarding job creation, retention, and capital investments to accurately evaluate program success.
The State should establish a 'Database of Deals' to bring together all state funds disbursed or committed for economic development along with appropriate measures of results.
Project-specific economic development subsidies should only be provided after a private entity has made an investment to reduce risk for taxpayers.
The Office of the State Comptroller should have authority to review and approve all contracts more than $250,000 to ensure proper administrative oversight.
Key Data
$4 billion
— Total amount the state invests in economic development programs each year.
$1.4 billion
— Amount in the fiscal year 2017-2018 budget allocated to programs that lack clear parameters.
$250,000
— Threshold for contracts that the State Comptroller should have the authority to review and approve.
$14 million
— Annual appropriation for Centers for Advanced Technology.
$11 million
— Annual appropriation for Centers of Excellence.
$10 million
— Annual appropriation for the Manufacturing Extension Partnership.
The data points are 348 and 74. 348 is the number of Local Development Corporations and Industrial Development Agencies in NYS. These corporations made $16.2 billion in economic development investments from 2011 through 2015, yet only 5 of the state's 62 counties have had job growth higher than the national…
New York State's system of Industrial Development Agencies and Local Development Corporations is fragmented and lacks sufficient accountability, with $1.9 billion in annual spending and tax expenditures often failing to produce clear economic benefits. Consolidating these entities and standardizing reporting requirements are essential steps to improve transparency and ensure public resources are invested effectively.
Recommendations related to Economic Development Spending
IDAs in each of the state’s 10 REDC regions should be consolidated into a single multicounty IDA per region, which will work to support the REDCs’ strategic plans.
Existing LDCs should not be allowed to engage in economic development activities and should be limited to specific purposes.
The formation of new LDCs within each region should be subject to a veto by the local REDC so that economic development within the region remains coordinated.
ABO should be granted the ability to assess fines, suspend directors, or to curtail certain activities of an authority and its board which have been censured but remain out of compliance with state law.
Oversight of the data being input into PARIS should be increased, with data for large projects verified individually for each project.
OSC’s audit authority should be extended to apply to LDCs directly, not only through their relationships with local governments.
IDAs and LDCs should collect the same information for each of their projects, all of which should be available on the state’s open data website as part of a comprehensive 'database of deals'.
Key Data
$1.9 billion
— Total spending and tax expenditures by IDAs and LDCs in 2015.
$16.2 billion
— Investments made by IDAs and LDCs from 2011 through 2015.
350
— Number of IDAs and LDCs across New York State in 2015.
$24,747
— Average tax exemption per planned job for IDA projects outside New York City in 2015.
55.7%
— Percentage of IDA procurement costs that were for non-competitively bid contracts during the 2016 reporting year.
$23,885
— Total debt outstanding for IDAs and LDCs in 2015 (in millions).
This week's data point is 30% - the share, based on dollar value, of city contracts to be awarded to minority- and women-owned businesses by fiscal year 2021, according to a goal set by Mayor Bill de Blasio in September 2016. New York City Deputy Mayor Richard Buery joins the…
This week's data point is $780 million - the value of contracts involved in the alleged bid-rigging and corruption scandal involving State economic development programs. Special guest New York State Comptroller Tom Dinapoli discusses his proposal for independent review and reform of state procurement practices with Ben Max and Maria…
New York State's spending on economic development programs has tripled under the current administration, yet these investments lack clear guidelines and measurable results. Despite significant funding increases and tax credit extensions, nine out of ten regions in the state have lagged behind national job growth rates between 2010 and 2016.
Recommendations related to Economic Development Spending
New York State should establish a unified economic development budget to improve transparency and oversight.
The state must use standardized metrics to effectively evaluate the performance of economic development programs.
Policymakers should publish a database of deals to provide public visibility into how economic development funds are allocated.
The state needs to improve program design to ensure that economic development initiatives are structured to achieve meaningful outcomes.
The state should make administrative reforms to streamline and enhance the management of economic development efforts.
Key Data
23%
— Growth in total appropriations to Empire State Development from the 2017 adopted budget to the 2018 adopted budget.
$1.4 billion
— Amount of appropriated funds for Empire State Development dedicated to projects without specific guidelines.
$420 million
— Annual cost of the Empire State Film Production Tax Credit.
$163 million
— Annual cost of the Excelsior Scholarship once fully phased in.
9 out of 10
— Number of regions in New York State that lagged behind national job growth from 2010 to 2016.
-1.8%
— Job growth rate in the Southern Tier region from 2010 to 2016.
In 2017, only 40.7% of New York City residents rated the City's efforts to promote economic growth as excellent or good, representing a 6.1% decline from 2008. Additionally, 9.4% of survey participants identified jobs, training, and economic development as one of the most important issues requiring more attention from the City government.
Key Data
40.7%
— Proportion of residents who rated the City's promotion of economic growth as excellent or good.
-6.1%
— Change in the proportion of residents rating the City's promotion of economic growth as excellent or good from 2008 to 2017.
9.4%
— Proportion of survey respondents who identified jobs, training, or economic development as one of the most important issues requiring more attention from the City government.
The New York State fiscal year 2018 budget allocates billions in capital funds for economic development without establishing a meaningful planning process or performance standards. This approach relies on ad hoc projects and questionable investments rather than transparent, accountable oversight.
Recommendations related to Economic Development Spending
The state should require meaningful disclosure and performance standards for economic development spending.
The state should allocate capital funds through a meaningful planning process instead of dedicating funds to ad hoc projects and questionable investments.
The state should extend design-build authorization to New York City and for State government outside of specified projects to yield considerable savings.
New York’s economic development tax incentive programs are the most expensive in the nation, costing taxpayers $8.25 billion in 2015 alone. Despite this high spending, there is little evidence that these incentives effectively drive economic growth, wages, or employment, necessitating a moratorium on new spending and comprehensive reform.
Recommendations related to Economic Development Spending
The state should implement a moratorium on new economic development spending until it increases transparency, establishes performance criteria to measure impacts, and enforces agreements to hold beneficiaries accountable.
New York should establish a unified economic development budget that captures state and local costs.
The state should use standardized metrics across all economic development initiatives.
The state should publish a database of deals to shine a light on recipients of incentives.
The state should improve program design to follow best practices and to reward actual performance.
The state should make administrative reforms to procurement and oversight rules.
Key Data
$45 billion
— State and local economic development tax incentives cost taxpayers $45 billion in 2015.
$8.25 billion
— New York awarded $8.25 billion in incentives in 2015.
2.5 times
— New York's incentive use is 2.5 times higher than the national average.
New York State is operating under an emergency budget that extends spending levels while funding water infrastructure, creating uncertainty for local governments and school districts. The state should prioritize fiscal discipline and enact reforms, including better oversight and transparency for economic development spending.
Recommendations related to Economic Development Spending
The Legislature and Governor should promptly come to an agreement that includes improved targeting and disclosure of economic development spending.
CBC's Director of State Studies David Friedfel and Ron Deutsch of the Fiscal Policy Institute join Nick Reisman on Capital Tonight to discuss economic development in New York and reforms that should be part of the budget process.
Standardized metrics should be tracked for all economic development programs to ensure transparency and accountability regarding public investments. These metrics include detailed reporting on project information, incentive amounts, job creation and retention commitments, and actual capital investments.
Recommendations related to Economic Development Spending
Agencies should collect general project information, such as identification numbers, applicant names, and industry codes, for all economic development programs.
Programs must report annual breakouts of incentives issued, including grants, loans, tax credits, and the estimated value of other benefits.
Economic development initiatives should track job creation and retention commitments, including both full-time equivalent and temporary positions.
Agencies should monitor actual job performance by reporting full-time equivalent and temporary jobs annually after the incentive begins.
Programs should document capital investment commitments and actual qualified investments to ensure transparency in economic development spending.
New York's Executive Budget proposes significant increases in economic development spending, including $319 million for Empire State Development and $650 million in non-ESD capital spending, despite a history of limited results. To address these concerns, the state should reject these new allocations, impose a moratorium on new programs, and repeal or reduce the $420 million annual film tax credit.
Recommendations related to Economic Development Spending
The allocation of $800 million for economic development should be rejected.
The state should impose a moratorium on new economic development programs until more transparency and results are achieved in existing programs.
New York should repeal or substantially decrease the Empire State Film Tax Credit, as the film and television industry is firmly embedded in New York.
The state should create a consolidated economic development budget and universal reporting requirements to ensure transparency and results in existing programs.
Key Data
$800 million
— The allocation for economic development in the Executive Budget that should be rejected.
$319 million
— The amount by which the Executive Budget would increase spending by Empire State Development.
$334 million
— The amount by which the Executive Budget increases non-ESD economic development capital spending.
$650 million
— The total amount of non-ESD economic development capital spending proposed in the Executive Budget.
$420 million
— The annual cost to state taxpayers for the Empire State Film Tax Credit.
