Economic development tax incentives in New York include the various tax credits, abatements, and subsidies provided by the State and its localities to encourage business investment, job creation, and housing development. This page covers CBC’s work on the evaluation of tax incentive programs, the transparency of economic development spending, the Empire State Film Tax Credit, the Industrial and Commercial Abatement Program, and recommendations for performance-based fiscal reforms.
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..
Absent paying for itself, a 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.
The minimal return on most credits highlights the need to target tax breaks more effectively.
New York State and its local governments should evaluate how effective existing programs are and use those results to grow what works, and to shrink, eliminate, or reform what does not.
New York should evaluate economic development programs, expand those that are proven cost-effective, and reform or eliminate those that are not.
New York’s State and local governments should focus their economic development activities on the fundamentals that drive New York’s competitiveness, including job creation and retention incentives with proven benefits and high cost-effectiveness.
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, with State tax breaks projected to increase from $3.3 billion in 2025 to $4.5 billion in 2026.
As of October 2026, the Micron semiconductor fabrication facility in Clay, NY was eligible for up to $7 billion in performance-based tax credits, including $5.5 billion in Excelsior tax credits over 20 years.
In November 2024, the CBC reported that New York State had spent over $5.8 billion on film tax credit programs since 2007, despite an independent evaluation finding that these credits returned less than 30 cents in State tax revenue for every dollar awarded.
In August 2024, the CBC noted that the cost of New York City's Industrial and Commercial Abatement Program (ICAP) grew six-fold 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 required the tax breaks to be financially feasible.
A July 2023 policy brief showed that expenditures for the winding-down Empire Zone tax credit program fell from $537 million in 2015 to $29 million in 2022, while its replacement, the Excelsior program, grew to $163 million in 2022.
New York State and its local governments spent $12.7 billion on economic development in 2025, with state tax breaks projected to grow from $3.3 billion to $4.5 billion by 2026 despite weak evidence of their effectiveness. To improve competitiveness, future economic development efforts should focus on rigorous program evaluations, reforming or eliminating underperforming tax incentives, and investing in foundational areas like affordability and workforce development.
Recommendations related to Economic Development Tax Incentives
Absent paying for itself, a 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.
The minimal return on most credits highlights the need to target tax breaks more effectively.
New York State and its local governments should evaluate how effective existing programs are and use those results to grow what works, and to shrink, eliminate, or reform what does not.
New York should evaluate economic development programs, expand those that are proven cost-effective, and reform or eliminate those that are not.
New York’s State and local governments should focus their economic development activities on the fundamentals that drive New York’s competitiveness, including job creation and retention incentives with proven benefits and high cost-effectiveness.
Key Data
$3.3 billion
— Projected cost of New York State economic development tax breaks in tax year 2025.
$4.5 billion
— Projected cost of New York State economic development tax breaks in tax year 2026.
$7.0 billion
— Amount of performance-based tax credits that Micron's semiconductor fabrication facility in Clay, NY is eligible for.
$1 billion
— Estimated cost of the film production and theatrical tax credits in tax year 2026.
$2.0 billion
— Amount spent by New York City on economic development tax breaks in 2025.
$960 million
— Amount of New York City tax breaks in 2025 attributed to the Industrial and Commercial Abatement Program and its predecessor.
New York's corporate tax rates are already the highest in the nation, and further increases would threaten the state's economic competitiveness and business environment. To address affordability and budget challenges, the state should prioritize curbing $5 billion in ineffective economic development tax breaks and reducing burdensome regulations rather than raising taxes.
Recommendations related to Economic Development Tax Incentives
The State should hold the line on taxes to maintain economic competitiveness.
Policymakers should review and reduce burdensome regulations that do not serve New Yorkers’ interests.
The State should curb the $5 billion in economic development tax breaks, capital spending, and programs that fail to deliver results.
The State should shift funding from lower-impact programs to affordability and other priority needs.
The State should drive service quality and efficiency improvements with performance data, accountability, and targeted programs.
Key Data
$5 billion
— The amount of economic development tax breaks, capital spending, and programs that fail to deliver results and should be curbed.
17.44 percent
— The top combined corporate tax rate faced by New York City businesses, which is the highest in the nation.
$19.7 billion
— The total amount of statewide business tax collections in fiscal year 2025.
$4.7 billion
— The total Payroll Mobility Tax collections in 2026, which more than doubled from $1.8 billion in 2022.
10th
— The ranking of New York as the worst state to start a small business.
2nd
— The ranking of New York as the most regulated state based on a review of state codes, rules, and regulations.
New York State must avoid raising taxes and instead prioritize fiscal responsibility by shifting funds from ineffective programs to high-impact priorities. Specifically, the state should curb $5 billion in underperforming economic development tax breaks and programs to ensure long-term economic competitiveness and affordability.
Recommendations related to Economic Development Tax Incentives
Curb the $5 billion in economic development tax breaks and programs that fail to deliver results.
Key Data
$5 billion
— The amount in economic development tax breaks and programs that fail to deliver results and should be curbed.
New York State faces a structural budget gap of $20 billion annually, driven by high spending and a precarious fiscal foundation that necessitates scaling back ineffective programs and subsidies. To improve economic competitiveness and affordability, the state must prioritize cost-effective investments, reform tax incentives, and eliminate spending driven by political prerogative rather than strategic planning.
Recommendations related to Economic Development Tax Incentives
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.
State leaders should eliminate environmental and economic development capital spending distributed by political prerogative, rather than 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.
State leaders should reform tax incentives to make housing development financially feasible.
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.
80 percent
— The amount by which New York State’s per-capita Medicaid spending exceeds the national average.
4.7 percent
— The rate of New York State's population growth since 2000.
20.9 percent
— The rate of national population growth since 2000.
12 percent
— The decline in public school enrollment since 2021.
New York State's fiscal proposals for the 2026 budget include expanding various economic development subsidy programs despite a lack of evidence regarding their value to taxpayers. To ensure fiscal responsibility, the state should instead prioritize rigorous evaluation of existing incentives, adopt performance-based standards, and avoid creating new tax credits without proven efficacy.
Recommendations related to Economic Development Tax Incentives
The State should reject new or expanded economic development subsidy programs that have not been proven effective by rigorous evaluation.
The State should rigorously evaluate existing incentives and programs to determine their effectiveness.
The State should not extend and create new tax credits or subsidies without evidence of their efficacy.
The State should adopt performance-based incentives whenever possible.
The State should create a unified economic development budget.
New York State spends $11 billion annually on economic development programs, yet most tax incentives fail to pay for themselves or generate significant returns on investment. To improve effectiveness, the state should prioritize performance-based incentives, regularly evaluate existing programs, and focus on foundational improvements like infrastructure and housing affordability rather than picking industry winners.
Recommendations related to Economic Development Tax Incentives
New York should regularly evaluate economic development programs to determine what works and modify or eliminate those that are ineffective.
Lawmakers should waive tax secrecy provisions to grant evaluators access to the firm-level tax records needed to properly assess program effectiveness.
The state should avoid picking winners and losers by offering incentives tailored to specific industries, as predicting which sectors will grow is difficult.
New York should use performance-based incentives that reward actual performance in key sectors, similar to the Excelsior jobs tax credit.
The state should retool film tax credit programs to surgically target incentives to portions of the industry that are truly at risk while shrinking spending on ineffective areas.
To ensure long-term economic success, the state should focus on getting the basics right, including high-quality public services, sustainable spending, reasonable taxes, and addressing the housing affordability crisis.
Key Data
$11 billion
— Annual cost of economic development programs in New York State and its localities.
$5.8 billion
— Total amount spent on Film Production, Film Post-Production, and Commercial Production Tax Credit programs since 2007.
$700 million
— The increased annual cap for film tax credits established in the fiscal year 2023 State budget.
30 percent
— The portion of eligible production costs that film productions can now recoup, increased from 25 percent.
17.6 percent
— New York's share of national film production employment in 2022.
$878 million
— The cost of Georgia's film tax credit in foregone tax revenue during fiscal year 2023.
The Industrial and Commercial Abatement Program (ICAP) has seen its costs grow six-fold to $506.3 million in fiscal year 2024, despite evidence that only 3.6 percent of projects actually required these tax breaks to be financially feasible. The program should not be renewed without a thorough, objective evaluation to ensure it is a cost-effective use of public funds.
Recommendations related to Economic Development Tax Incentives
The Governor should veto S9822/A10530 because it extends the Industrial and Commercial Abatement Program without assessing its necessity.
The Governor should sign a one-year extension, negotiated as a Chapter amendment, to allow time for an objective evaluation of the program.
The State should identify eligibility and benefit changes to improve the cost-effectiveness of the Industrial and Commercial Abatement Program.
The State should evaluate whether an extension would be cost-effective before committing to a multi-year renewal of the program.
Key Data
3.6 percent
— The share of projects receiving ICAP benefits that actually required the tax breaks to be financially feasible, according to a 2016 City Council evaluation.
$506.3 million
— The cost of the Industrial and Commercial Abatement Program in fiscal year 2024.
$81.4 million
— The cost of the Industrial and Commercial Abatement Program in fiscal year 2017.
Two-thirds
— The portion of ICAP recipients that receive 25-year abatements, which is longer than necessary for most projects.
$500 million
— The amount spent per year on the program without a determination that it is an effective use of public funds.
The state should veto legislation that retroactively expands the Empire State Film Production Credit, as it depletes resources for productions already committed to filming in New York. Instead of engaging in a "race to the bottom" through lucrative tax incentives, the state should prioritize economic growth by leveraging comparative strengths like human capital and improving the business climate.
Recommendations related to Economic Development Tax Incentives
The Governor should veto S7562/A7757, which expands eligibility for the Empire State Film Production Credit.
New York should focus on expanding its economy based on its comparative strengths, such as human capital and cultural and natural amenities.
New York should enhance its willingness to make it easier to do business in New York.
New York State and its localities spent $10.7 billion on economic development in 2022, yet there is insufficient evidence that these programs effectively create jobs or provide benefits exceeding alternative uses of funds. With budget gaps looming, officials should prioritize data-driven evaluations to reform or eliminate ineffective incentives rather than continuing to expand them.
Recommendations related to Economic Development Tax Incentives
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…
New York spends approximately $10 billion annually on economic development programs that often lack rigorous evidence of effectiveness, such as film tax credits and horse racing subsidies. Instead of relying on these unproven incentives, the state should prioritize investments in human capital, infrastructure, and essential public services to foster sustainable economic growth.
Recommendations related to Economic Development Tax Incentives
The state should conduct a thorough, rigorous evaluation to identify whether a given incentive program had induced additional economic activity.
New York should focus on developing human capital by educating and training New Yorkers and attracting great talent.
The state should prioritize providing high-quality, essential public services and maintaining infrastructure to compete for businesses and residents.
New York should stop allocating huge sums to economic development programs without real evidence of impact.
The state should ensure it remains an affordable, attractive, and fiscally stable place to live and operate a business.
