Top 10: Watching incentives
If we asked you to develop a list of the top 10 stories of 2011, you probably wouldn’t include incentives.
That’s because perks like payment-in-lieu-of-taxes deals, guaranteed loans, and energy-for-jobs swaps are the types of economic development that run in the background. Unless you’re a hardcore public meeting junkie – or a reporter – incentives don’t usually pop up on your radar.
But incentives are important. Deals get made all the time, to encourage companies to create jobs, to stay in New York, or to move from one place to another – sometimes neighboring towns.
The problem is trying to gauge what taxpayers get for the money. Incentives are distributed at every level of government, but tracking whether or not companies came through on their promises to create jobs or invest capital is difficult. And companies can’t predict the future – a promise to create jobs on the eve of a recession is unlikely to be fulfilled.
But the deals can be massive despite the uncertainty, and this year was no exception. In October, the state announced that it would be pitching in $400 million for research and development at the GlobalFoundries chip fabrication plant, outside Albany – a facility that, to date, is the state’s most expensive economic development investment. In March, Verizon walked away from a more than $600 million package to lure a data center to the Buffalo suburb of Somerset.
Those are the big deals. But every month, industrial development agencies offer smaller packages to try to help grow businesses and the local economy. These efforts came under fire this year during an audit by the state comptroller, Thomas DiNapoli, who wrote in his July report:
An analysis by county of net tax exemptions provided by IDAs and of job growth does not indicate a positive correlation between the two. This reinforces the need for better job creation and retention data for all IDA projects, in order to evaluate the extent to which these projects are meeting their intended economic development goals.
In other words: these projects are worth watching. So just as we did in 2011, we plan to continue keeping an eye on incentives of all stripes in 2012.
Are there taxpayer-funded projects in your region that you’re concerned about? Let us know in the comments, or talk back to us on Facebook.