New York State's economic development spending reached $4.0 billion in fiscal year 2016, yet these programs often lack transparency and measurable results. The proposed executive budget for fiscal year 2018 would significantly increase this spending without addressing the need for standardized performance metrics or improved reporting requirements.
Recommendations related to Economic Development Spending
The growth of economic development costs should be halted, not accelerated, until the effectiveness of each program is demonstrated through standardized performance measures and transparent reporting.
New York State should implement a consolidated economic development budget that incorporates state agency spending, tax incentives, and public authority benefits.
A publicly accessible, searchable database of economic development incentives should be created.
Key Data
$4.0 billion
— Total state economic development costs in fiscal year 2016.
$2.4 billion
— State tax breaks in fiscal year 2016, representing 60 percent of total costs.
$1.6 billion
— Direct state spending in fiscal year 2016, representing 40 percent of total costs.
$739 million
— Empire State Development spending in fiscal year 2016.
$644 million
— Additional spending in fiscal year 2018 proposed in the Executive Budget.
$1.5 billion
— Cumulative future tax credits proposed in the Executive Budget.
The FY2018 Executive Budget allocates excessive capital funding to questionable economic development projects, including hundreds of millions for specific initiatives in Buffalo, the Bronx, and life sciences. Furthermore, the budget increases appropriations for economic development while weakening oversight and accountability measures for programs like START-UP NY and extending unnecessary subsidies for the profitable film industry.
Recommendations related to Economic Development Spending
The state should cease extending the film tax credit, as the movie industry is profitable and should not be subsidized.
The state should reduce capital funding allocations for dubious economic development projects, such as the Life Science initiative and various regional projects.
The state should strengthen eligibility, reporting, and clawback provisions for the START-UP NY program to ensure accountability and protect the state's investment.
Key Data
$300 million
— Capital funding allocated to the Life Science initiative.
$400 million
— Capital funding allocated to projects in Buffalo.
$108 million
— Capital funding allocated for an ice-skating rink in the Bronx.
$150 million
— Capital funding spread throughout the state through the Regional Economic Development Councils.
15%
— Increase in appropriations for economic development projects in the operating budget.
Governor Cuomo's fiscal year 2018 budget proposals include $15.5 billion in spending across various capital and operating projects, including significant investments in infrastructure and economic development. These initiatives raise questions regarding the state's ability to close projected budget gaps and the long-term fiscal impact of new programs like the $10 billion airport transformation.
Key Data
$10 Billion
— Cost allocated for the transformation of JFK Airport.
$500 Million
— Funding designated for the Buffalo Billion 2 economic development initiative.
$150 Million
— Investment for the Woodbury Transit and Economic Development Hub.
$100 Million
— Allocation for the second round of the Downtown Revitalization initiative.
$38 Million
— Funding for the revitalization of the Plattsburgh Airport.
$36 Million
— Funding for the revitalization of the Syracuse Airport.
New York's Regional Economic Development Councils have distributed nearly $4 billion in tax breaks and grants since 2011, yet most regions have failed to outperform national or neighboring state job growth benchmarks. Instead of continuing to fund specific industries or projects, the state should prioritize broad regulatory and tax reforms, infrastructure investment, and career education to foster more effective economic growth.
Recommendations related to Economic Development Spending
REDCs should reassess their strategic plans and revise them with an eye toward investing in business sectors that are more likely to spur growth.
Rather than aiding specific businesses or projects, better results may be available through regulatory and tax reform, enhanced career and technical education, or infrastructure investment that benefit employers throughout the region or state.
Key Data
$4 billion
— Total tax breaks and grants awarded through the Regional Economic Development Councils to date.
$750 million
— Additional funding available for Regional Economic Development Councils this year.
7.9 percent
— Total employment growth in New York State between 2010 and 2015.
656,801
— Number of jobs added in New York State for a total of almost 9 million in 2015.
$65,000
— Statewide average pay in the manufacturing sector.
$120,400
— Statewide average pay in the technology sector.
New York should veto proposed legislation that would create $150 million in new tax credits for music and digital gaming production, as these narrowly focused subsidies lack a proven return on investment. Instead of creating new programs, tax policy with significant budget implications should be addressed during comprehensive budget negotiations to ensure fiscal responsibility.
Recommendations related to Economic Development Spending
Governor Cuomo should veto A.10083-b/S.7485-b to prevent the creation of new tax credits for music and digital gaming production.
The state should curtail narrowly focused tax credits rather than expanding them, as they do not provide a sufficient return on investment.
Matters of tax policy with significant budget implications should be dealt with in the midst of budget negotiations and an overall financial plan.
Key Data
$25 million
— Annual cost of the proposed music and digital gaming production tax credits.
$150 million
— Total estimated cost of the proposed tax credits over the next three years.
$25 million
— Original annual cap of the Film Tax Credit Program when it was first adopted.
$420 million
— Current annual cost of the Film Tax Credit Program.
New York State's Fiscal Year 2017 Financial Plan Mid-Year Update shows tax revenue projections down $1.4 billion from the adopted budget and out-year budget gaps growing to $8.9 billion by fiscal year 2020. While economic development oversight remains unchanged despite corruption concerns, the state faces rising personnel costs and increased expenses for minimum wage hikes in state contracts.
New York State faces pressure to reform its economic development project oversight following recent corruption charges, necessitating a thorough evaluation of current spending to eliminate ineffective initiatives. The state must determine if it will prioritize fiscal responsibility by cutting less desirable projects rather than simply shifting administrative responsibilities.
Recommendations related to Economic Development Spending
The State should take this opportunity to fully evaluate economic development spending and cut less desirable projects.
New York's economic development programs have been marred by a massive bid-rigging scandal involving over $1 billion in public funds, highlighting the need for systemic procurement reforms. To restore public trust, the state must centralize subsidy awards under the Empire State Development Corporation, implement competitive contracting, and increase transparency through measures like a public database of deals and campaign contribution limits.
Recommendations related to Economic Development Spending
Require competitive and transparent contracting for the award of state funds, regardless of the contracting entity.
Transfer responsibility for awarding all business subsidy awards to the Empire State Development Corporation, and end the use of state non-profits and SUNY in awarding these subsidies.
Empower the Comptroller to review and approve all state contracts.
Create a Database of Deals that allows the public to see the total value of all forms of subsidies awarded to a business.
Seek to reduce the potential for conflicts of interest by exploring options to limit campaign contributions from anyone who has or is seeking a state contract.
Key Data
$750 million+
— The scale of the bid-rigging scandal engulfing state-controlled non-profits and SUNY Polytechnic.
$1 billion
— The amount of public funds affected by the scandal involving systemic problems with how the state awards certain large contracts.
19
— The number of states that currently have 'pay to play' laws to limit campaign contributions from those seeking state contracts.
6
— The number of states that currently have a 'Database of Deals' allowing the public to see the total value of subsidies awarded to a business.
New York State spends $8.6 billion annually on economic development initiatives, yet lacks a unified budget or clear metrics to evaluate the effectiveness of these investments. The state should shift from providing upfront discretionary grants based on promises to a pay-for-performance model that requires established eligibility criteria and accountability mechanisms.
Recommendations related to Economic Development Spending
More robust reporting requirements are needed all around for economic development initiatives.
The state should not provide economic development benefits based on promises alone.
The state should pay for performance, providing subsidies only for investments and wages that have been expended.
It's time for the state to stop project-specific appropriations for economic development until eligibility criteria are established and accountability mechanisms enhanced.
Key Data
$8.6 billion
— Total annual state economic development investments, including tax breaks and spending.
$4 billion
— The state portion of annual economic development investments.
$4.6 billion
— The local portion of annual economic development investments.
$750 million
— Amount the state is paying to build the SolarCity factory.
$20,000
— Cost per job per year for the SolarCity project based on hiring targets.
TWC News Allegations in state government are bringing more light to the state's economic development - the cost of many programs continues to rise but the rate of return doesn't hold up. CBC's Dave Friedfel explains.
A recent bid-rigging scandal involving New York's Upstate economic development program has exposed systemic flaws in how the state awards over $1 billion in public funds through non-profits and SUNY branches. To prevent future abuse, watchdog groups are calling for increased transparency, the consolidation of subsidy awards under the Empire State Development Corporation, and stricter oversight of state contracts.
Recommendations related to Economic Development Spending
Require competitive and transparent contracting for the award of state funds, regardless of the contracting entity.
Transfer responsibility for awarding all business subsidy awards to the Empire State Development Corporation (ESDC), and end the use of state non-profits and SUNY in awarding these subsidies.
Empower the Comptroller to review and approve all state contracts.
Create a Database of Deals that allows the public to see the total value of all forms of subsidies awarded to a business.
Limit campaign contributions from anyone who has or is seeking a state contract to reduce the potential for conflicts of interest.
Key Data
$1 billion
— The amount of public funds affected by the scandal involving the state's Upstate economic development program.
six states
— The number of states that currently maintain a Database of Deals to track subsidies awarded to businesses.
Nineteen states and NYC
— The number of jurisdictions that have implemented 'pay to play' laws to limit campaign contributions from those seeking state contracts.