Key Data
$10 billion
— Annual spending by New York state and its localities on economic development.
$14.6 billion
— Possible lifetime cost of the film tax credit under the executive budget proposal.
$455 million
— Proposed funding to renovate and expand Belmont Park for the horse racing industry.
$44 million
— Annual cost of four city tax incentives that the legislature proposes to extend.
$6.5 billion
— Amount in film tax credits already granted by New York without rigorous analysis.
$700 million
— Proposed annual credit cap for the Empire State Film Tax Credit.
New York should reject the expansion of the film production tax credit and the issuance of state debt for Belmont Park renovations, as these programs lack proven effectiveness. Furthermore, the state should freeze new economic development programming and reject the extension of New York City commercial tax exemptions until rigorous evaluations confirm their value.
Recommendations related to Economic Development Tax Incentives
The State should shrink rather than expand the film tax credit.
The State should reject State borrowing for Belmont Park.
The State should 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 wait for the release of the evaluation of all economic development programs before making further changes to or increases in economic development funding.
Key Data
$700 million
— The proposed annual cap for the film production tax credit, representing an increase of over 60 percent.
$455 million
— The amount of new State debt proposed to be issued on behalf of the New York Racing Association to finance the renovation and expansion of Belmont Park.
30 percent
— The proposed expansion of the film production tax credit amount.
5 years
— The duration for which the film production tax credit would be extended and for which four New York City commercial tax exemptions are proposed to be extended.
The proposed expansion of the New York State Film Tax Credit, which would increase the lifetime maximum cost to $14.6 billion, should be rejected due to a lack of rigorous evidence demonstrating its economic necessity or cost-effectiveness. Instead of expanding these incentives to compete with other states, the program should be phased out until a comprehensive evaluation justifies its existence and design.
Recommendations related to Economic Development Tax Incentives
The proposed expansion of the film tax credit should be rejected.
Until a rigorous analysis justifies some form of incentive, the State should be shrinking the film tax credit program.
The Empire State Film Tax Credit should not be extended and expanded; absent a rigorous evaluation that demonstrates its need and cost-effectiveness, it should be phased out.
Tax incentives should only be provided if justified by rigorous analysis.
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 state’s legislatures.
Key Data
$14.6 billion
— The lifetime maximum cost of the film tax credit program under the proposed Executive Budget changes.
$9.4 billion
— The lifetime maximum cost of the film tax credit program under current law.
$700 million
— The proposed annual credit cap for the film tax credit program starting in 2024.
$420 million
— The current annual credit cap for the film tax credit program.
$6.5 billion
— The total amount of credits provided since the start of the film tax credit program.
$509.5 million
— The cost of the film production credit in tax year 2018, the most recent year for which actual costs are available.
New York City's economic development tax incentives, which cost the city $44 million annually in foregone revenue, should not be extended without rigorous evaluation of their effectiveness and efficiency. Prior assessments have found that programs like the Commercial Revitalization Program and Commercial Expansion Program failed to significantly improve office vacancy rates or employment, suggesting they should be reconsidered rather than automatically renewed.
Recommendations related to Economic Development Tax Incentives
An incentive should not be extended absent a rigorous evaluation of its effectiveness and efficiency and an analysis demonstrating it is needed to meet current and future goals.
For programs like CEP and CRP, existing evaluations should inform the Legislature’s decision of whether to extend, amend, or sunset these programs.
Any extension or expansion of an existing tax expenditure should be supported by a prospective model of its impacts and justified by an evaluation that determines whether the tax expenditure achieved its purpose.
Key Data
$44 million
— Annual foregone revenue for New York City from the package of economic development tax incentives.
$14 million
— Annual foregone revenue from property taxes.
$15 million
— Annual foregone revenue from utility taxes.
$7 million
— Annual foregone revenue from commercial rent taxes.
$8 million
— Annual foregone revenue from sales taxes.
The 421-g property tax incentive program successfully encouraged the conversion of nearly 13 million square feet of obsolete office space into 12,865 residential units in Lower Manhattan between 1995 and 2006. Future conversion efforts should prioritize regulatory relief, such as lifting floor area ratio caps, and ensure incentives are cost-effective and targeted to maximize impact.
Recommendations related to Economic Development Tax Incentives
Regulatory relief of various forms is essential, including lifting the FAR cap to unlock the potential of future projects.
An as-of-right approvals process is needed to ensure that the market is able to dictate when and where office-to-residential conversions make sense.
Care is needed to design a cost-effective incentive that avoids providing subsidies that are more than necessary to incentivize conversions.
Any new conversion program should be appropriately targeted and empirically grounded by a feasibility study and policy design that addresses the vacancy crisis and program goals.
Policymakers should consider different incentive structures, such as capping incentives based on square footage, to limit the City’s fiscal downside risk.
Key Data
$1.17 billion
— The nominal cost of the 421-g property tax incentive through the end of fiscal year 2022.
12,865 units
— The total number of new residential units created through the 421-g program.
13 million square feet
— The amount of office space converted to residential use between 1995 and 2006 using the 421-g incentive.
$92,000 per unit
— The nominal cost per unit of the 421-g property tax incentive.
$1.7 billion
— The total tax expenditure of the 421-g program adjusted to constant 2022 dollars.
$132,000 per unit
— The cost per unit of the 421-g program adjusted to constant 2022 dollars.
New York's recently enacted budget includes a new database to track economic development deals, though it contains loopholes that limit transparency regarding data prior to 2018 and incomplete reporting. Furthermore, the state's film tax credit, which fails to provide commensurate economic impact, was extended for three years despite calls for it to be phased out and eliminated.
Recommendations related to Economic Development Tax Incentives
The state should bolster the Database of Deals to ensure it is appropriately comprehensive in its implementation.
The state should compile a unified economic development budget to improve transparency.
The state should phase out and ultimately eliminate the film tax credit because it does not provide commensurate economic impact.
The state should pursue other programmatic reforms to improve economic development results.
The New York State fiscal year 2023 budget agreement adds significant recurring spending without sufficient measures to restrain growth, creating potential future fiscal risks. Furthermore, the budget continues ineffective programs like the film tax credit, which should be eliminated, while failing to implement necessary reforms to economic development program transparency and management.
Recommendations related to Economic Development Tax Incentives
Hopefully important strides will be made, such as standardizing how a job is defined in economic development programs and enlarging the Database to cover all economic development programs, not just those of ESD.
Extension of film tax credit continues an expensive program that does not provide commensurate value for New Yorkers and should be phased out and ultimately eliminated.
Key Data
$40 billion
— Recent recessions prior to 2020 on average reduce expected receipts by more than $40 billion over three years.
15 percent
— The reported set aside of reserves equal to 15 percent of State operating funds is important, substantial, and welcome.
$10 billion
— The recurring spending reportedly added—on top of the Governor’s proposed $10 billion increase—sets the stage for the State to possibly cut spending or increase taxes in the not distant future.
New York should require a rigorous, transparent analysis to justify any public subsidy for a new Buffalo Bills stadium, as past research shows sports facilities rarely provide significant, consistent economic benefits. Any proposed funding must demonstrate that incremental economic and fiscal impacts exceed the costs, while also incorporating private investment and clawback provisions.
Recommendations related to Economic Development Tax Incentives
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 (such as a lease term) to calculate a proposed subsidy’s value.
Ideally, the analysis should discount the benefits by a factor that represents the benefit that would be accrued should the State use those funds for another purpose.
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.
$27 million
— Estimated annual fiscal impact (tax revenue) generated by the presence of the Buffalo Bills.
$385.8 million
— Estimated annual economic output generated by the Buffalo Bills franchise.
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 transparency through a unified budget and an enhanced database of incentives.
Recommendations related to Economic Development Tax Incentives
This year’s State budget should include overdue reforms to the management, transparency, and accountability of economic development programming by State agencies and authorities.
The State should adopt a unified economic development budget and standardized metrics for economic development programs.
The State should implement an enhanced Database of Economic Incentives to improve transparency.
The State should restore procurement powers to the Comptroller and increase funding for the Authorities Budget Office to ensure appropriate oversight.
Local 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
— Cost of State and local economic development deals, including tax breaks and direct subsidies, as of 2019.
roughly half
— 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, the state should implement a unified budget, standardize performance metrics, and enhance the transparency of its Database of Deals.
Recommendations related to Economic Development Tax Incentives
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.
Program design should be improved by requiring private 'skin in the game,' performance metrics and penalties for non-performance, and evaluation.
Procurement oversight powers of the Comptroller’s Office should be restored, and funding for the Authorities Budget Office should be increased.
Key Data
$10 billion
— Total annual cost of economic development programs in New York State in 2019.
8 of the 20
— Number of criteria for a sound database that the current Database of Economic Incentives meets.
New York should implement a Unified Economic Development Budget to consolidate and report on all economic development spending, including tax expenditures and discounted power. Additionally, the state should standardize performance metrics for economic development incentives and evaluate existing programs to ensure they effectively create and retain jobs.
Recommendations related to Economic Development Tax Incentives
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 currently lacks key information.
The Database of Deals 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.
Existing programs—including Regional Economic Development Council spending, film and television subsidies, horse racing industry subsidies, fossil fuel tax breaks, and other targeted programs—should be evaluated to determine how effectively the resources are creating and retaining jobs.
The proposed Penn Station Area Civic and Land Use Improvement Project could cost up to $17 billion, utilizing a complex value capture framework to divert local property tax revenues through payments in lieu of taxes (PILOTs) to fund transit improvements. However, the plan lacks critical details regarding its financing structure, the specific division of costs among state and federal partners, and the decision-making role of New York City in managing these diverted revenues.
Recommendations related to Economic Development Tax Incentives
There should be a robust discussion about potential tax incentives or abatements for redevelopment projects in the GPP district.
The discussion of potential tax incentives should factor in office market competition more generally, and how projects in the GPP district would complement or compete with other potential development sites.
New York City should have a substantive role in the planning process and should be a partner that agrees to the use of tax revenue that would otherwise flow to the City’s general fund.
The City should determine whether and how much of its future tax revenue should be dedicated to a mass transit project instead of other needs like public safety, education, or housing.
Key Data
$17 billion
— Reported maximum cost of the entire Penn Station project, including renovation, expansion, land acquisition, demolition, and public space improvements.
$6 to $7 billion
— Estimated cost of a scaled-back Penn Station renovation project without the proposed Penn South expansion.
$1.3 billion
— Funding included in the New York State Fiscal Year 2022 Enacted Budget for Penn Station-related projects.
50 percent
— Anticipated federal share of the project's funding, assuming it mirrors the Gateway project split.
25 percent
— Anticipated funding share for New York State, as well as New Jersey's expected share, under the proposed Gateway project split.
New York City must prioritize core services and implement rigorous performance management to ensure fiscal stability and effective use of federal aid. To foster long-term growth, the administration should reform property taxes and implement performance-based, targeted economic development incentives.
