Jun 9
2023
Tax subsidy reforms stall in Albany
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New York state lawmakers were poised to end the 2023 legislative session Friday with no action on a pair of bills that would have drastically reformed the state’s 107 industrial development agencies.
Industrial development agencies, or IDAs, are public benefit corporations that have the power to grant property, sales and mortgage tax breaks to corporations who apply for those benefits, often in exchange for creating new jobs. The eight counties of Western New York have 15 IDAs at both the county and municipal levels.
One bill, sponsored by Senator Sean Ryan, a Buffalo Democrat, would have barred IDAs from granting property tax breaks that affect schools. Property tax breaks tend to be the largest subsidies IDAs can grant to companies, and schools receive the lion’s share of property taxes.
A second bill, sponsored by Senator James Skoufis, an Orange County Democrat, would have regionalized IDAs, reducing the total number of agencies from 107 to 10. Under that bill, five Western New York counties — Erie, Niagara, Chautauqua, Cattaraugus and Allegany counties — would be served by a single IDA instead of 12.
“It looks like it’s getting blocked by the corporate interests and the IDA backers are really pushing back hard against it, so I’m not optimistic that it’s going to pass,” Ryan told Investigative Post in an interview Friday afternoon.
He blamed IDAs and trade groups working on their behalf for halting the bills before lawmakers could vote on them.
“As soon as the IDAs figured out [that] some of their ability to waste taxpayer dollars was going to be threatened, they all started contacting their legislators,” Ryan said.
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In a statement Friday, a spokesperson for the New York State Economic Development Council, a group that lobbies in Albany on behalf of IDAs, said the organization has supported smaller-scale IDA reforms in the past. Those included requiring IDAs to livestream meetings online and having IDA leaders to go through training, among other measures. Spokesperson Ryan Silva said the organization takes “great pride in the work we’ve done with the Legislature to improve transparency and accountability for IDAs over the last five years.”
Recent reports from Investigative Post and a watchdog group have highlighted that New York schools, including several Western New York districts, forgo significant sums of revenue every year due to IDA and other property tax breaks.
In February, Washington D.C.-based Good Jobs First found that New York schools forgo $1.8 billion in revenue each year due to property tax breaks from cities and IDAs. That figure was based on an analysis of district financial disclosures.
Investigative Post, in a series published last week, detailed that four Western New York districts — Dunkirk City Schools, Niagara-Wheatfield CSD, Warsaw CSD and Letchworth CSD — forgo millions of dollars in revenue each year due to IDA subsidies. That means the districts have less funding for teachers, classrooms and extracurriculars.
In Dunkirk, Warsaw and Letchworth schools, the forgone revenue means the districts have, on average, around $3,000 less to spend per student.
Investigative Post’s series further detailed research that found tax breaks don’t create jobs. Studies have shown that between 75 and 90 percent of jobs created via tax subsidies would have been created anyway.
IDAs, however, earn fees for every subsidy they approve, giving the agencies a “perverse incentive,” as Skoufis described it, to grant tax breaks to companies that don’t need the assistance.
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In the final days of the legislative session, watchdog groups like Good Jobs First and Reinvent Albany joined with AFSCME New York, New York State United Teachers, the NYS Council of Churches and others to pressure lawmakers to pass the bill barring IDAs from granting tax breaks that affect schools.
Elizabeth Marcello, senior research analyst at Reinvent Albany, called the legislature’s failure to pass the reform bill “shameful.”
“It is a common sense bill that would stop the worst of what IDAs do, which is drain revenue that should go to schools to benefit corporations,” Marcello said in a statement Friday. “Time and time again, independent studies have shown that tax abatements and other corporate giveaways do not work.”
“Real investment in public services like education, transit, and clean water infrastructure are clearly superior uses of taxpayer dollars,” she added.
Ryan, noting that past IDA reform took years to move through Albany, said he plans to continue advocating for his reform legislation next year. Skoufis said he, too, would continue pushing for “broad IDA reform.”
“While we couldn’t rally the support needed to regionalize IDAs this year, I’ll continue working with colleagues to educate them on the importance of restoring taxpayer trust by holding these wasteful agencies to account, limiting their influence, and forcing wealthy developers to pay their damn taxes,” Skoufis said in a statement.
School districts, teachers and municipal workers, Ryan said, “are coming to the realization that they can’t hire staff, do programming or give raises because the IDA is giving away their money.”
“IDAs are ineffective and costly,” he added. “So we need to really rein them in.”