New York's START-UP New York program provided $56,561 in tax benefits to participating companies in 2014, a figure that grew to $1.2 million in 2015. These figures represent the actual benefits received by companies, which have remained below the state's initial tax expenditure estimates.
Key Data
$56,561
— Actual tax benefits reported by START-UP New York companies in 2014.
$1.2 million
— Actual tax benefits reported by START-UP New York companies in 2015.
New York State's economic development spending lacks sufficient oversight, with project-specific appropriations often bypassing established criteria and accountability measures. Programs like START-UP NY and the Excelsior Jobs Program require reforms to ensure subsidies are tied to performance and that tax incentives are not disproportionately benefiting companies or industries that do not require state assistance.
Recommendations related to Economic Development Spending
The state should exclude recently added industries, notably music and entertainment, from the Excelsior Jobs Program, as they do not require state assistance in order to be economically viable.
The state should convert the personal income tax benefit in START-UP NY into a business tax credit based on wages paid.
The state should implement a cap on the maximum salary that could be exempt from tax in the START-UP NY program.
The state should require that total wages paid and the number of employees be reported for START-UP NY.
The state should implement a cessation to project-specific appropriations for economic development at least until eligibility criteria are established and accountability mechanisms enhanced.
The state should ensure that all economic development programs follow the Excelsior model of pay-for-performance.
Key Data
$1 billion
— Amount the State is paying to build a factory in Buffalo for SolarCity.
$2,000
— Cost to the State per job per year for the Muller Quaker factory.
6.85%
— The jobs credit rate in the Excelsior program, which is considered too generous.
$486 million
— Funding for the SolarCity plant included in recent budgets.
$638 million
— Funding for the Nano Utica project included in recent budgets.
$59,000
— The State Median Household Income annually.
Risky Business Investments Billions of your taxpayer dollars are used in an effort to lure businesses to our region to create jobs. What's being done to make sure state money isn't being wasted?
The state should declare a moratorium on expansions in economic development spending until existing programs are evaluated and ineffective ones are terminated, as current initiatives often lack evidence of worthwhile returns. Recent spending includes billions for regional grants and specific projects like a pharmaceutical factory and a mall, which should be rejected in favor of more rigorous oversight.
Recommendations related to Economic Development Spending
The use of settlement funds to support economic development projects with unquantifiable returns on investment should be rejected.
The proposal to use $170 million for losers of last year’s Upstate Revitalization Initiative should be rejected as an unjustified economic development program.
The goal of the Private Activity Bond Allocation Act should be to subject the use of such bonds for economic development to statewide oversight.
The extension of the Excelsior Jobs Tax Credits should be rejected.
A moratorium should be declared on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
Key Data
$170 million
— Amount proposed for losers of last year’s Upstate Revitalization Initiative.
$600 million
— Amount in capital grants through Regional Economic Development Councils.
$1.5 billion
— Amount for the Upstate Revitalization Initiative.
$1 billion
— Additional amount for economic development in the Executive Budget.
$200 million
— Amount allocated to build a pharmaceutical factory in Chautauqua County.
$22 million
— Amount from the 2016 budget to subsidize a mall on Staten Island.
The FY2016-2017 Executive Budget proposes over $1 billion in new economic development capital grants, including funding for university initiatives and regional councils, despite a lack of evidence that these subsidies effectively create jobs. Performance reporting for these programs remains inadequate, with documented job results available for less than one-fifth of Regional Economic Development Council projects.
Recommendations related to Economic Development Spending
The state should improve performance reporting for economic development programs to ensure transparency and accountability.
The state should require documented evidence that economic development subsidies are effective before extending programs like the Excelsior Jobs Program.
Key Data
$1 billion
— New economic development capital grants proposed in the Executive Budget.
$470 million
— Funding allocated for university-related initiatives.
$200 million
— Funding allocated for losers of the Upstate Revitalization Initiative.
$110 million
— New SUNY/CUNY 2020 challenge grants.
$150 million
— Sixth round of Regional Economic Development Council (REDC) capital funding.
New York's Regional Economic Development Councils have received nearly $3 billion in state funding, yet a widespread lack of standardized reporting on project outcomes makes it difficult to track performance or justify continued investment. To improve accountability, the state must require consistent, project-level reporting on actual costs, job creation, and retention for all funded initiatives.
Recommendations related to Economic Development Spending
ESD should collect more information for its centralized CFA Data Table to allow for comparisons across year of award, industry sectors, state agencies, and project types.
Actual project-level information on total costs, jobs created, and jobs retained for all projects should be collected and published annually.
The state should require standardized reporting of performance indicators to better monitor and manage projects for performance.
The state should ensure that project-level performance influences the extent of later rounds of funding.
The state should require reporting on actual project investment to allow for the calculation of leverage ratios and cost-effectiveness.
Key Data
$3 Billion
— State commitment to projects reviewed by REDCs through 2014.
$1.2 Billion
— Funding provided by Empire State Development through 2014.
$1.1 Billion
— Funding provided through industrial development bonds through 2014.
$689 Million
— Funding provided by other state agencies through 2014.
$750 Million
— Total of the fifth round of awards announced at the end of 2015.
$1.5 Billion
— Funding to be distributed to three upstate regions based on the Upstate Revitalization Initiative.
The Excelsior Jobs Program has proven to be a more efficient and targeted economic development initiative than the Empire Zones program it replaced, though recent legislative expansions threaten to increase costs and reduce performance standards. To maintain fiscal discipline, the state must resist further program modifications and ensure rigorous oversight of tax credit allocations.
Recommendations related to Economic Development Spending
The state should avoid the temptation to loosen restrictions and performance requirements to entice more entrants into the Excelsior Jobs Program.
Empire State Development should remain cautious and vigilant in administering and monitoring the program.
Legislators should avoid additional modification to expand the program.
Key Data
$470 million
— Allocated in tax credits over the lifetime of the benefit period for the Excelsior Jobs Program compared to $2 billion for Empire Zones.
$2 billion
— Allocated in tax credits over the lifetime of the benefit period for the Empire Zones program.
$478 million
— Unused tax credits accumulated by Empire State Development during the first four years of the Excelsior program.
$239 million
— Amount of unused credits rolled over for use in other years of the program.
$1.8 billion
— Potential cost of the Excelsior program by 2019 when accounting for expanded length and rollover credits.
20 percent
— Average annual cost growth of the Empire Zones program over its lifetime.
The city's ten-year capital strategy lacks sufficient transparency and justification, particularly regarding $3.1 billion in economic development spending that currently lacks supporting cost-benefit analysis. Without clear performance metrics or defined project goals, it is impossible to determine if these investments will effectively increase economic activity or improve service delivery.
Recommendations related to Economic Development Spending
The Council should require improved reporting on the rationale for and performance goals of capital spending.
The Council should limit the capital budget to clearly defined projects with demonstrable benefits.
Investments should be undertaken based on clear analysis that demonstrates increased economic activity, improved operating efficiency, or enhanced service delivery.
Specificity is necessary before dollars are appropriated for new investments.
Key Data
$3.1 billion
— Total planned economic development spending, which includes projects that are not specified and lack supporting cost-benefit analysis.
$2 billion
— Portion of the economic development spending allocated to the Neighborhood Revitalization Fund.
$22 billion
— Total value of new OneNYC investments, for which details and specific spending plans are lacking.
New York state has significantly increased spending on economic development programs and expanded tax credit eligibility despite a lack of evidence that these subsidies generate positive economic returns. State leaders should prioritize rigorous economic impact analyses to justify these large expenditures rather than continuing to expand programs without clear performance metrics.
Recommendations related to Economic Development Spending
State leaders should seek better evidence that large economic development subsidies produce positive returns for New York before adopting new capital funding or expanding tax credit programs.
The state should require in-depth economic analyses for all economic development programs to prove their ability to induce new economic activity.
State agencies should establish clear criteria for selecting projects for capital grants, as current eligible uses are exceptionally broad and lack selection standards.
The state should improve transparency and reporting requirements for economic development programs to include essential information like wage data and tax credit projections.
Key Data
$8 billion
— Total state and local spending for economic development activities in 2014.
$2 billion
— Amount added to economic development programs in the fiscal year 2016 state budget.
$5.7 billion
— Planned capital disbursements for Empire State Development for fiscal years 2016 to 2020.
88 percent
— Increase in planned capital disbursements for Empire State Development compared to the previous five years.
$570 million
— Net loss in tax revenue from film and TV production tax credits awarded in 2013 and 2014.
30 percent
— Value of the fully refundable film tax credit relative to qualified expenditures.
New York's economic development programs have grown in cost from $7.0 billion in 2010 to $8.1 billion in 2014, yet measuring their actual economic benefits remains difficult due to a lack of standardized metrics and accountability. To ensure these investments provide value, the state must coordinate spending with regional strategies, standardize performance reporting, and implement comprehensive disclosure requirements.
Recommendations related to Economic Development Spending
All investments should be coordinated and aligned to regional strategies.