Recommendations related to Economic Development Tax Incentives
Improving land-use decision-making, reforming the property tax and performance-based, targeted economic development incentives will help the city provide for New Yorkers.
New York City should reform its economic development incentives by assessing the return on investment for existing programs like the Industrial and Commercial Abatement Program and the Relocation and Employment Assistance Program. Additionally, the city needs to increase transparency by publishing a comprehensive database of these incentives, including their costs, job creation, and overall economic impact.
Recommendations related to Economic Development Tax Incentives
The incoming Administration should clearly articulate economic development priorities and strategies and focus on how performance-based as-of-right incentives can help drive a broad, sustained recovery.
The Administration should assess the impact and return on investment of as-of-right programs, including the Industrial and Commercial Abatement Program (ICAP), the Relocation and Employment Assistance Program (REAP), and Lower Manhattan incentives.
The City should focus the Economic Development Corporation (EDC) on its core economic development mission rather than ferry operation or capital procurement.
The incoming Administration should increase transparency by publishing a comprehensive database of economic development incentives, including benefits paid, jobs created, and economic impact.
New York City's proposed small business recovery programs risk duplicating existing federal and state aid, potentially wasting resources that could be better utilized elsewhere. Instead of creating redundant initiatives, the City should focus on identifying coverage gaps and providing technical assistance to help businesses navigate and access available support.
Recommendations related to Economic Development Tax Incentives
To maximize impact, City programs should focus on filling gaps left by the federal and State programs, assisting eligible businesses to access programs as needed, and providing additional support for already eligible businesses where the federal and State programs do not provide a reasonable amount of needed support.
Creating duplicative programs risks diverting resources away from other uses that would more efficiently support New York City’s economic recovery and help improve the City’s long-term fiscal stability.
It is critically important for the City to identify potential gaps first by determining which businesses are eligible for which existing programs and whether those programs reasonably meet their needs.
The City already is supporting small businesses in accessing federal support and should consider whether increasing these efforts may be an efficient use of resources, and whether to expand this to State programs when they begin accepting applications.
As the City adopts its fiscal year 2022 budget and then finalizes program eligibility, it should clearly identify gaps left by the multiple federal and State programs, where federal and State programs do not provide sufficient needed support, and where City technical assistance to leverage those programs would be most valuable.
Key Data
$813 billion
— Total appropriation for the Paycheck Protection Program (PPP).
$30 billion
— Total value of PPP loans received by New York City businesses.
$207 billion
— Total value of EIDL loans made by the SBA as of May 6, 2021.
$600 million
— Expected total allocation for the State Small Business Credit Initiative (SSBCI) in New York State.
$27.4 billion
— Total value of RRF loans awarded to restaurants as of June 16, 2021.
$100 million
— Cap on the New York City Musical and Theatrical Production Tax Credit program.
New York State has allocated over $7 billion in tax incentives to the film and television industry since 2004, yet research suggests these credits fail to generate meaningful employment gains and often subsidize projects that would have filmed in the state regardless. Given the state's significant budget gaps and economic challenges, the program should be eliminated or substantially reformed to reduce its fiscal impact.
Recommendations related to Economic Development Tax Incentives
The State should eliminate the film tax credit because it has not produced enough value for New Yorkers.
The State should stop awarding from future year allocations to ensure that the annual cap effectively limits state liability.
The State should stop spreading claims over 3 years to reduce the extended distance between job creation and state financial impact.
The State should decrease the credit substantially to 10 percent of qualified costs and eliminate the annual cap to lower program costs.
The State should further decrease the share of expenses that can be claimed in New York City to push production to areas with greater economic development needs.
Key Data
$7.8 billion
— Total amount allocated in tax incentives to the film and television industry by New York State since 2004.
$9 billion
— The size of the state budget gap during the period of the report.
$19 billion
— Projected annual deficits for New York State in fiscal year 2023.
$420 million
— The annual cap on the film tax credit through 2025.
$12 million to $15 million
— Annual amount collected by Saturday Night Live in tax credits between 2015 and 2018.
25 percent
— The rate of the refundable film tax credit for qualified production and post-production costs in New York.
New York State's Regional Economic Development Councils have distributed billions in funding since 2011, yet the program suffers from a lack of strategic alignment, dispersed investment, and insufficient transparency. To improve effectiveness, the state should mandate standardized performance metrics, prioritize projects tied to clear economic strategies, and increase the weight of regional assessments in funding decisions.
Recommendations related to Economic Development Tax Incentives
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 to businesses and localities since the REDCs' 2011 inception.
$773 million
— Average annual funding allocated to businesses and localities through REDCs since 2011.
$4.4 billion
— Total state spending on economic development in 2018, including direct expenditures and forgone tax revenue.
$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'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. To improve efficacy, these entities should be consolidated into regional bodies, reporting requirements must be standardized, and oversight should be strengthened through expanded auditing authority and increased resources for the Authorities Budget Office.
Recommendations related to Economic Development Tax Incentives
The State should consolidate local IDAs into regional IDAs and prohibit LDCs from engaging in economic development activities.
The State should improve reporting requirements for IDAs and LDCs to ensure data is consistent, accurate, and timely.
The State should improve accountability by allowing the State Comptroller to audit LDCs to ensure appropriate internal controls.
The State should increase resources for the Authorities Budget Office to allow it to conduct its full scope of work.
Key Data
$10 billion
— Total amount 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.
$700 million
— Tax benefits provided by IDAs in 2017.
$1.1 billion
— Amount spent by New York City LDCs on economic development in 2017.
$272 million
— 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.
The Opportunity Zone program, designed to encourage investment in low-income communities, may cost New York State and City millions in lost tax revenue while lacking necessary oversight and accountability. To address these concerns, the state should implement mandatory transparency reporting for funds or consider decoupling from the federal program to better target incentives and protect public funds.
Recommendations related to Economic Development Tax Incentives
The State can require Opportunity Funds operating in New York State to report on their activity in order to qualify for state tax benefits.
The State could require funds to report annually on the value of gains invested by New York State taxpayers in qualified opportunity funds.
The legislature could pass a bill that would limit benefits to residential projects that meet a minimum affordability threshold for a fixed set of time or to commercial projects that are consistent with an REDC strategic plan.
The State could limit benefits to zones that meet both the poverty and family income thresholds, or to those that meet the criteria based on the most recently available Census data.
The legislature could decouple fully from the federal program, as there is no requirement that New York State conform to the tax benefits offered by the OZ program.
Key Data
$63 million
— Estimated annual revenue loss for New York State due to the Opportunity Zone program.
$31 million
— Estimated annual revenue loss for New York City due to the Opportunity Zone program.
$2 billion
— Estimated annual cost to the federal government in lost revenue from the Opportunity Zone program.
$9.4 billion
— Total estimated cost to the federal government for tax years 2018 to 2022.
$53 billion
— Amount that funds intend to raise to invest in Opportunity Zone projects as of August 2019.
17.2 percent
— Combined federal, state, and local effective tax rate for a New York City resident with Opportunity Zone benefits.
The 2019 Economic Development Sweetener Scorecard tracks 69 legislative bills aimed at providing tax incentives and subsidies to various industries, including manufacturing, agriculture, and small businesses. These proposed measures represent a wide array of fiscal commitments, ranging from small-scale pilot programs to significant tax credits for specific sectors like film production and corporate manufacturing.
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 Farm Workforce Retention Credit per eligible farm employee.
$275 Million
— Fiscal impact of making real property owned by small businesses eligible for the STAR property tax exemption.
$8.25 Million
— Fiscal impact of establishing the Capital Investment Jobs Retention Program, a refundable tax credit for eligible businesses.
$1 Million
— Fiscal impact of establishing the Transitional Green Development Program to assist upstate communities.
$0.21 Million
— Fiscal impact of creating a pilot to train and counsel small retail business owners.
The 2019 Economic Development Sweetener Scorecard tracks 67 legislative bills proposing various tax incentives, grants, and loan programs aimed at stimulating business growth across New York State. These proposed measures include significant fiscal commitments, such as $440 million for the Excelsior Linked Deposit Program and $275 million for expanding the School Tax Relief (STAR) property tax exemption to small businesses.
Key Data
$440 Million
— Total funding increase proposed for the Excelsior Linked Deposit Program.
$275 Million
— Fiscal impact of making real property owned by small businesses eligible for the 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 music and video game production.
$65 Million
— Proposed increase for the Excelsior Linked Deposit Program.
$30 Million
— Fiscal impact of increasing the credit per eligible farm employee under the Farm Workforce Retention Credit.
The New York State Legislature introduced 67 economic development bills in 2019, many of which propose new or expanded tax incentives, grants, and loan programs for 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 manufacturing tax exemptions.
Key Data
$140 Million
— Fiscal impact of the proposed zero-percent Corporate Franchise Tax for manufacturers.
$30 Million
— Fiscal impact of the Farm Workforce Retention Credit.
$275 Million
— Fiscal impact of making small businesses eligible for the School Tax Relief (STAR) property tax exemption.
$100 Million
— Annual cap for the new tax credit for music and video game production industries.
$10 Million
— Annual grant funding for the GrowNY economic gardening pilot program.
$8.25 Million
— Fiscal impact of the Capital Investment Jobs Retention Program.
New York legislators introduced 69 bills in 2019 aimed at providing various economic development incentives, including tax credits, grants, and loan programs for industries ranging from manufacturing to agriculture. These proposed measures represent a significant fiscal commitment, with individual programs carrying price tags reaching as high as $440 million.
Key Data
$440 Million
— Total funding increase proposed for the Excelsior Linked Deposit Program.
$275 Million
— Fiscal impact of making real property owned by small businesses eligible for the STAR property tax exemption.
$200 Million
— Portion of the Excelsior Linked Deposit Program funding dedicated specifically for business startups.
$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 music and video game production.
$65 Million
— Proposed increase for the Excelsior Linked Deposit Program.
5 is the number of years Alicia Glen was the Deputy Mayor for Housing and Economic Development under Mayor Bill de Blasio. She joins the podcast to reflect on her tenure as Deputy Mayor, the state of the city in 2014, where it stands now, and where it should be…
New York State's economic development strategy relies heavily on costly and often ineffective tax breaks, with over $1.1 billion in potential savings available by eliminating film and production tax credits and reducing discretionary capital spending. To improve regional growth, the state should shift its focus toward evidence-based strategies, such as aligning funding with regional strengths, prioritizing projects with higher returns on investment, and enhancing workforce training collaborations.
Recommendations related to Economic Development Tax Incentives
Capture fully and report together all state and local economic development incentives.
Eliminate film and production tax credits to generate savings.
Reduce ESD discretionary capital spending by half.
Implement a stricter prioritization of projects based on potential return on investment.
Align funding with regional strategies to focus on projects in thriving industries.
Strengthen SUNY partnerships with REDCs to develop and assess training programs.
Standardize metrics across initiatives to improve evaluation.
