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Comptroller Thomas DiNapoli's audit of Empire State Development Corp. questions tax incentives

State Comptroller Thomas DiNapoli said his review of

State Comptroller Thomas DiNapoli said his review of the Empire State Development Corp. shows the public authority doesn't "publicly assess whether individual projects would have occurred without its involvement." Credit: AP

ALBANY -- A state report released Thursday found little evidence that billions of dollars in tax breaks provided to companies by a state authority to attract and retain jobs actually work.

State Comptroller Thomas DiNapoli said his review of the Empire State Development Corp. shows the public authority doesn't "publicly assess whether individual projects would have occurred without its involvement."

The report also found that the authority makes no public assessment on whether "such initiatives have succeeded or failed at creating good jobs for New Yorkers or whether its investments are reasonable."

"It is unclear to what extent ESDC's programs drive net job creation to the state," the report concluded.

On Monday, Newsday reported that academic studies, fiscal analysts and a recent study commissioned by Gov. Andrew M. Cuomo questioned whether the tax incentives are worth the cost to taxpayers, or if the tax breaks work at all.

On Thursday, in a budget presentation in Farmingdale, Cuomo disagreed with DiNapoli's findings.

"This state lost its effectiveness and primacy in terms of attracting businesses over the past decades and we've come a long way in the past four years in reversing that and bringing jobs back to New York," Cuomo said. "To the extent the comptroller thinks we should go back to the old way, which saw New York losing jobs, I couldn't disagree more strongly."

The authority's spokesman, Jason Conwall, said the Cuomo administration has increased transparency in its tax credit and loan programs. He said the authority will review DiNapoli's recommendations.

The issue arose last week in a legislative budget hearing. Deep in his presentation to lawmakers, state Environmental Conservation Commissioner Joseph Martens said that the state's tax credits to encourage companies to clean up and build on old polluted industrial sites is "still far too generous, providing tax credits to projects that would have been undertaken even in the absence of the incentives."

He said Cuomo is seeking to extend the program begun in 2008 for another 10 years, but with reforms.

Thursday's report also said the authority has increased its debt load by 20 percent from 2013 to 2014. DiNapoli noted the authority's "backdoor borrowing" for the state, which avoids the need for voter approval, reached $10.7 billion in 2014 fiscal year.

The report also found that the authority whose board is mostly controlled by gubernatorial appointees has 290 employees, nearly 23 percent of whom make at least $100,000.

"New York State spends hundreds of millions of dollars each year to spur economic development and job creation through ESDC programs," DiNapoli said. "New Yorkers deserve a more thorough accounting about whether these programs are achieving desired results."

The targeted tax breaks from state and local governments total about $2 billion annually and are awarded to just 1 percent of corporate income tax filers. The cost of those avoided taxes or, in some cases, direct payments issued by the state is picked up by all other residential and commercial taxpayers as part of the state's $137 billion budget.

New York has the most grants to companies of any state, with 71,759 subsidies active in 2013, the most recent year for which statistics were available, according to the Good Jobs First organization, a watchdog on corporate giveaways.

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