Performance metrics should be standardized for all programs and across all regions.
More comprehensive disclosure requirements should be put in place so that the costs and benefits of each project can be weighed.
Increased accountability, greater transparency, and more rigorous evaluation would ensure a return on investment that taxpayers could truly value.
Key Data
$1.5 billion
— The proposed budget for the Upstate Revitalization initiative.
$7.0 billion
— The cost of economic development programs in 2010.
$8.1 billion
— The cost of economic development programs in 2014.
New York's Brownfield Cleanup Program has provided $1.1 billion in tax breaks for site redevelopment, with 85% of these benefits going toward tangible property credits rather than environmental remediation. To ensure the program effectively targets cleanup efforts, eligibility for these credits should be restricted to projects in high-poverty areas, affordable housing developments, or sites where cleanup costs exceed property value.
Recommendations related to Economic Development Spending
The state should implement further tightening of eligibility for the Brownfield Cleanup Program to ensure it functions as an environmental cleanup program rather than a real estate development program.
Policymakers should better focus benefits on the cost of cleanup and environmental remediation rather than redevelopment.
The state should limit eligibility for the tangible property credit to projects located in high poverty or high unemployment locations, sites where cleanup costs exceed the property value absent contamination, and affordable housing projects.
Key Data
$1.1 billion
— Total tax breaks issued by New York to clean up and redevelop 115 sites from 2008 to 2013.
85%
— Share of total program benefits accounted for by the tangible property tax credit.
58%
— Amount by which the tangible property credit cost exceeded developers’ cost of site cleanup and groundwater remediation.
$963 million
— Total cost of the tangible property credit compared to $609 million for site cleanup and groundwater remediation.
$609 million
— Total cost of site cleanup and groundwater remediation compared to $963 million for the tangible property credit.
64%
— Share of total tax breaks accounted for by the top 10 projects.
New York's executive budget proposes significant spending on economic development initiatives, including $1.5 billion for regional competitions and $600 million in capital grants, despite a lack of evidence regarding their effectiveness. A moratorium on these expansions is recommended until existing programs can be rigorously evaluated and unsuccessful ones terminated.
Recommendations related to Economic Development Spending
A stronger framework to evaluate proposed investments relative to return on investment should be developed and adopted.
The proposed economic development spending initiatives should be rejected and a moratorium declared on expansions in this area until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
Key Data
$1.5 billion
— Proposed allocation of bank settlement funds for an economic development competition among seven regions upstate.
$600 million
— Capital grants provided through new Regional Economic Development Councils over the last four years.
$150 million
— Proposed fifth round of capital grants to the Regional Economic Development Councils.
$50 million
— Proposed expansion to the State’s venture capital fund.
$110 million
— Proposed funding to SUNY and CUNY for challenge grants.
New York's annual economic development investments grew from $7.0 billion in 2010 to $8.1 billion in 2014, largely driven by expanded tax expenditures and capital projects that lack sufficient accountability and evidence-based targeting. These programs often suffer from poor coordination and transparency, necessitating a standardized, unified budget approach to ensure taxpayer funds are used effectively.
Recommendations related to Economic Development Spending
The State should implement better coordination, standardized metrics, payment only for results, and more transparency and disclosure through a unified economic development budget.
All economic development investments should be coordinated and aligned to regional strategies to ensure they are effective.
Performance metrics should be standardized for all programs and across all regions to allow for better evaluation.
More comprehensive disclosure requirements should be put in place so that the costs and benefits of each project can be weighed.
All programs should be reevaluated for effectiveness before existing programs are increased or new ones are added.
The State should limit the Investment Tax Credit to manufacturers and eliminate the credit for used property.
The State should end the financial services Investment Tax Credit altogether to save $95 million annually.
The State should reduce brownfield credit caps and prioritize credit awards based on need.
The State should restrict brownfield credits to site preparation and remediation costs to prevent misuse.
Key Data
$7.0 billion
— Total annual economic development investments in 2010.
$8.1 billion
— Total annual economic development investments in 2014.
$1.9 billion
— Proposed new capital appropriations for Empire State Development in the fiscal year 2016 Executive Budget.
$427 million
— Estimated cost of the film tax credit in 2014.
$1.2 billion
— State's unused Investment Tax Credit liability as of 2013.
$2.9 billion
— Total amount awarded to Regional Economic Development Councils from 2011 through 2014.
New York's $5 billion windfall from bank settlements should be prioritized for investments that improve long-term fiscal health and economic competitiveness rather than recurring expenses. State leaders should focus on infrastructure improvements, such as utilizing design-build procurement to lower costs, while avoiding opaque allocation methods like memorandums of understanding.
Recommendations related to Economic Development Spending
Any proposal with recurring costs should be immediately rejected.
The State Legislature should resist the temptation to spend money on long-term commitments, such as school aid or tax cuts, and be wary of “temporary” tax cuts or “one-time” school aid infusions.
New York should place a high priority on proposals to permanently reduce the cost of providing services or prepare the State for future challenges.
The State should prioritize investments in environmental and transportation infrastructure, as well as plans to boost savings and reduce long-term liabilities such as paying down debt, replacing planned borrowing with pay-go capital, shoring up the Rainy Day Fund, and fully funding the State’s pension funds.
As State leaders choose among competing infrastructure projects and other uses of settlement money, priority should be given to projects that increase the state’s economic competitiveness.
If an infrastructure bank is endowed, clear criteria and a formal allocation process should be adopted at the same time.
Legislative leaders should avoid using memorandums of understanding (MOUs) to allocate lump-sum appropriations for economic development capital programs.
State leaders should use the opportunity presented by a special session to extend design-build procurement authority.
Key Data
$5 Billion
— The amount of the State’s windfall from bank settlements available for potential investment.
almost one-third
— The portion of the state’s sewage systems that have been beyond their useful life for more than 10 years.
almost 40 percent
— The amount of the state’s pavement that is in fair or poor condition.
$138 Billion
— The size of the State’s annual budget, providing context for the scale of the windfall.
27 percent
— The reduction in project costs found by the Department of Transportation when using design-build procurement.
New York City spends nearly $3 billion annually on economic development, yet many of these tax incentives and capital projects lack sufficient oversight or clear evidence of effectiveness. The city should reform its approach by reducing unnecessary subsidies for profitable projects and prioritizing investments that demonstrably enhance neighborhood infrastructure.
Recommendations related to Economic Development Spending
The city should reform "as-of-right" programs to reduce the length of benefits provided and exclude projects that clearly will be profitable without subsidies.
The city should monitor discretionary tax benefit deals more closely and structure them to provide benefits only after firms provide proof they have met their job creation promises.
The city should narrow capital investments to those that enhance infrastructure in neighborhoods with growth potential rather than focusing on individual firms.
The Mayor should clean out the city's economic development toolbox to decide which tools are best in fostering economic growth.
Key Data
$3 Billion
— Annual spending by New York City to cultivate industries, attract and keep businesses, and stimulate development.
New York City's economic development programs have grown significantly, with tax expenditures reaching $1.6 billion and capital spending nearly tripling to $751 million by 2012. The next administration should prioritize infrastructure investments in neighborhoods with job growth potential and improve the cost-effectiveness and transparency of tax incentive programs.
Recommendations related to Economic Development Spending
The new administration should use capital investments to enhance infrastructure in neighborhoods with job growth potential rather than supporting individual firms as beneficiaries.
The City should encourage growth in the cultural, medical and educational sectors by enhancing access to capital through conduit financing.
Whenever possible, conduit financing should be used instead of direct capital grants for nonprofit institutions.
The next mayor should continue reform of as-of-right tax expenditure programs to make them more cost-effective, including greater restrictions on retail benefits and shorter duration of benefits.
The IDA’s 'Uniform Tax Exemption Policy' (UTEP) should be supplemented with additional guidelines for the award of discretionary tax expenditure benefits, such as establishing a cap on the level of per job subsidy.
The City should continue rezoning and expand special mixed use districts to facilitate diversified job growth in areas currently limited to industrial use.
The EDC should be better managed by focusing on job creation and enhancing transparency in the way it administers discretionary tax exemptions.
Key Data
$1.6 billion
— Annual cost of tax expenditures in 2012, which more than doubled over the decade.
$751 million
— Annual capital spending on economic development in 2012, which nearly tripled since 2002.
$9.7 billion
— Total conduit debt outstanding in 2012, an increase of about $1.4 billion.
$368 million
— Relevant operating expenditures for economic development in 2012.
$265.3 million
— Net value of annual real estate tax benefits administered by the EDC in fiscal year 2012.
$9.2 billion
— Total face value of 226 bond issues completed by the NYC IDA, Trust for Cultural Resources, and Build NYC between 2002 and 2012.
New York City's capital spending has reached unprecedented levels, with over $100 billion in debt outstanding, yet the city lacks a comprehensive, transparent strategy for prioritizing projects or ensuring assets are maintained. Future capital planning should prioritize a "fix it first" approach, mandate rigorous cost-benefit analyses for economic development projects, and implement policies to reduce the city's high debt burden.