Key Data
$1.1 Billion
— Total available for reinvestment by eliminating ineffective economic development expenditures.
$570 million
— Savings generated by eliminating film and production tax credits.
$570 million
— Savings generated by reducing ESD discretionary capital spending by half.
$175 million
— Amount allocated in the NYS FY2019 budget for workforce training.
$750 million
— Annual amount awarded to regional projects based on REDC rank and State agency score.
43%
— State average share of economic development projects tied to a REDC strategy.
New York's spending on state and local economic development programs rose to $9.9 billion in 2018, a 17 percent increase from 2016, driven by growth in discretionary grants and tax expenditures. To improve accountability, the state should codify transparency measures into law, establish a unified budget, and implement standardized metrics to ensure benefits align with private sector investment.
Recommendations related to Economic Development Tax Incentives
The state should codify the gubernatorial proposal for a “database of deals” and procurement reform into law to improve transparency.
New York must establish a forward-looking unified economic development budget that includes information on the costs of all programs for the coming fiscal year.
The state should implement standardized metrics across programs to allow for the comparability of results.
Policymakers should pursue program design improvements so that benefits follow private sector investment and eligibility is standardized.
Economic development programs must ensure that results are evaluated regularly to improve accountability.
Key Data
$9.9 billion
— Total amount spent on state and local economic development efforts in 2018.
17%
— The increase in total economic development costs from 2016 to 2018.
$5.6 billion
— Total local economic development costs in 2018.
$3.2 billion
— The portion of local economic development costs in 2018 that was for New York City.
$802 million
— The cost of sales tax benefits for production and research and development in 2018.
$1.2 billion
— Spending by the Empire State Development Corporation in 2018.
New York's $4.8 billion annual investment in economic development incentives lacks transparency and has failed to produce the desired results. The state should implement long-needed disclosure improvements and program redesigns to increase the effectiveness of these investments.
Recommendations related to Economic Development Tax Incentives
The State should increase transparency, focus, and effectiveness of economic development investments, as the current $4.8 billion annual expenditure lacks transparency and has not produced desired results.
The Executive Budget should include long-needed disclosure improvements and program redesign for economic development incentives.
The State should make adjustments to the Excelsior Program to accommodate Amazon.
Key Data
$4.8 billion
— Annual cost of economic development incentives that lack transparency and have not produced desired results.
The Amazon headquarters deal in Long Island City, involving $2.8 billion in state and city tax incentives, highlights significant flaws in current economic development strategies that require reform. Future policy should prioritize general infrastructure investment over direct corporate subsidies and ensure that tax expenditure programs are strictly targeted to induce job creation that would not otherwise occur.
Recommendations related to Economic Development Tax Incentives
The Legislature should closely scrutinize an increase in the cap of the Excelsior Jobs Program to prevent it from exceeding legislatively set limits.
A cap to the level of wages eligible for the Excelsior credit should be considered 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.
City tax expenditure programs should be narrowed or eliminated to ensure benefits are only spent to induce job creation that would not otherwise occur.
Capital investment should go through the regular budgetary process rather than being diverted to specific funds outside of citywide needs.
Key Data
$2.5 billion
— Amazon's announced investment for the construction of headquarters in Long Island City.
25,000
— Number of new full-time jobs Amazon committed to creating over the next 10 years.
$150,000
— Average salary for the new jobs Amazon committed to creating.
$2.8 billion
— Total value of tax breaks and grants offered by New York State and New York City to Amazon.
$3.5 billion
— Potential combined state and city incentives if Amazon creates 40,000 jobs and 8 million square feet of office space.
$200,000 and $300,000
— Annual wage caps for eligible employees under the Start-Up NY program.
The Amazon HQ2 project in Long Island City is supported by a $2.8 billion to $3.5 billion incentive package from New York State and City, utilizing various tax credits and grants. This deal highlights the need to reform economic development policies, specifically by avoiding program expansions for single companies, capping wage reimbursements, and reevaluating as-of-right tax incentives.
Recommendations related to Economic Development Tax Incentives
The Excelsior Jobs Program should not be expanded to accommodate the needs of a single company, as offering benefits that go well above the current cap and expiration date sets a concerning precedent.
The State should implement caps to the level of wages eligible for reimbursement under the Excelsior jobs program to minimize financial exposure.
State capital funding should be invested in general infrastructure rather than 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.
$386 million
— Estimated total value of the Industrial and Commercial Abatement Program (ICAP) for the Amazon project.
$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.
New York State's economic development landscape involves over 100 Industrial Development Agencies and 200 local development corporations that distribute over $750 million in annual benefits, often with insufficient oversight. To improve accountability and transparency, the state should consolidate these entities, strengthen enforcement powers, and expand reporting requirements to ensure public funds are used effectively.
Recommendations related to Economic Development Tax Incentives
The state should further consolidate economic development, as there are more than 100 IDAs and close to 200 local development corporations across the state.
The state should strengthen ABO enforcement powers, as the Authorities Budget Office is currently unable to suspend an IDA’s operations for noncompliance.
The state should expand ABO resources to allow for more thorough analysis of IDA and LDC inputs into the Public Authority Reporting Information System.
The state should authorize the State Comptroller to audit LDCs to ensure greater oversight.
The state should expand the proposed reporting requirements to LDCs to increase transparency.
The state should expand reporting requirements to State entities engaged in economic development.
Key Data
$750 million
— Amount in benefits provided by IDAs as of 2015, the vast majority of which were through tax reductions.
100
— Number of Industrial Development Agencies (IDAs) operating across New York State.
200
— Number of local development corporations (LDCs) operating across New York State.
$8 billion
— Amount allocated per year by state and local governments toward economic development.
New York State is considering numerous economic development bills that would expand tax credits, grants, and loan programs for various industries, including manufacturing, technology, and small businesses. These proposals, which carry significant fiscal impacts, should be rejected to prevent unnecessary strain on the state budget and avoid inefficient allocation of public funds.
Recommendations related to Economic Development Tax Incentives
The Governor should reject the ten economic development bills that propose new or expanded tax incentives, as these measures often lack sufficient oversight and fiscal discipline.
State policymakers should refrain from enacting new tax credits for specific industries, such as the $7 million annual Empire State Commercial Production Tax Credit, to maintain fiscal responsibility.
The state should veto legislation that creates new grant programs or expands existing ones, like the $100 million music and video game production tax credit, to avoid further budgetary expansion.
Legislators should oppose the expansion of industrial development agency powers that allow for retail project tax benefits, as these often divert resources from more productive economic activities.
The state should reject proposals that increase funding for existing programs like the Excelsior Linked Deposit Program by $65 million, prioritizing fiscal restraint over targeted subsidies.
Key Data
$7 Million
— Annual cap for the Empire State Commercial Production Tax Credit extension.
$1.5 Million
— Fiscal impact of the proposed Microenterprise Development Fund.
$1-$2 Million
— Estimated fiscal impact of the Small Business Innovation Research Program outreach funds.
$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.
New York state legislators have introduced numerous bills aimed at expanding economic development programs, including tax incentives, grants, and loan funds for small businesses, manufacturers, and startups. These proposed initiatives range from broad tax credits to targeted support for specific industries like agriculture, technology, and microbusinesses.
Key Data
$440 Million
— Total funding increase for the Excelsior Linked Deposit Program.
$200 Million
— Funding dedicated for business startups within the Excelsior Linked Deposit Program.
$140 Million
— Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
$20 Million
— Fiscal impact of the HIRE NY act providing loans for microbusiness hiring.
$10 Million
— Annual grants authorized for the GrowNY economic gardening pilot program.
$2 Million
— Fiscal impact of the Transitional Green Development Program to assist upstate communities.
New York State is considering numerous economic development programs and tax incentives, with proposed fiscal impacts ranging from small grants of $210,000 for retail training to major expansions like the $440 million increase for the Excelsior Linked Deposit Program. These legislative efforts target a wide array of sectors, including manufacturing, small business, and technology, through mechanisms such as tax credits, low-interest loans, and grant programs.
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 funding dedicated to business startups.
$20 Million
— Fiscal impact of the HIRE NY act, which provides loans for microbusiness hiring.
$5 Million
— Funding available for microbusinesses in the Small Business Revolving Loan Fund and Linked Deposit Program interest rate reductions.
$1.5 Million
— Fiscal impact of the Microenterprise Development Fund.
New York state spends billions on economic development programs and tax incentives annually, yet these investments often fail to produce promised job growth or economic success. To address this waste, the state should implement reforms like creating a unified budget, standardizing performance metrics, and shifting to retroactive, performance-based incentives.
Recommendations related to Economic Development Tax Incentives
Publish a “database of deals” that includes funds committed and disbursed to each recipient across all programs, as well as project progress and results to increase transparency regarding taxpayer return on investment.
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.
Standardize metrics across economic development programs, so that results can be compared.
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.
Make administrative reforms to ensure transparent, competitive procurement and stronger oversight of economic development initiatives.
Key Data
$3 Million
— Appropriation for an upstate luxury golf tournament deemed to be an economic development initiative.
$4 Billion
— Total spending on economic development programs in fiscal year 2016.
$2.4 Billion
— Amount of tax breaks included in the fiscal year 2016 economic development spending.
$4.6 Billion
— Amount spent by local governments and authorities on economic development in addition to state spending.
$1.7 Billion
— New appropriations for economic development in the fiscal year 2019 budget.
$300 Million
— Appropriation for a High Technology Innovation and Economic Development Infrastructure Program.
The state's proposal to create transportation improvement districts that capture up to 75 percent of increased property tax revenue to fund the MTA threatens the city's control over its own tax dollars. Instead of broad, state-imposed mandates, value capture arrangements should be tailored to specific projects and determined by local elected officials on a case-by-case basis to ensure accountability.
Recommendations related to Economic Development Tax Incentives
Any value capture arrangement should be tailored to specific projects and circumstances rather than broadly applied.
The mayor and city council should determine how the city’s property tax revenue is spent, rather than the governor and state Legislature.
Dedicating future tax revenue to mass transit should be a policy choice made by the city on a case-by-case basis that is transparent and accountable to taxpayers.
Key Data
up to 50 percent
— Share of increased New York City property taxes within transportation improvement districts that the state proposal would capture.
up to 75 percent
— Share of increased property taxes that could be captured for future transportation improvement districts.
18 million square feet
— Amount of new office, residential and retail space planned or built at Hudson Yards as a result of the No. 7 line extension.
New York City's economic development efforts, which cost $3.2 billion in 2016, rely heavily on discretionary tax expenditures and capital investments that require more rigorous standards and transparency. To improve outcomes, the City should prioritize infrastructure-focused capital investments and utilize conduit financing for specific sectors rather than providing customized tax benefits to individual firms.
Recommendations related to Economic Development Tax Incentives
The City should establish more detailed standards for awarding discretionary tax expenditures to ensure investments are sound.
The City should 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 the primary form of support for these areas.
