Gov. Andrew M. Cuomo is seeking changes to his program of tax-free zones for businesses, including dropping the name Start-Up NY and loosening job creation requirements, officials said Wednesday.
In his 2017-18 proposed state budget, released Tuesday night, Cuomo asked the State Legislature to approve a new Excelsior Business Program that would incorporate many aspects of the 3-year-old Start-Up NY program, including the centerpiece: tax-free zones on college campuses.
The governor’s plan would give participating companies more time to meet their employment promises and, in some cases, lower the threshold to qualify for tax breaks, according to officials at Empire State Development, the state’s primary business-aid agency.
For example, a business would only have to hire one person over five years to receive aid. Under the current rules, a business must hit annual job creation targets.
The officials also said companies that hire five or more workers would receive an additional benefit: a state grant each year.
All participants would continue to enjoy Start-Up NY’s key feature: no state and local taxes for up to 10 years and new employees exempt from paying state income taxes for up to 10 years, the officials said.
Cuomo’s proposal must be adopted by the legislature, where there has been bipartisan criticism of Start-Up NY.
Lawmakers and others have blasted the program, which was Cuomo’s idea, saying more than $50 million was spent on Start-Up NY advertising but only 408 jobs were created in the first two years.
Empire State Development spokesman Jason Conwall defended Start-Up NY, saying on Wednesday that the program is sound but needs to be amended.
“The proposed adjustments, which are based on feedback from businesses, will help [the program] reach its full potential,” he said. “We remain firmly committed to the model — innovative academia-business partnerships coupled with performance-based, tax-free incentives.”
Start-Up NY participants have promised to create more than 4,000 jobs across the state, including 265 on Long Island. Locally, most of the 23 participants are at Stony Brook University.
These existing Start-Up NY companies would have to adhere to the new rules, which officials said would be less onerous.
Eligibility for new participants would be tightened. They would have to be startups that have yet to turn a profit and have fewer than 25 employees.
The program’s critics said it should be scrapped, not revamped.
“A name change and lowering of standards is not going to make this a better or more effective program,” said Ron Deutsch, executive director for the Fiscal Policy Institute, a union-backed think tank. “Sometimes you have to know when to throw in the towel.”