Recommendations related to Economic Development Spending
The next administration should enact clear guidelines or directives for performing routine maintenance and regular replacement of assets.
All city agencies and component units should undertake a comprehensive needs assessment that details the condition of major asset classes and the cost to fix those in disrepair.
The needs assessment should be used to develop a plan to achieve state of good repair.
The next mayor must focus on reducing the city’s high debt burden.
The administration should develop criteria for paying for some capital expenses from the operating budget.
The City should adopt a “fix it first” strategy, in which state of good repair projects receive priority at each agency.
Proposed expansion projects should be accompanied with rigorous cost-benefit analysis demonstrating service improvements or economic enhancements.
The City should renew its Project Labor Agreements to reduce labor costs and improve managerial flexibility.
City leaders should advocate for changes to contracting rules that increase costs and impede efficient construction management, such as a repeal of Wicks Law.
Key Data
$4 billion
— Amount devoted to stimulating economic development, renovating and modernizing public hospitals, and preserving and developing housing.
$100 billion
— Amount of debt used to finance capital spending between fiscal years 2003 and 2014.
135 percent
— Increase in water and sewer fees since fiscal year 2003.
31 percent
— Share of school capital improvement projects that are completed late.
25 percent
— Increase in the cost of housing construction caused by prevailing wage mandates.
79 percent
— Increase in the value of assets owned by New York City and its related public authorities since fiscal year 2002.
New York's proposed budget increases economic development spending by over $800 million, despite the fact that most of the $7 billion currently spent annually on these programs lacks sufficient data to prove the investments are worthwhile. The state should halt these spending increases until it can more systematically scrutinize and justify its business subsidies.
Recommendations related to Economic Development Spending
The State should not increase expenditures for economic development until it more systematically scrutinizes and justifies its subsidies for business.
The State should limit state sales tax breaks granted by local Industrial Development Agencies by requiring projects to meet the standards of the Excelsior program and have Regional Council approval.
Key Data
$800 million
— The amount by which the proposed budget increases spending for economic development activities.
$7 billion
— The amount currently spent annually in New York on economic development that lacks adequate controls or data to prove the investments are worthwhile.
$420 million
— Funding allocated for film tax breaks within the proposed economic development spending increase.
$165 million
— Funding allocated for additional capital grants within the proposed economic development spending increase.
$150 million
— Funding allocated for the Regional Economic Development Councils within the proposed economic development spending increase.
$50 million
— Funding allocated for a venture capital fund within the proposed economic development spending increase.
New York state and local governments spend $7 billion annually on economic development, including $2.6 billion in tax credits and exemptions that have largely avoided scrutiny. Consequently, no further funding should be authorized for these programs until a comprehensive review confirms their effectiveness and evaluates new performance metrics.
Recommendations related to Economic Development Spending
No additional funds should be authorized for economic development programs until a thorough review of all of them has been conducted to assess whether they are working and until the results of the new performance metrics put in place by the Regional Councils can be evaluated.
Key Data
$365 million
— New capital grants authorized in the last two budgets allocated through the Regional Economic Development Councils.
$7 billion
— Total amount the state and its local governments spend on economic development each year.
$2.6 billion
— Amount in credits and exemptions that reduce state taxes and have largely escaped scrutiny.
New York State and its local governments spend $7 billion annually on economic development, including $2.6 billion in tax credits and exemptions that have largely escaped scrutiny. To ensure accountability, no additional funds should be authorized for these programs until a thorough review is conducted to assess their effectiveness and performance metrics are evaluated.
Recommendations related to Economic Development Spending
No additional funds should be authorized for economic development programs until a thorough review of all of them has been conducted to assess whether they are working and until the results of the new performance metrics put in place by the Regional Councils can be evaluated.
Key Data
$365 million
— New capital grants authorized in the last two budgets allocated through the Regional Economic Development Councils.
$7 billion
— Total amount the State and its local governments spend on economic development each year.
$2.6 billion
— Amount in credits and exemptions that reduce state taxes and have largely escaped scrutiny.
New York State and its local governments spend nearly $7 billion annually on economic development programs, many of which lack sufficient transparency and accountability. To improve the effectiveness of these investments, the state should standardize performance metrics, eliminate ineffective programs, improve project scoring consistency, and create a unified economic development budget.
Recommendations related to Economic Development Spending
ESD should facilitate the development and reporting of meaningful and consistent metrics across all Councils and programs.
New York’s leaders should also consider using the cap mechanism more widely to foster a more disciplined approach.
To the extent possible, ESD should facilitate the convergence and standardization of the multiple criteria and scoring methods, making them more useful for decision making.
The CFA should be expanded and should serve as the platform for a unified economic development budget, or UEDB.
ESD should choose approximately 10 regional indicators and 10 project indicators that all Regional Councils must report, while allowing the Councils to report additional performance measures that speak to specific Council strategies or goals.
Key Data
$7 billion
— New York State and its local governments will spend close to $7 billion this fiscal year in the name of economic development through dozens of programs.
$762 million
— New York will allocate $762 million in economic development funds through the recently created Regional Economic Development Councils.
$300 million
— New York State and its local governments will spend close to $7 billion this fiscal year in the name of economic development through dozens of programs – an increase of $300 million from 2010.
$100 million
— New York continues to create new programs, such as the new Excelsior program, which will cost $100 million in tax year 2012.
$3.8 billion
— The total economic development spending tally includes $3.8 billion in tax incentives, with $2.6 billion reducing state taxes and $1.2 billion lowering local taxes.
New York City's economic development reporting fails to capture the full scope of spending, as evidenced by the FreshDirect incentive package where significant portions of costs are excluded from cost-benefit analyses. Improving transparency by including capital commitments and convening the mandated methodology recommendation committee would enhance accountability and ensure government-funded benefits are justified.
Recommendations related to Economic Development Spending
The Economic Development Corporation should include the debt service associated with project-related capital commitments in its cost-benefit analysis, similar to how it treats PILOTs and tax exemptions.
The methodology recommendation committee, which has not been appointed or convened since the enactment of Local Law 48, should be activated to discuss necessary adjustments to reporting measures.
City officials should make the costs and benefits of economic development projects more transparent to achieve better accountability and ensure government-funded benefits are justified.
Key Data
$125 million
— Total incentive package provided to FreshDirect for its relocation and expansion into the Bronx.
$1.4 billion
— Total assistance provided to more than 620 development projects over their lifespans as of 2011.
$265 million
— Average annual capital commitments made by the Economic Development Corporation over the past decade.
$8,000
— Cost per job created based on the $700 million in assistance provided by the Economic Development Corporation through 2011.
$33.9 million
— Value of state benefits, such as sales tax and mortgage recording tax exemptions, excluded from the FreshDirect cost-benefit analysis.
$16.4 million
— Value of city assistance programs, such as REAP and CEP, excluded from the FreshDirect cost-benefit analysis.
New York State's budget includes unnecessary expansions to economic development programs, such as new capital grants and funds, despite existing annual spending of $6 billion on such initiatives. Rather than creating new programs, the state should prioritize accountability, performance metrics, and evaluative analysis to identify and eliminate failing programs before committing further resources.
Recommendations related to Economic Development Spending
Performance metrics and evaluative analysis should be systematically employed to identify failing programs for elimination or redesign before new programs are grafted onto an already fragmented governance structure.
Instead of being subjected to additional parochial constraints, the economic development power programs should be completely overhauled.
Before additional financial commitments are made, accountability for existing economic development programs should be improved.
Key Data
$150 Million
— Capital grants allocated for regional economic development councils in the budget.
$75 Million
— New economic development fund created in the budget.
$6 Billion
— Total annual spending on economic development in New York State, including capital grants, tax breaks, and direct subsidies.
Prevailing wage mandates in New York City often result in compensation levels significantly higher than private sector averages, with supplemental fringe benefits adding at least 30 percent to labor costs. To ensure these mandates accurately reflect local market conditions and improve transparency, the calculation methodology should be reformed to use a broader standard than the current 30 percent threshold.
Recommendations related to Economic Development Spending
Efforts should be undertaken to ensure wage surveys are inclusive and widely administered, and the definition of prevailing wage should be broadened to a standard greater than 30 percent.
The State Labor Commissioner and the City Comptroller should take steps to improve transparency in the determination of prevailing wage.
They should exercise their discretion to re-examine the criteria for establishment of titles and consider whether changes to prevailing wage schedules could be made within occupations to simplify the schedules and reduce the cost burden.
In addition, collective bargaining agreements used to set prevailing wage rates should be identified on the schedules.
These and other contractual agreements relevant to the determination of the prevailing wage should also be posted online.
Key Data
30 percent
— The current threshold used to determine prevailing wage rates in New York City.
65 – 67 percent
— The amount by which the New York City prevailing wage for boilermakers exceeds the mean hourly rate paid by private employers.
30 percent
— The minimum amount that supplemental rates for fringe benefits add to the cost of wages.