The EDC should better articulate the goals of discretionary tax expenditure projects and provide a transparent method for calculating benefits.
Key Data
$3.2 billion
— The 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 for benefits per job created, below which most projects received funding.
$100,000
— The threshold for benefits per job created, above which three projects received funding.
87 percent
— The portion of conduit debt issued since 2016 that has been for the cultural, educational, and health sectors.
New York State's economic development and business subsidy programs face significant risks of corruption and waste, necessitating a freeze on over $3.2 billion in proposed spending until comprehensive transparency and anti-corruption reforms are enacted. These reforms include establishing competitive contracting requirements, centralizing grant management, and creating a public database to track subsidy deals and performance targets.
Recommendations related to Economic Development Tax Incentives
The state must require competitive and transparent contracting for the award of state funds, including those distributed by authorities and affiliates.
The state should have the Empire State Development Authority (ESD) 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.
The state must prohibit all state-affiliated entities from doing business with their boards of directors.
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 limit campaign contributions from anyone seeking a state contract to reduce potential conflicts of interest.
Key Data
$3.2 Billion
— Amount of new proposed spending in the Executive Budget on economic development and business subsidies that should be frozen.
$1 Billion
— Value of state economic development contracts involved in alleged rigging in federal trials.
$250k
— Contract value threshold above which the Comptroller should be empowered to pre-approve SUNY and OGS central contracts.
19
— Number of states and NYC that have laws limiting campaign contributions from anyone seeking a state contract.
New York spends over $4 billion annually on economic development projects, yet many initiatives lack clear criteria and fail to meet job creation projections. To improve accountability, the state should implement a unified budget, standardize performance metrics, and ensure incentives are only awarded after companies fulfill their job creation promises.
Recommendations related to Economic Development Tax Incentives
New York should establish a unified economic development budget to provide transparency for the $4 billion spent annually.
The state should standardize metrics across all economic development initiatives to allow for accurate comparisons between programs.
New York should establish a database of deals outlining every economic development incentive, including beneficiaries and private commitments.
The state should improve program design so that incentives are only provided after an employer has fulfilled its promises to ensure accountability.
The state should adopt administrative reforms to ensure procurement integrity in its economic development spending.
Key Data
$4 billion
— Annual state allocation for economic development, including tax benefits.
$1 billion
— Taxpayer money allocated to 'silver-bullet' projects before a single new job was created.
$83 million
— State investment in a factory for an LED light company in DeWitt that failed.
$15 million
— Additional cost to taxpayers to properly equip the building for a new tenant.
290 jobs
— Number of jobs promised by the new company replacing the failed LED light company.
$337,931
— Cost per job for the new company replacing the failed LED light 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 programs, including tax expenditures, capital spending, and conduit financing, yet these efforts require more rigorous management and cost-effectiveness. While some progress has been made, the city must implement stricter standards for discretionary tax benefits, reform as-of-right tax programs, and improve the transparency of economic development reporting.
Recommendations related to Economic Development Tax Incentives
The city should make as-of-right tax expenditures more cost-effective with continued reform.
The city 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 Economic Development Corporation 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.
The city should consider changes to the Industrial Commercial Abatement Program (ICAP) to address limited inducement effects.
The city should strengthen standards for discretionary tax benefits to account for wage levels and private investment.
The city should make reporting more comprehensive regarding the full scope of project benefits.
Key Data
$3.2 billion
— The annual cost of the City’s economic development efforts in 2016.
$2 billion
— The amount of foregone tax revenue due to exemptions or other tax benefits in 2016.
$1,758
— The low end of the per-job subsidy range for projects granted discretionary benefits in fiscal years 2015 and 2016.
$590,269
— The high end of the per-job subsidy range for projects granted discretionary benefits in fiscal years 2015 and 2016.
$8.9 billion
— The collective amount of conduit debt outstanding in 2016.
3.6 percent
— The portion of recipient projects that relied on the Industrial Commercial Abatement Program (ICAP) to reach a hurdle rate that made the investment worthwhile.
The New York State Film Tax Credit program, which features a $420 million annual cap, should be repealed as it represents a wasteful use of taxpayer funds. Because of rollover provisions and multi-year claim requirements, the state will not see immediate budget savings and must act quickly to eventually realize financial benefits.
Recommendations related to Economic Development Tax Incentives
The state should repeal the New York state Film Tax Credit program.
The state should enact a timely repeal of the wasteful film tax credit to eventually realize financial benefits.
Key Data
$420 million
— The annual cap for the New York state Film Tax Credit program.
$5 million
— The threshold for companies claiming credits to spread that claim over three years.
$6 million
— An example of a movie credit awarded in 2017 from the 2019 allocation.
Tax increment financing is a common economic development tool that captures future property tax revenue to fund infrastructure, but it carries significant risks if not properly managed. To protect taxpayers, governments should conduct rigorous due diligence, including 'but for' analyses, to ensure projects generate genuine economic growth rather than simply shifting activity or subsidizing unnecessary development.
Recommendations related to Economic Development Tax Incentives
Governments should determine if the project passes the 'but for' test to ensure development would not occur in the absence of the TIF-funded capital project.
Policymakers must evaluate whether the investment will generate new economic activity or simply shift it from elsewhere within the city or region.
Officials should 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 to ensure the district will generate sufficient revenue to repay debt service and other costs.
Governments should consider whether general obligation bonds are a better option than TIF bonds, which are riskier and more costly.
Answering these questions, coupled with strong transparency provisions, can help protect future taxpayers against the risks associated with TIF projects.
Key Data
$359 million
— The amount the City paid from its general fund to subsidize Hudson Yards’ interest payments.
$14 million
— The amount of TIF debt the Troy Downtown Development Authority in Michigan defaulted on.
$75.4 million
— The total outstanding Pilot Increment Financing (PIF) debt in New York as of June 2017.
$3 billion
— The projected cost of the Hudson Yards project based on planning study projections.
$10 million
— The amount that a majority of Chicago's TIF districts raised and spent over a 13-year period.
138-acre
— The size of the contaminated industrial property in Atlanta that was remediated for the Atlantic Station TIF project.
New York State currently spends $5 billion on economic development programs, yet there is evidence that narrowly focused incentives fail to provide a return on investment. Consequently, the state should halt the approval of new tax and spending programs until comprehensive reforms are implemented to improve evaluation, procurement, and disclosure requirements.
Recommendations related to Economic Development Tax Incentives
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.
No new programs should be approved until existing spending is effectively evaluated.
Any new spending or tax programs should be considered in the context of an overall budget and financial plan.
Narrowly focused economic development incentives do not provide a return on investment and should be curtailed.
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.
$5 million
— Annual cap for the proposed new refundable tax credit for companies that hire female and minority writers and directors.
$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 these initiatives often lack standardized metrics, clear eligibility parameters, and centralized oversight. To improve accountability and effectiveness, the state should implement a unified budget, create a transparent database of deals, and require that private entities invest before receiving subsidies.
Recommendations related to Economic Development Tax Incentives
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 to ensure comparability regarding job creation, retention, and capital investments.
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 of state economic development spending each year.
$1.4 billion
— Amount in the fiscal year 2017-2018 budget for programs that lack clear parameters.
$250,000
— Contract threshold above which the State Comptroller should have authority to review and approve.
$2 million
— Annual appropriation for Technology Development Organizations.
$10 million
— Appropriation for Manufacturing Extension Partnership.
$11 million
— Appropriation for Centers of Excellence.
New York State's economic development landscape is fragmented by nearly 350 Industrial Development Agencies and Local Development Corporations that often lack accountability and provide poorly justified tax incentives. These entities frequently engage in overlapping, duplicative efforts that prioritize competition between regions over efficient, strategic investment of public resources.
Recommendations related to Economic Development Tax Incentives
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, and data for large projects should be 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.
Key Data
$16.2 billion
— Total investments made by IDAs and LDCs from 2011 through 2015.
$1.9 billion
— Total spending and tax expenditures by IDAs and LDCs in 2015.
$676 million
— Statewide tax expenditures by IDAs and LDCs in 2015.
$1.2 billion
— Statewide spending by IDAs and LDCs in 2015.
$24,747
— Average tax exemption per planned job for IDA projects outside New York City reporting planned job creation.
55.7%
— Percentage of IDA procurement costs that were for non-competitively bid contracts during the 2016 reporting year.
New York State's spending on economic development programs has tripled under the current administration, yet these investments lack clear performance metrics and reporting, making their effectiveness difficult to evaluate. Furthermore, nine out of ten regions in the state have lagged behind national job growth rates between 2010 and 2016, despite the extension of large tax credits and reduced job creation requirements for various industries.
Recommendations related to Economic Development Tax Incentives
The state should establish a unified economic development budget to better track and manage spending.
Policymakers should use standardized metrics to evaluate the effectiveness of economic development investments.
The state should publish a database of deals to increase transparency regarding economic development incentives.
The state should improve program design to ensure economic development initiatives are effective.
The state should make administrative reforms to improve the management of economic development programs.
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
— Number of out of ten regions in New York State that lagged national job growth from 2010 to 2016.
New York’s economic development tax incentive programs are the most expensive in the nation, costing taxpayers $8.25 billion in 2015 alone. Despite these high costs, there is little evidence that these incentives effectively drive economic growth, wages, or employment, necessitating a shift toward greater transparency and accountability in state spending.
Recommendations related to Economic Development Tax Incentives
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.
New York 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.
New York should make administrative reforms to procurement and oversight rules.
Key Data
$45 billion
— The estimated cost to taxpayers for state and local economic development tax incentives in 2015.
$8.25 billion
— The total amount of incentives awarded by New York in 2015.
2.5 times
— The rate at which New York's incentive use exceeds the national average.
3
— The number of other states whose combined economic development incentive costs equal New York's total.
Standardized reporting metrics for economic development programs should include detailed tracking of project identification, incentive types, and specific financial benefits like tax credits. Comprehensive oversight requires monitoring job creation commitments, actual employment figures, and capital investments to ensure transparency and accountability in incentive programs.
Recommendations related to Economic Development Tax Incentives
Agencies should track general information for all economic development programs, including project identification numbers, applicant names, and site addresses.
Programs should report incentives issued with annual breakouts, including grants, loans, tax credits, and the estimated value of other benefits.
Economic development initiatives must track job creation and retention commitments, including full-time equivalent and temporary jobs.
Agencies should monitor actual jobs reported annually after an incentive begins, distinguishing between full-time equivalent and temporary positions.
Programs should report capital and qualified investments, including both total and annual figures, to measure the impact of economic development incentives.
New York State's economic development spending reached $4.0 billion in fiscal year 2016, with tax breaks accounting for 60 percent of that total. The proposed executive budget for fiscal year 2018 continues to increase spending and future tax credit commitments without implementing necessary standardized performance measures or transparent reporting requirements.
Recommendations related to Economic Development Tax Incentives
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 economic development costs.
$1.6 billion
— Direct state spending in fiscal year 2016, representing 40 percent of total economic development costs.
$739 million
— Empire State Development spending in fiscal year 2016.
$644 million
— Additional spending added in the fiscal year 2018 Executive Budget.
$1.5 billion
— Cumulative future tax credits added in the fiscal year 2018 Executive Budget.
The proposed state budget includes questionable economic development spending and tax incentives, such as the film tax credit and the START-UP NY program, which lack sufficient accountability and oversight. Additionally, the replacement for the 421-a housing program extends tax exemptions for up to 35 years, potentially sacrificing significant future city revenue without adequate fiscal justification.
Recommendations related to Economic Development Tax Incentives
The state should not extend the film tax credit because the movie industry is profitable and should not be subsidized.
The state should reverse changes to START-UP NY that weaken eligibility, reporting requirements, and clawback provisions, as these changes make it difficult to evaluate program success and recoup investments.
The state should reconsider the Affordable New York Housing Program's proposed 35-year tax exemption, as it is unwise to sacrifice decades of future city revenue.
The state should reduce capital funding allocated to dubious economic development projects, such as the Life Science initiative, Buffalo projects, and the Bronx ice-skating rink.
Key Data
$300 million
— Capital funding allocated to the Life Science initiative.
$400 million
— Capital funding allocated for 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.
35 years
— Proposed full tax exemption period for a subset of projects under the Affordable New York Housing Program.
25 years
— Previous full tax exemption period for new development under the expired 421-a program.
The proposed legislation to create new tax credits for music and digital gaming production would cost $150 million over three years and should be vetoed to avoid the pattern of expansion seen with the Film Tax Credit Program. Narrowly focused tax incentives often fail to provide a return on investment and should be handled within the context of broader budget negotiations rather than as standalone bills.
Recommendations related to Economic Development Tax Incentives
Governor Cuomo should veto A.10083-b/S.7485-b, which would create new tax credits for music and digital gaming media production.
The state should curtail, not expand, narrowly focused tax credits because they do not provide a return on investment.
Matters of tax policy that have significant budget implications should be dealt with in the midst of budget negotiations and an overall financial plan.
Key Data
$150 million
— The total estimated cost of the proposed tax credits for music and digital gaming media production over the next three years.
$25 million
— The annual cost of the proposed music and digital gaming tax credits for the next three years.
$420 million
— The current size of the Film Tax Credit Program, which grew significantly from its original cap.
$25 million
— The original annual cap of the Film Tax Credit Program when it was first adopted.
New York state spends $8.6 billion annually on economic development initiatives, yet lacks a unified budget or clear metrics to measure the effectiveness of these investments. The state should shift away from upfront discretionary grants toward performance-based subsidies to ensure accountability and protect taxpayer funds.
Recommendations related to Economic Development Tax Incentives
More robust reporting requirements are needed all around for economic development programs.
The state should pay for performance, providing subsidies only for investments and wages that have been expended.
The state should 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.
$4 billion
— State portion of annual economic development investments.
$4.6 billion
— Local portion of annual economic development investments.
$486 million
— Appropriation for the SolarCity plant in Buffalo.
$638 million
— Appropriation for Nano Utica.
$125 million
— Appropriation for the Norsk Titanium plant at SUNY Polytechnic Institute.
New York State utilizes a variety of tax expenditures and economic development programs, such as the START-UP New York initiative, to incentivize business activity. Reported tax benefits for companies participating in START-UP New York grew from $56,561 in 2014 to $1.2 million in 2015.
Key Data
$56,561
— Tax benefits reported by START-UP New York companies in 2014.
$1.2 million
— Tax benefits reported by START-UP New York companies in 2015.
Economic development tax expenditures in New York City grew from $1.6 billion in 2012 to $2.1 billion in 2016, necessitating greater oversight and clearer standards for discretionary tax abatements. Proposed legislation aims to establish a regular evaluation process for these expenditures to ensure they are effective and actually induce desired behaviors like business investment.
Recommendations related to Economic Development Tax Incentives
The City should enact legislation to create a regular evaluation process for economic development tax expenditures.
There is a need for more scrutiny of all tax expenditures and clearer standards for discretionary tax abatements.
The City should establish a similar evaluation process for other tax expenditures, such as property tax abatements intended to induce construction of housing.
The City should use evaluation results to inform the Council’s oversight and advocacy at the State and local level to improve program effectiveness or terminate ineffective programs.
Key Data
$1.6 billion
— Total cost of economic development tax expenditures in 2012.
$2.1 billion
— Total cost of economic development tax expenditures in 2016.
$2.8 billion
— Total tax expenditures identified by the City Council Taskforce on Economic Development Tax Expenditures.
New York State's economic development programs, including START-UP NY and the Excelsior Jobs Program, often lack sufficient oversight and accountability, leading to inefficient use of taxpayer funds. Furthermore, ad hoc project-specific appropriations frequently bypass established criteria, resulting in high-risk investments like the nearly $1 billion commitment to SolarCity that lacks the performance-based safeguards found in other programs.
Recommendations related to Economic Development Tax Incentives
Improved wage reporting would provide a clearer picture of who benefits from the program.
The personal income tax benefit should be converted into a business tax credit based on wages paid.
Recently added industries, notably music and entertainment, should be excluded from the program, as they do not require state assistance in order to be economically viable.
All economic development should follow the Excelsior model: pay-for-performance.
The state should implement a cessation to project-specific appropriations for economic development at least until eligibility criteria are established and accountability mechanisms enhanced.
Key Data
$1 billion
— Cost to build a factory in Buffalo for SolarCity.
$20,000
— Cost per job per year for the SolarCity project in a best case scenario.
$2,000
— Cost to the State per job per year for the Muller Quaker factory.
6.85%
— Jobs credit rate in the Excelsior program.
$59,000
— State Median Household Income annually.
$560,000
— Tax incentives received by the Muller Quaker factory through the Excelsior Jobs program.
The Excelsior Jobs Program has proven to be a more efficient and cost-effective alternative to the Empire Zones program due to stricter performance requirements and targeted industry eligibility. However, recent legislative modifications that expand eligibility and allow for credit rollovers threaten to increase program costs and weaken the oversight that has kept the program successful.
Recommendations related to Economic Development Tax Incentives
In order for Excelsior to continue to control costs, the state should avoid the temptation to loosen restrictions and performance requirements to entice more entrants.
Empire State Development should remain cautious and vigilant in administering and monitoring the program.
Legislators should avoid additional modification to expand the Excelsior Jobs Program.
Key Data
$470 million
— Total tax credits allocated by the Excelsior Jobs Program over the lifetime of the benefit period in its initial three years.
$2 billion
— Total tax credits allocated by the Empire Zones program over the lifetime of the benefit period in its initial three years.
$250 million
— The peak annual program cap for the Excelsior Jobs Program in 2015.
$478 million
— Unused credits accumulated by Empire State Development during the first four years of the Excelsior program.
$239 million
— The amount of unused credits that could be rolled over after Empire State Development was allowed to roll over half of all unused credits.
$1.8 billion
— The potential cost of the Excelsior program by 2019, including the allowance for rollover credits.
New York spends over $8 billion annually on economic development programs, yet the 109 local Industrial Development Agencies lack uniform review and monitoring procedures for the $660 million in tax breaks they provide each year. Legislation S5867/A7915 aims to address these inconsistencies by mandating standard application processes, rigorous project evaluation criteria, and uniform agreements to recoup benefits if performance targets are not met.
Recommendations related to Economic Development Tax Incentives
Governor Cuomo should sign S5867/A7915 to improve the practices of Industrial Development Agencies.
Industrial Development Agencies should require a standard application that includes a detailed description of the project and the projected costs.
Applicants should be required to assert that a project would not occur without financial assistance, or explain why the project is worthy of assistance if it could be completed without it.
Industrial Development Agencies should develop standard criteria for evaluating and selecting projects, including a cost-benefit analysis for each project.
Industrial Development Agencies should implement uniform project agreements and standard policies to discontinue or recoup benefits if projects fail to meet targets.
Key Data
$8 billion
— Annual spending on economic development through myriad state and local programs.
109
— Number of local Industrial Development Agencies (IDAs) operating in New York.
$660 million
— Annual tax breaks provided by local Industrial Development Agencies.
New York's economic development spending has expanded significantly, with the fiscal year 2016 budget adding over $2 billion in capital funding and expanding tax credit programs despite a lack of evidence regarding their economic impact. State leaders should prioritize rigorous economic impact analyses for these subsidies to ensure they produce positive returns rather than continuing to expand programs with unclear benefits.
Recommendations related to Economic Development Tax Incentives
State leaders should require in-depth economic analyses for all economic development programs to prove their ability to induce new economic activity.
Before adopting new capital funding and expanding tax credit programs, state leaders should seek better evidence that these large subsidies produce positive returns for New York.
State leaders should improve transparency and reporting for economic development programs by including wage data and tax credit projections for future years.
State leaders should eliminate loopholes like the one for "underutilized sites" in the Brownfield Cleanup Program to better target tax credits.
Key Data
$8 billion
— Total state and local spending for economic development activities in 2014, largely consisting of capital grants and business tax breaks.
$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
— The increase in planned capital disbursements for Empire State Development compared to actual disbursements over the previous five years.
$570 million
— The net loss in tax revenue the State will incur from film and TV production tax credits awarded in 2013 and 2014.
30 percent
— The value of the fully refundable film tax credit relative to qualified expenditures.
New York's Brownfield Cleanup Program has functioned primarily as a real estate development subsidy rather than an environmental remediation tool, with 85 percent of its benefits going toward tangible property tax credits. Between 2008 and 2013, the state issued $1.1 billion in tax breaks for 115 sites, with the tangible property credit costing 58 percent more than the actual cleanup and remediation expenses.
Recommendations related to Economic Development Tax Incentives
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 percent
— Share of total Brownfield Cleanup Program benefits accounted for by the tangible property tax credit.
58 percent
— Amount by which the tangible property credit cost more than developers’ cost of site cleanup and groundwater remediation.
$963 million
— Total cost of the tangible property credit for brownfield projects.
$609 million
— Total cost of site cleanup and groundwater remediation for brownfield projects.
64 percent
— Share of total tax breaks accounted for by the top 10 brownfield projects.
New York's recent budget proposals include significant expansions in economic development spending, such as tax-free zones and capital grants, despite a lack of evidence regarding their effectiveness. A moratorium on these expansions is necessary until existing programs can be rigorously evaluated and unsuccessful initiatives are terminated.
Recommendations related to Economic Development Tax Incentives
The state should declare a moratorium on expansions in economic development spending until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
The state should reject proposals for excessive economic development spending, including new capital grants and tax credit extensions, due to a lack of information showing they yield a worthwhile return.
The state should implement a more stringent approval process for state tax breaks issued by local Industrial Development Agencies.
The state should sunset the investment tax credit for financial services firms, as these entities no longer need the incentive.