109 - 210%
— The ratio of prevailing wage to private sector wage for security guards in the New York City region.
151 - 194%
— The ratio of prevailing wage to private sector wage for truck drivers in the New York City region.
$47
— The approximate hourly prevailing wage for boilermakers in New York City.
New York State invests approximately $6.6 billion annually in economic development through a fragmented system of agencies and programs that lack standardized performance metrics and transparency. To improve outcomes, the state should consolidate these disparate entities, implement consistent performance measures, and adopt a unified budget to fully disclose the costs and benefits of all economic development investments.
Recommendations related to Economic Development Spending
Do not authorize additional funds for another round of regional competition until the "hydra" of economic development is tamed.
Improve the accountability and transparency of all expenditures to ensure that grants and preexisting programs are a success.
The apparatus of economic development in the State should be brought together under a management structure that works to make the most efficient and effective types of investments.
Some agencies should be eliminated and others consolidated, as the more than 100 IDAs are a striking example of the need for consolidation.
Empire State Development should develop a consistent set of performance measures that look not only at output measures, but also at outcome measures, such as economic growth and poverty levels.
The State should adopt a Unified Economic Development Budget (UEDB) to include direct subsidies, tax expenditures, and discounted power grants from all levels of government.
Key Data
$6.6 billion
— Annual state and local investment in direct subsidies and tax expenditures for economic development.
100
— Number of Industrial Development Agencies (IDAs) operating in New York State.
$783 million
— Amount of regional economic development funding recently awarded by the state.
28:1
— Leveraging ratio of public to private capital reported in Central New York's economic development plan.
6.5:1
— Leveraging ratio of public to private capital reported in the North Country's economic development plan.
5:1
— Leveraging ratio of public to private capital reported in the Capital Region's economic development plan.
New York should halt the expansion of economic-development spending, which has included $785 million in recent grants and a planned $200 million in the upcoming executive budget. Instead, the state must prioritize transparency and accountability for the $6 billion in existing and new public subsidies allocated to private-sector projects.
Recommendations related to Economic Development Spending
The state should halt the growth of economic-development spending.
The state should ensure that the new and “old” money, some $6 billion, is used well, with transparency and accountability on any public subsidies for private-sector projects.
Key Data
$785 million
— Economic-development grants awarded by the state this month.
$200 million
— Additional economic-development spending intended to be proposed in the forthcoming executive budget.
$6 billion
— Total amount of new and old money allocated to public subsidies for private-sector projects.
The state should halt new competitive grant programs for economic development and instead prioritize the efficient use of existing funds while increasing transparency for public subsidies. With $785 million recently awarded and an additional $200 million proposed, the focus must shift toward repurposing current resources rather than expanding these programs.
Recommendations related to Economic Development Spending
The State should not continue the competition for economic development spending and instead ensure that the new and “old” money, some $6 billion, is used well.
State leaders should focus on repurposing existing funding to preserve scarce resources for other priorities, and concentrate on tuning up the transparency and accountability on any public subsidies for private sector projects.
Key Data
$785 million
— Total amount of economic development grants awarded this month.
$200 million
— Proposed additional funding for another round of economic development competition in the Executive Budget.
$6 billion
— Total amount of new and old money currently allocated to economic development funding.
New York's fragmented economic development landscape, which involves hundreds of entities and billions in annual spending, requires consolidation and stricter oversight to improve effectiveness. Implementing standardized performance metrics, retroactive benefit payments, and a unified budget would ensure that state resources are used efficiently rather than wasted on unsuccessful programs.
Recommendations related to Economic Development Spending
To tame the hydra, the councils should have authority over all state economic development resources, not just a subset.
The six, eight, 10, 14, 19, or even 23 IDAs operating in each of the regions should be consolidated into one per region.
Discount power programs of the New York Power Authority and the economic development programs of the New York State Energy Research and Development Authority should also be fully folded into the regional councils.
As Empire State Development helps the new councils develop metrics it should make sure that standard performance measures and benchmarks are used in every region.
Benefits should be paid retroactively based on firm performance.
A Unified Economic Development Budget, including tax expenditures, subsidies (including discounted power) and local add-ons should be prepared and released for each region.
Funds for the Regional Councils should be generated by reducing unsuccessful current programs.
Key Data
$6.6 billion
— Estimated annual cost of incentives dispensed by hundreds of entities at the state and local level.
$2.5 billion
— Annual reduction in state tax receipts due to more than a dozen separate state tax credit programs.
$1.8 billion
— Annual spending by seven state public authorities and six state agencies.
$1.3 billion
— Annual investment by municipalities.
$1.0 billion
— Annual expenditure by 107 Industrial Development Agencies (IDAs) and New York City.
$1 billion
— Resources that the 10 new regional councils will tap.
New York State's economic development landscape is fragmented and lacks accountability, with billions spent annually across hundreds of entities without clear performance metrics. To improve outcomes, the state should consolidate these disparate programs, implement standardized performance-based funding, and adopt a unified budget to ensure transparency and fiscal responsibility.
Recommendations related to Economic Development Spending
To be fully effective, the councils should have responsibility and authority over all state economic development resources, not just a subset of selected programs.
Benefits should be paid retroactively based on firm performance to ensure accountability.
The state should create a Unified Economic Development Budget that includes tax expenditures, direct subsidies, and benefits conferred by local entities.
Funds for the expansion of regional council investments should be generated by reducing or eliminating current programs that are deemed unsuccessful after a thorough review.
The Power Allocation Board should not be allowed to act in isolation or in a counter-productive fashion relative to the goals of the Regional Councils.
Key Data
$6.6 billion
— Annual cost to the State and local governments in tax breaks and direct expenditures to spur economic development.
$2.5 billion
— Annual reduction in state tax receipts caused by more than a dozen separate state tax credit programs.
$554 million
— Cost to the State in 2010 in lost tax receipts from the Empire Zone program.
$586 million
— Amount invested by the State from 1997 to 2006 trying to establish the Centers of Excellence program.
$371 million
— Total grants spent by NYSTAR on ten funding programs over the 2001 to 2009 period.
$1.0 billion
— Amount of Empire Zone credits businesses reported carrying forward in 2007.
New York's economic development programs are currently fragmented and inefficient, often subsidizing businesses that would have located in the state regardless of incentives. To improve outcomes, the state should consolidate these efforts, prioritize transparency, and ensure that tax incentives are only awarded to companies that create high-quality jobs.
Recommendations related to Economic Development Spending
Tax benefits and other incentives should go only to firms that actually generate quality new jobs in the state.
The best way to assure that the taxpayer is truly getting 'bang for the buck' is to require total transparency and accountability in the awarding of benefits.
Benefits should be paid when job creation goals are actually met, not simply promised, and should be graduated to incentivize the creation of better, higher-paying jobs.
All economic development activities should be part of a coordinated state-wide strategy that makes targeted moderate investments to key industries in our communities.
New programs should start small so that we can learn what works and scuttle the rest.
Key Data
$300 million
— Amount in local tax breaks awarded by 115 Industrial Development Agencies each year.
115
— Number of Industrial Development Agencies operating in New York.
$5 billion
— Annual amount of public money spent on haphazard, unproductive economic development programs when the full array of business tax breaks is included.
New York City's capital planning process lacks sufficient economic justification for the $24 billion in planned expansion projects, with only the Hudson Yards investment having a clear rationale. The city should implement rigorous economic analysis to ensure that public funds for infrastructure are allocated transparently and provide a high rate of return.
Recommendations related to Economic Development Spending
New, large capital projects should be selected based on a clear set of priorities rooted in the ability to provide a higher or more efficient level of service, or in terms of providing a high rate of return on the investment of public funds.
Expansion projects should be clearly explained and justified with data that demonstrates economic and other benefits, or a high rate of return on the investment of public funds.
The City should place all its capital assets on regular replacement cycles and fund their replacement with operating revenues, not from the capital budget, to ensure resources are available for necessary investments.
The City should improve its needs assessments and develop a systematic plan or timetable for bringing all capital assets to a state of good repair.
Key Data
$24 billion
— Total amount of new capital investments to be pursued by the City in the next ten years.
$3.0 billion
— Investment in Hudson Yards, which is the only project among $24 billion in new capital investments clearly justified on the basis of anticipated economic benefits.
$83.7 billion
— Total capital investments called for in the recently adopted Ten-Year Capital Strategy.
$60.5 billion
— Total value of City-controlled capital assets.
New York's economic development programs, specifically the Empire Zone Program and Power for Jobs, have become costly and ineffective, requiring immediate replacement with more transparent, performance-based initiatives. These new programs must be integrated into a broader strategy that includes clear metrics for success and environmental conservation goals to better support the innovation economy.
Recommendations related to Economic Development Spending
The Empire Zone Program and Power for Jobs should be replaced without further delay to address their well-documented shortcomings.
The state should replace the Empire Zone Program with the Excelsior program, which awards tax credits based on performance rather than giving benefits to existing companies.