Proposed Brownfields tax credit reforms should be enacted to tighten eligibility and better focus the program on the cost of cleanup and environmental remediation for sites in economically distressed areas.
Key Data
$1.5 Billion
— Proposed allocation of bank settlement funds for an Upstate Revitalization fund to award to Regional Economic Development Councils.
$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 challenge grants to SUNY and CUNY.
New York's economic development spending grew from $7.0 billion in 2010 to $8.1 billion in 2014, largely driven by expanding tax expenditure programs that often lack sufficient accountability and evidence-based targeting. To improve cost-effectiveness, the state should implement standardized performance metrics, coordinate investments with regional strategies, and reevaluate existing programs before authorizing further expansions.
Recommendations related to Economic Development Tax Incentives
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.
All programs should be reevaluated for effectiveness before existing programs are increased or new ones are added.
The qualifications for Excelsior tax credits should be strengthened.
Key Data
$8.1 billion
— Estimated annual economic development investments in 2014, representing a 15 percent increase from 2010.
$2.8 billion
— Amount the State expects to have spent on economic development tax expenditures in fiscal year 2014, a 49 percent increase over 2010.
$427 million
— Estimated cost of the Empire State Film Production credit to the state in 2014.
$149 million
— Cost of the Brownfields Cleanup Program in 2013.
$59 million
— Estimated cost of the START-UP NY program for 2014.
The FY2016 Executive Budget continues to expand tax credit and economic development programs, including a $150 million capital grant round and a $50 million venture capital fund expansion, without clear documentation of their benefits. Additionally, the budget modifies the $500 million annual Brownfield Tax Credit program to limit eligibility to economically disadvantaged sites and restrict credits to remediation costs.
Recommendations related to Economic Development Tax Incentives
The state should require clear documentation of benefits before continuing the expansion of tax credit and other economic development programs.
Policymakers should ensure that Brownfield Tax Credit program reforms limit eligibility to economically disadvantaged sites and restrict credits to remediation costs.
Key Data
$1.5 Billion
— Investment through upstate Regional Economic Development Councils.
$150 Million
— Fifth round of capital grants proposed in the budget.
$50 Million
— Expansion of the State's venture capital fund.
$110 Million
— Challenge grants for SUNY and CUNY.
$11 Million
— Excelsior tax credits awarded to The Late Show.
$500 Million
— Annual cost of the Brownfield Tax Credit program.
The FY2016 New York State budget requires scrutiny regarding the expansion of economic development tax credits, which currently lack documented benefits, and the implementation of necessary reforms to brownfields tax credits. Fiscal oversight is essential across major spending areas, including education, Medicaid, and infrastructure, to ensure prudent use of funds.
Recommendations related to Economic Development Tax Incentives
The state should avoid expanding economic development tax credit programs without first documenting clear benefits.
The state should implement sensible reforms to Brownfields Tax Credits following the Governor's veto.
New York City spends nearly three billion dollars annually on economic development, yet many tax incentives are granted to projects that would be profitable without them. To improve effectiveness, the city should prioritize infrastructure investments in neighborhoods with growth potential, tighten monitoring of job creation promises, and reduce the duration of tax benefits.
Recommendations related to Economic Development Tax Incentives
The city should reduce the length of benefits provided and exclude projects that clearly will be profitable without subsidies regarding as-of-right tax expenditures.
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 economic development investments to those that enhance infrastructure in neighborhoods with growth potential.
The beneficiaries of city capital dollars should be neighborhoods, not individual firms.
For firms that need support, the city can continue to provide low-cost conduit financing.
Key Data
three billion
— Annual spending by New York City to cultivate industries, attract and keep businesses, and stimulate development.
New York City spends $930 million annually on business property tax expenditures, which are often criticized as unnecessary for attracting or retaining jobs. Ending these wasteful subsidies and clawing back funds from companies that fail to meet job creation promises could provide necessary revenue for the city's budget.
Recommendations related to Economic Development Tax Incentives
Wasteful subsidies for businesses should be ended.
More can be done to 'claw back' money from firms that fail to deliver on promised jobs.
Key Data
$930 million
— The cost of business property tax expenditures in the last fiscal year.
$30 million
— The estimated annual savings from cutting corporate tax breaks in the short run.
New York City's economic development programs, including tax expenditures, capital spending, and conduit financing, have grown significantly in cost over the past decade, yet often lack rigorous evaluation or clear criteria for success. Future administrations should prioritize infrastructure investments in high-potential neighborhoods, reform tax incentive programs for greater cost-effectiveness, and improve the transparency and management of economic development agencies.
Recommendations related to Economic Development Tax Incentives
The city 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 instead of relying on direct capital grants.
The administration should continue reform of as-of-right tax expenditure programs to make them more cost-effective by implementing greater restrictions on retail benefits and shorter durations.
The city must establish clearer standards for awarding discretionary tax expenditure benefits to reduce the wide variation in the level of support firms receive.
The city should continue rezoning and expand special mixed use districts to facilitate diversified job growth in areas currently limited to industrial use.
The city should better manage the Economic Development Corporation by focusing on job creation and enhancing transparency in how it administers discretionary tax exemptions.
Key Data
$1.6 billion
— Annual tax expenditures in 2012.
$751 million
— Annual capital spending in 2012.
$9.7 billion
— Total conduit debt outstanding in 2012.
$368 million
— Operating expenditures in 2012.
$9.2 billion
— Total face value of conduit financing projects from 2002 to 2012.
$2,000 to $398,000
— Range of benefit awarded per job for discretionary projects approved in fiscal years 2010 and 2011.
New York State spends $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.
Recommendations related to Economic Development Tax Incentives
State leaders should freeze economic development spending until a thorough review of all programs has been conducted to assess whether they are working.
No additional funds should be authorized for economic development programs until the results of the new performance metrics put in place by the Regional Councils can be evaluated.
Key Data
$7 billion
— The amount the State and its local governments spend on economic development each year.
$2.6 billion
— The amount in credits and exemptions that reduce state taxes and have largely escaped scrutiny.
$365 million
— The amount in new capital grants authorized in the last two budgets through the Regional Economic Development Councils.
New York State and its local governments spend nearly $7 billion annually on economic development programs, yet many of these initiatives lack sufficient transparency and accountability. To improve the effectiveness of these investments, the state should standardize performance metrics, eliminate ineffective programs, harmonize project scoring criteria, and create a unified economic development budget.
Recommendations related to Economic Development Tax Incentives
The state should use standardized and meaningful metrics to evaluate programs and make them public to ensure economic development funding meets its goals.
New York should end ineffective programs by reexamining their efficacy and eliminating those that fail to deliver results.
ESD should improve the consistency of project scoring by facilitating the convergence and standardization of the multiple criteria and scoring methods used by agencies and councils.
The state should expand the Consolidated Funding Application to serve as the platform for a unified economic development budget that accounts for all expenditures.
Key Data
$7 billion
— Total annual spending by New York State and its local governments on economic development programs.
$762 million
— Economic development funds allocated through Regional Economic Development Councils in 2012.
$786 million
— Economic development funds allocated through Regional Economic Development Councils in 2011.
$100 million
— Cost of the new Excelsior program in tax year 2012.
$50 million
— Annual cap on Excelsior tax credits for five years.
$4.5 billion
— Total tax incentives approved in Missouri since 2000, cited as a benchmark for transparency.
New York City's economic development reporting often fails to capture the full scope of costs associated with incentive packages, such as capital commitments and state-level assistance. Improving transparency by including these overlooked expenses in cost-benefit analyses is essential for ensuring accountability and justifying the use of public funds for business incentives.
Recommendations related to Economic Development Tax Incentives
The Economic Development Corporation should include the debt service associated with project-related capital commitments in its cost-benefit analysis to accurately reflect the full cost of economic development projects.
The methodology recommendation committee, created under Local Law 48, should be appointed and convened to discuss necessary adjustments to reporting measures, as it has not met since the law's enactment.
Key Data
$125 million
— Total incentive package provided to FreshDirect for its relocation and expansion.
$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
— Amount of state-level assistance excluded from the FreshDirect cost-benefit analysis.
$16.4 million
— Amount of city-level assistance excluded from the FreshDirect cost-benefit analysis.
New York State should pause additional funding for regional economic development competitions until it consolidates the fragmented system of agencies and improves accountability. The state must implement standardized performance metrics and a unified budget to ensure that the billions spent annually on subsidies and tax expenditures actually produce measurable results for taxpayers.
Recommendations related to Economic Development Tax Incentives
New York State should not authorize additional funds for another round of regional competition until the "hydra" of economic development is tamed.
The state should improve the accountability and transparency of all expenditures to ensure that grants and preexisting economic development 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.
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.
New York should adopt a Unified Economic Development Budget to ensure full disclosure of the costs and benefits of every investment.
Key Data
$6.6 billion
— Annual state and local investment in direct subsidies and tax expenditures for economic development.
6.5:1
— Leveraging ratio of public to private capital in the North Country's economic development plan.
5:1
— Leveraging ratio of public to private capital in the Capital Region's economic development plan.
28:1
— Leveraging ratio of public to private capital in Central New York's economic development plan.
$783 million
— Amount of economic development funding just awarded by the state.
New York's fragmented economic development landscape involves hundreds of entities dispensing an estimated $6.6 billion in annual incentives, with over a dozen tax credit programs alone reducing state tax receipts by $2.5 billion. To improve outcomes, regional councils should consolidate oversight, implement standardized performance metrics, require retroactive benefit payments, and maintain a unified budget to ensure transparency and accountability.
Recommendations related to Economic Development Tax Incentives
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 the 10 new regional councils will tap.
New York State spends approximately $6.6 billion annually on economic development programs, yet these initiatives often lack clear performance metrics and accountability. To improve outcomes, the state should consolidate these disparate programs, implement performance-based funding, and adopt a unified budget to ensure tax incentives are scrutinized and effective.
Recommendations related to Economic Development Tax Incentives
The councils should have responsibility and authority over all state economic development resources, not just a subset of selected programs.
Performance should be gauged only by new activity created in addition to baseline payroll and/or property value.
Benefits should be paid retroactively based on firm performance.
After the initial round of competition economic development incentives should not be awarded by regional formula but only on the specific merits of each deal.
The ultimate goal should be the creation of a Unified Economic Development Budget.
All programs should be considered for elimination before the budget for economic development is increased.
Key Data
$6.6 billion
— Annual cost to the State of all economic development programs in lost tax revenues, power subsidies, and direct spending.
$2.5 billion
— Annual reduction in state tax receipts caused by more than a dozen separate state tax credit programs.
$1.0 billion
— Annual expenditure by Industrial Development Agencies and the City of New York in tax breaks.
$554 million
— Cost to the State in 2010 for the Empire Zone program in lost tax receipts.
$586 million
— Amount invested by the State from 1997 to 2006 trying to establish the Centers for Excellence.