New economic development legislation should include greater provisions for environmental audits to help firms identify areas where they can conserve energy.
Both replacement programs should be fit into a larger economic development strategy that identifies overarching goals and includes metrics for assessing performance.
Key Data
$30 million
— Annual cost of the Empire Zone Program in 2000.
$600 million
— Annual cost of the Empire Zone Program in 2009.
$479 million
— Lower bound estimate of the annual cost of New York Power Authority economic development programs.
$640 million
— Upper bound estimate of the annual cost of New York Power Authority economic development programs.
$100 million
— Direct aid provided to residential rate-payers to replace discount power contracts.
New York's power authority operates nine economic development programs that provide discounted electricity to businesses, yet these initiatives lack clear strategic alignment and transparency, often failing to incentivize energy conservation. The report calls for a comprehensive overhaul of these programs to better integrate them with state economic development goals and ensure they are administered with greater accountability.
Recommendations related to Economic Development Spending
The state should phase out current economic development power programs as contracts expire.
New York should include assistance for firms with high energy costs as part of a comprehensive economic development strategy administered by Empire State Development.
The state should sell power no longer used for economic development at market rates to generate additional revenue.
New York should link energy conservation and economic development goals and programs by requiring firms receiving benefits to comply with energy efficiency best practices.
Key Data
$479 million to $640 million
— Estimated annual cost of NYPA's economic development programs.
2,322 megawatts
— Total amount of power reserved for selected firms under NYPA's economic development programs.
453,914
— Total number of jobs committed by firms participating in NYPA's economic development programs.
New York City committed over $63 billion to capital projects between fiscal years 2002 and 2009, with significant investments in education, environmental protection, and transportation. While these expenditures expanded the city's capital assets, the impact of the $2 billion allocated to economic development projects remains unclear due to a lack of publicly available analytic evidence regarding their benefits.
Recommendations related to Economic Development Spending
The City should require analytic evidence of economic benefits for economic development projects, as little or no analytic evidence of such benefits is currently publicly available.
The City should improve the tracking of costs and benefits for individual economic development projects, as they are often lumped together under larger appropriations, making tracking difficult.
The City should increase reporting on the outcomes of capital spending, as the City does not currently do extensive reporting on the outcomes of capital spending.
The City should fully fund the capital work required to bring assets to a state of good repair, as the funding gap has grown to 49 percent of the needed work.
Key Data
$2 billion
— Amount spent on economic development projects between fiscal years 2002 and 2009.
$2 billion
— Amount slated for spending on economic development projects in the four fiscal years following 2009.
$63.4 billion
— Total capital commitments made by New York City through the end of fiscal year 2009.
49 percent
— The portion of needed capital work that constitutes the funding gap for state of good repair projects.
$5.6 billion
— Amount of capital work needed to bring surveyed assets to a state of good repair.
The Empire Zones program has proven to be an ineffective and costly investment for taxpayers, necessitating its scheduled sunset on June 30, 2010. Replacing this program with the proposed Excelsior initiative would better align economic development efforts with criteria that prioritize targeted, temporary, and performance-based benefits.
Recommendations related to Economic Development Spending
The State Legislature should allow the seriously flawed Empire Zones program to sunset as of June 30, 2010, as established by law.
The State Legislature should enact the Excelsior program as proposed by the Governor.
The State Legislature should reject provisions that would extend local Empire Zone administration boards and wage credits patterned on the current Empire Zone program.
New York State's Empire Zone program, intended to spur economic growth in distressed areas, has become an ineffective and costly vehicle for corporate tax breaks that fail to meet job creation targets. Given the program's history of reform-resistance and lack of accountability, it should be abolished to save scarce public resources.
Recommendations related to Economic Development Spending
The time has come to end the program.
Increasingly scarce public resources should no longer be spent in this unproductive way.
New York’s Empire Zone program is not worth the tremendous loss of revenue it requires, and it should be abolished.
With the State budget under enormous stress, the Empire Zone program should be a prime target for elimination.
Key Data
$582 million
— The cost of the Empire Zone program in 2008, representing a twenty-fold increase from $30 million in 2000.
$900 million
— The amount of unused tax credits firms have accumulated that can be used in future years.
70 percent
— The portion of businesses receiving tax breaks in audited zones that failed to meet their job creation targets in 2004.
$514 million
— The total amount of tax credits claimed by firms in the Empire Zone program in 2006.
9,800
— The number of certified businesses participating in the Empire Zone program statewide.
380,000
— The number of people employed by certified businesses in Empire Zones statewide.
The Empire Zone program has grown unsustainably, with costs rising from $30 million to $580 million between 2000 and 2008, while failing to meet performance targets for the vast majority of participants. New York should eliminate this ineffective program and replace it with initiatives that prioritize clear economic strategies, performance-based payments, and centralized management.
Recommendations related to Economic Development Spending
New programs should be aligned with a clear and overarching economic development strategy for New York State that articulates goals, objectives, and the metrics needed to measure performance.
Reporting and disclosure of cost-benefit calculations for all economic development subsidies should be improved.
Newly focused efforts should be targeted toward growth industries such as the development and manufacturing of new technologies.
Subsidies aimed at retention in manufacturing and other sectors should be clearly delineated and paired with appropriate measurements of their success or failure.
Firms should be held accountable by basing program payments on performance post-facto rather than on projections made upon approval.
Program management should be consolidated under a statewide or regional board structure to improve outcomes and standardize practices.
Key Data
$580 million
— The cost of the Empire Zone program in 2008.
45 percent
— The average annual growth rate of the program's cost from 2000 to 2008.
$2,200
— The median benefits per job for program participants.
$690,000
— The amount Manhattan Nursing Home Realty received in 2006 for adding a single job.
58 percent
— The portion of firms in the program that fell short of either their job or investment targets by more than 60 percent.
79 percent
— The portion of the 570 Empire Zone beneficiaries in New York City that failed to meet their targets.
To address the fiscal crisis, the city must prioritize essential infrastructure maintenance over poorly justified economic development projects and ambitious expansion plans. Reducing the capital budget's reliance on debt is necessary to ensure long-term fiscal health and avoid the service cuts seen in previous crises.
Recommendations related to Economic Development Spending
The City should sacrifice current capital plans for less essential undertakings, such as poorly justified economic development projects.
A smarter, rather than bigger, capital budget should focus on better use and maintenance of existing assets rather than ambitious plans for expansion.
New York's power subsidies for economic development are poorly targeted, often lacking transparency and failing to align with broader energy conservation goals. The state should phase out these programs and reallocate resources toward more effective, strategic economic development initiatives that prioritize high-value industries and energy efficiency.
Recommendations related to Economic Development Spending
State leaders should phase out current economic development power programs by allowing existing contracts to expire and passing no new reauthorization legislation.
New York should include assistance for firms with high energy costs as part of a comprehensive economic development strategy administered by Empire State Development.
The state should sell power no longer used for economic development at market rates to generate revenue for more effective economic development initiatives or infrastructure improvements.
Policymakers must link energy conservation and economic development goals by requiring firms receiving power benefits to submit to energy audits and comply with efficiency best practices.
Key Data
$479 million and $640 million
— Estimated annual spending on nine economic development programs.
$362 million to $489 million
— Estimated total cost of the five hydro economic development programs.
$117 million to $151 million
— Estimated total cost of the five purchased power economic development programs.
$5,836 to $7,883
— Per-job subsidy range for the five hydro economic development programs.
$247 to $630
— Per-job subsidy range for the five purchased power economic development programs.
$157 million
— Estimated annual subsidy value promised to Alcoa.
New York's power authority operates nine economic development programs that provide discounted electricity to businesses, costing between $479 million and $640 million annually. These programs are largely ineffective at supporting long-term strategic economic goals and lack transparency, necessitating a shift toward market-rate power sales and better integration with state energy conservation efforts.
Recommendations related to Economic Development Spending
New York should phase out current economic development programs by allowing current contracts to expire and passing no new reauthorization legislation.
State leaders should include assistance for firms with high energy costs as part of a comprehensive economic development strategy administered by Empire State Development.
New York should sell power no longer used for economic development at market rates to generate additional revenue and increase operating surplus.
Firms that receive benefits should be required to submit to energy audits and comply with best practices for energy efficiency to link energy conservation and economic development goals.
Key Data
$479 million to $640 million
— Estimated annual cost of NYPA's economic development programs.
2,322 megawatts
— Total amount of power reserved for selected economic development programs.
453,914
— Total number of jobs committed by firms participating in the programs.
1.8 cents to 2.2 cents
— Price per kilowatt-hour paid by program recipients in 2008, compared to the 6.7 cent market rate.
New York's Empire Zone Program has been criticized for its lack of accountability and failure to meet job creation and investment targets, with many firms falling significantly short of their goals. The state is urged to phase out this costly initiative and replace it with a more targeted economic development strategy that focuses on strategic growth industries and measurable outcomes.
Recommendations related to Economic Development Spending
The state should phase out the Empire Zone Program as a wasteful use of limited resources.
New York should replace Empire Zones with a more targeted approach to statewide and regional economic development that stimulates good jobs and investment in growth sectors.
The state should pursue the decertification of businesses in substantial noncompliance and cease new commitments that fail to meet well-defined, strategic objectives.
New York should develop a more effective approach to economic development that focuses on strategic growth industries and offers deeper benefits for the most distressed areas of the state.
The Legislature should work with the Governor and economic development groups to create a new program that results in significant and measurable outcomes.
Key Data
$600 million
— The approximate annual cost of the Empire Zone Program.
400%
— The wide variance in the value of awards given to businesses.
58%
— The percentage of participating firms that fell short of their job creation and investment targets in 2006.
69 to 79%
— The failure rate of firms meeting their targets in several regions.
New York State's Empire Zone program, originally intended to spur job growth in distressed areas, has become an ineffective and costly vehicle for corporate tax breaks that fails to meet its stated economic goals. Given its history of reform-resistant loopholes and lack of accountability, the program should be eliminated to preserve scarce public resources.
Recommendations related to Economic Development Spending
The Empire Zone program should be abolished because its problems are extensive and longstanding.
With the State budget under enormous stress, the Empire Zone program should be a prime target for elimination.
Increasingly scarce public resources should no longer be spent in this unproductive way.
Key Data
$582 million
— Cost of the Empire Zone program in 2008, representing a twenty-fold increase from $30 million in 2000.
$514 million
— Total amount of tax credits claimed by firms in the Empire Zone program in 2006.
70 percent
— Businesses receiving tax breaks in audited zones that failed to meet their job creation targets.
58 percent
— Firms participating in the program that missed their job or investment targets by at least 60%.
$391 million
— Amount of tax credits claimed by just 500 firms, accounting for 76% of the total program cost.
$127 million
— Amount of tax credits claimed by Fortune 1000 firms, representing 25% of total annual claims.
New York should eliminate ineffective economic-development programs like the Empire Zones, which failed to meet job-growth targets for the majority of recipients, to achieve significant annual savings. Additionally, scaling back the underperforming Centers of Excellence high-tech-promotion program would further reduce wasteful state spending.
Recommendations related to Economic Development Spending
The Empire Zones program should be axed to eliminate ineffective economic-development programs, resulting in annual savings of $582 million.
The state should scale back the Centers of Excellence high-tech-promotion program, which is excelling in name only, to save taxpayers $244 million annually.
Key Data
$582 million
— Annual savings from eliminating the Empire Zones economic-development program.
23 percent
— Businesses receiving Empire Zone tax credits that actually cut jobs at their companies according to a 2004 State Comptroller's Office audit.
30 percent
— Recipients of Empire Zone tax credits that met or exceeded their job-growth targets.
$244 million
— Annual taxpayer savings from scaling back the Centers of Excellence high-tech-promotion program.
New York's prison system costs $3.6 billion annually, with the state spending $57,000 per inmate, despite a significant decline in the inmate population. By closing underutilized facilities and investing in alternatives to incarceration, the state could save hundreds of millions of dollars annually to redirect toward schools and genuine economic development.
Recommendations related to Economic Development Spending
The state should fit the size of the prison infrastructure to the population it serves to save nearly $300 million a year.
The state should develop more effective and appropriate alternatives to incarceration for drug offenders to save an additional $100 million a year.
The prison system should be built around correctional needs, not local employment.
Unneeded facilities should be closed and used for other purposes.
The number of correctional officers should be reduced to align with the declining prison population.
Key Data
$300 million
— Estimated annual savings from fitting the size of the prison infrastructure to the population it serves.
$100 million
— Estimated annual savings from developing more effective and appropriate alternatives to incarceration for drug offenders.
$3.6 billion
— Annual operating cost of the entire prison system.
$57,000
— Annual cost of keeping one person in the custody of the prison system, including debt service and fringe benefits.
$34 million
— Estimated fully annualized operating savings from planned prison closures.
$30 million
— Savings in capital costs generated in fiscal year 2010 from prison closures.
New York state faces significant budget gaps and should address them by cutting ineffective programs rather than raising taxes. Specifically, the state should eliminate the failing Empire Zones program and scale back funding for Centers of Excellence to only the SUNY/Albany location.
Recommendations related to Economic Development Spending
Empire Zones should be cut from the budget and the money set aside for Centers of Excellence should be reduced.
Efforts to improve the Empire Zone program have failed, and it should, therefore, be ended.
The state should scale back the Centers of Excellence program to cover only SUNY/Albany.
Key Data
$800 million
— Annual savings identified from cutting ineffective economic development programs.
$558 million
— Tax credits given away through the Empire Zone program in the current year.
30 percent
— Recipients of Empire Zone tax credits that met or exceeded their employment targets.
23 percent
— Recipients of Empire Zone tax credits that reduced employment.
$586 million
— Total state commitment to the Centers of Excellence program.
$342 million
— Portion of Centers of Excellence funding intended for the State University of New York at Albany.
New York City's capital planning process requires significant reform to better manage its vast infrastructure assets and ensure that expansion projects are justified by rigorous economic analysis. The current system often relies on borrowing for routine replacements and lacks a comprehensive strategy for maintaining assets in a state of good repair, leading to inefficient spending and unclear long-term goals.
Recommendations related to Economic Development Spending
The City should improve its needs assessments and develop a systematic plan or timetable for bringing all capital assets to a state of good repair.
The City should place all its capital assets on regular replacement cycles and fund their replacement with operating revenues, not from the capital budget.
Expansion projects should be clearly explained and justified with data that demonstrates economic and other benefits, or a high rate of return on the investment of public funds.
The City should extend the PlaNYC approach to a broader range of public infrastructure.
The City should establish the Office of Long-Term Planning and Sustainability as a mayoral office.
Key Data
$83.7 billion
— Total capital investments called for in the Ten-Year Capital Strategy over the next ten years.
$23 billion
— Total cost of planned expansion projects for the next ten years.
$5.4 billion
— Estimated funding required to achieve a state of good repair for assets covered by the AIMS report for fiscal year 2008.
$2.8 billion
— Funding gap for maintenance and repairs identified in the AIMS report.
$3.0 billion
— Investment in Hudson Yards, the only expansion project with a clear rationale.
$60.5 billion
— Total value of capital assets controlled by the New York City government.
New York State's economic development programs, specifically Empire Zones and Centers of Excellence, have often failed to deliver promised results, with some programs costing hundreds of millions in foregone tax revenue and direct funding. Scaling back or eliminating these ineffective initiatives could yield significant budgetary savings, including an estimated $800 million.
Recommendations related to Economic Development Spending
The State should eliminate or scale back ineffective economic development programs, such as Empire Zones and Centers of Excellence, to achieve an estimated maximum savings of $800 million.
The State could scale back the size of the Centers of Excellence program to fund only the successful UAlbany center, resulting in a savings of $244 million.
Key Data
$800 million
— Estimated maximum savings from eliminating or scaling back ineffective economic development programs.
$558 million
— Tax revenue foregone by the Empire Zones program in calendar year 2007.
$529 million
— Total funds received by Centers of Excellence from 1997 to 2005.
$1.2 billion
— Private investment attracted by the Center for Excellence in Nanoelectronics and Nanoscience at UAlbany.
$135 million
— Combined private investment attracted by the six other Centers of Excellence.
$244 million
— Potential savings from scaling back the Centers of Excellence program to fund only the UAlbany center.
New York City's park system has expanded significantly, but the city faces challenges in maintaining these facilities and ensuring equitable access across all neighborhoods. To address these issues, the city should implement strategic planning, improve maintenance productivity, and create stronger financial incentives for generating earned revenue from park concessions.
Recommendations related to Economic Development Spending
Create a stronger incentive for increasing concessions and other earned revenues by dividing growth in these revenues between the City’s general fund and a new fund dedicated to parks improvements.
Institutionalize responsibility for strategic planning for parks by establishing an entity within municipal government with a clear mandate from City Hall.
Bring all parks to an acceptable condition by creating a strategic plan that includes a timetable for bringing all park facilities to an acceptable standard.
Improve productivity in parks maintenance and operations by establishing measures of park use and unit costs, and experimenting with contracting-out.
Encourage preventive maintenance and longer periods of usefulness by funding routine repairs and replacements in the operating budget.
Make the relationships between the Department of Parks and Recreation and its nonprofit partner organizations more transparent and consistent with core guidelines.
Key Data
$780 million
— Total City funds for Department of Parks and Recreation facilities in fiscal year 2006.
$394 million
— Amount needed to bring major Department of Parks and Recreation assets to a state of good repair in fiscal year 2007.
$386 million
— Estimated cost of investments for improving eight underdeveloped parks.
$247 million
— Budget over the next ten years for planting 230,000 street trees.
$111 million
— Estimated cost for converting 290 public school yards into public playgrounds.
$65 million
— Estimated private funds added to Department of Parks and Recreation facilities in fiscal year 2006.
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