The fiscal year 2010-11 budget replaced the flawed Empire Zone program with the Excelsior program to improve accountability for economic development incentives. However, the budget failed to implement necessary reforms for the Power for Jobs program, extending it for another year despite its longstanding issues.
Recommendations related to Economic Development Tax Incentives
Reforms proposed for the Power for Jobs program should have been adopted rather than extending the program for another year while leaving its longstanding problems unaddressed.
New York's existing economic development programs, specifically the Empire Zone Program and Power for Jobs, have become opaque and ineffective, with the former's costs ballooning from $30 million in 2000 to $600 million in 2009. To better foster job growth, the state should replace these initiatives with a unified strategy that utilizes performance-based tax credits and clear metrics to ensure resources are directed toward high-growth industries rather than existing businesses.
Recommendations related to Economic Development Tax Incentives
Both Power for Jobs and the Empire Zones should be replaced without further delay.
The Empire Zone Program should now be replaced by the Excelsior program, a new initiative proposed by Gov. David Paterson.
The Excelsior program would stop the practice of giving generous tax benefits to 'big box' stores, law firms and other companies that are already here.
The Excelsior program would attract firms in high-technology, manufacturing and financial services that agree to add at least 50 jobs in the state.
All tax credits should be awarded based on a standard application and doled out retroactively, based on the prior year's performance.
The legislation for a new Power for Jobs program 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 the performance of new programs.
Key Data
$30 million
— Cost of the Empire Zone Program in 2000.
$600 million
— 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
— Amount in direct aid to affected rate-payers in the agreement to end discount power contracts for residential consumers.
New York's power authority operates nine economic development programs that provide discounted electricity to businesses, yet these programs often fail to support the state's long-term energy and economic goals. The state should overhaul these initiatives by phasing out current programs, selling excess power at market rates, and better aligning energy conservation with economic development strategies.
Recommendations related to Economic Development Tax Incentives
New York should phase out current programs and allow existing contracts to expire without passing new legislation to reauthorize them.
State leaders should include assistance for firms with high energy costs as part of a comprehensive economic development strategy administered by Empire State Development.
NYPA should sell power no longer used for economic development at market rates to generate additional revenue.
The state should link energy conservation and economic development goals and programs by requiring firms that receive benefits to submit to energy audits.
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.
$42 million
— Cost for Power for Jobs (PFJ) rebates in 2007.
$20 million
— Cost for lost transmission charge revenue in 2007.
The Empire Zones program, criticized as an ineffective and costly economic development strategy, should be allowed to expire in favor of the proposed Excelsior program. New economic development initiatives should prioritize targeted industry benefits, temporary support, and clear performance-based criteria rather than continuing flawed administrative structures and wage credits.
Recommendations related to Economic Development Tax Incentives
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.
Policymakers should reject provisions that would extend local Empire Zone administration boards and wage credits, as policies that have proven ineffective should not be continued.
New York State's Empire Zone program, originally designed to assist economically distressed areas, has become an ineffective and expensive vehicle for corporate tax breaks that fails to meet its job creation and investment goals. Because the program is reform-resistant and lacks accountability, it should be abolished to save scarce public resources.
Recommendations related to Economic Development Tax Incentives
The Empire Zone program should be abolished because its problems are extensive and longstanding.
New York State should end the Empire Zone program as it is not worth the tremendous loss of revenue it requires.
Public resources should no longer be spent in this unproductive way given the current environment.
Key Data
$582 million
— The cost of the Empire Zone program in 2008.
$391 million
— The amount of credits claimed by just 500 firms, representing 76% of the total program cost.
$127 million
— The amount of credits that went to Fortune 1000 firms, representing 25% of total annual claims.
58%
— The percentage of firms participating in the program that missed their job or investment targets by at least 60%.
$900 million
— The amount in unused credits that firms have accumulated and can be used in future years.
New York's Empire Zone program has grown into an unsustainable and ineffective system of tax breaks that fails to meet job and investment targets, with costs rising from $30 million to $580 million between 2000 and 2008. The program should be eliminated and replaced with initiatives that are aligned with a clear economic development strategy, target growth industries, and base payments on retrospective performance rather than projections.
Recommendations related to Economic Development Tax Incentives
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.
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 and standardize practices.
Key Data
$580 million
— The total cost of the Empire Zone program in 2008.
45 percent
— The average annual growth rate of the program's cost from 2000 to 2008.
79 percent
— The portion of the 570 Empire Zone beneficiaries in New York City that failed to meet their job or investment targets.
$30 million
— The cost of the Empire Zone program in 2000.
$2,200
— The median benefits per job received by program participants.
$690,000
— The amount received by Manhattan Nursing Home Realty in 2006 for adding a single job.
The New York Power Authority operates nine economic development programs that provide discounted power to businesses, costing between $479 million and $640 million annually in lost potential revenue. These programs lack coordination with state economic goals and transparency, prompting calls to phase out current contracts and reallocate funds toward a more strategic, market-based economic development approach.
Recommendations related to Economic Development Tax Incentives
The state should phase out current economic development power programs by allowing current contracts to expire without passing new legislation to reauthorize them.
State leaders 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 and increase operating surpluses.
The state should link energy conservation and economic development goals and programs by requiring firms that receive benefits to submit to energy audits and comply with best practices.
Key Data
$479 million to $640 million
— Estimated annual cost of NYPA's economic development programs in lost potential revenue.
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.
1.8 cents to 2.2 cents
— Price per kilowatt-hour paid by program recipients compared to the 6.7 cents market rate.
New York's Empire Zone Program has failed to deliver promised economic growth despite costing nearly $600 million annually, with most participating firms missing their job creation and investment targets. The state should phase out this ineffective program and replace it with a more targeted strategy that focuses on strategic growth industries and distressed areas.
Recommendations related to Economic Development Tax Incentives
New York should phase out the Empire Zone Program, which is a largely wasteful use of limited state resources.
The state should replace Empire Zones with a more targeted approach to statewide and regional economic development that stimulates the creation of good jobs.
New York should decertify businesses in substantial noncompliance with their existing contracts.
The state should cease any new commitments that fail to meet well-defined, strategic objectives.
The Legislature should develop a new program that focuses on strategic growth industries and offers deeper benefits for the most distressed areas of the state.
Key Data
$600 million
— Annual cost of the Empire Zone Program.
400%
— Maximum variation in the value of awards given to businesses.
58%
— Percentage of participating firms that fell short of their job creation and investment targets in 2006.
60%
— Minimum percentage by which firms fell short of their targets.
69% to 79%
— Failure rate of participating firms in several regions.
Originally designed to spur job growth in distressed areas, the Empire Zone program has become an ineffective and costly vehicle for corporate tax breaks that lacks accountability and fails to meet its economic goals. Because the program is reform-resistant and continues to waste public resources, it should be abolished.
Recommendations related to Economic Development Tax Incentives
The time has come to end the Empire Zone 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.
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, which grew from $30 million in 2000.
$900 million
— The amount of unused tax credits firms have that can be used in future years.
$514 million
— The total amount of Empire Zone tax credits claimed in 2006.
$391 million
— The amount of tax credits claimed by just 500 firms in 2006, representing 76 percent of the total.
$127 million
— The amount of tax credits claimed by Fortune 1000 firms in 2006, or about 25 percent of the total annual claims.
$30 million
— The amount of tax credits received by 11 large retail chain stores.
New York City's business tax rates are significantly higher than those of key competitors, leading the city to rely on special tax incentives for individual companies to attract or retain them. A comprehensive, multi-year strategy is needed to reform the tax structure, which currently places a disproportionate burden on commercial property owners compared to homeowners.
Recommendations related to Economic Development Tax Incentives
Mr. Bloomberg and the City Council should appoint a blue-ribbon commission to map a multi-year strategy relating to the whole range of taxes and tax incentives.
The commission should have estimates of the fiscal impact in time for the mayor's January 2008 financial plan and specific recommendations for his executive budget in April 2008.
New York City should consider revamping business taxes because the thriving economy and surplus revenues can ease the transition for those who will be asked to pay more.
Key Data
$2.3 billion
— The annual cost to city businesses of excluded taxes like the commercial rent tax, real property transfer tax, and mortgage recording tax.
$240 million
— The value of the deal struck with JPMorgan Chase for the construction of a new office tower downtown.
7.5%
— The average effective state and local tax rate on businesses in New York City.
4.5%
— The comparable average effective state and local tax rate in the eight other locations studied.
70%
— The amount by which business taxes in New York City are higher than those in Los Angeles.
$28 million
— The value of annual tax cuts made on unincorporated businesses.
New York's public authorities hold $166 billion in outstanding debt, much of which is incurred through opaque "back door" borrowing that bypasses voter approval. Industrial-development authorities, which facilitate job growth through tax-exempt benefits, often operate with little accountability, necessitating more competitive and transparent processes for awarding these incentives.
Recommendations related to Economic Development Tax Incentives
The solution to this problem is more competition among private entities for the tax-exempt benefits.
Each local industrial-development authority should select among private parties based on criteria established in advance and in response to competitive proposals.
The process for awarding tax-exempt benefits should be done in the open rather than behind closed doors.
Key Data
$166 billion
— Total outstanding debt held by New York's public authorities.
$227 billion
— Total outstanding debt issued by New York state and local governments and their authorities.
$4 billion
— Amount of 'back door' debt (9 percent of the $45 billion in current state-supported debt) that has not been approved by the voters.
$45 billion
— Total current state-supported debt.
583
— Total number of public authorities in New York.
116
— Number of local jurisdictions that have created industrial-development authorities to facilitate job growth.
New York State's extensive use of public authorities to issue tax-exempt conduit debt for economic development lacks strategic oversight, leading to inefficient allocation and potential misuse of these subsidies. To improve outcomes, the state should implement more rigorous, competitive processes for allocating these tax benefits and require greater transparency and accountability from the industrial development agencies that manage them.
Recommendations related to Economic Development Tax Incentives
Improve the effective use of tax-exempt conduit debt by requiring more explicit advance allocation of its purposes and more competition among private entities for its benefits.
Allocations of private-purpose debt should be based on elected officials’ political judgments about the relative importance of the permissible function, and decisions should be based on evidence submitted by the issuing agency.
The appropriate legislative committee should conduct public hearings and prepare an annual report based on reliable data and sound evaluation methods to support a recommended allocation.
At the next stage, the authorities given an allocation of tax-exempt debt should select among entities seeking the benefit based on criteria established in advance and in response to competitive proposals.
Local IDAs, in particular, should select projects based on a competitive process with standardized criteria for evaluation.
Key Data
$227 Billion
— Estimated total debt borrowed by state and local governments and their authorities in New York.
$40 Billion
— Amount of private conduit debt out of the total $227 billion borrowed by state and local governments and their authorities.
$9.7 Billion
— Amount of debt issued by Industrial Development Agencies (IDAs) in 2003, representing one-quarter of the total local government debt.
$1.5 Billion
— Average annual quota for New York State's private activity bond volume cap in recent years.
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