Industrial development agencies would have to get state approval, in most cases, before granting tax breaks to expanding businesses, under a proposal from Gov. Andrew M. Cuomo.
He wants Empire State Development, the state's primary business aid agency, to review IDA incentive packages that include an exemption from the state's 4 percent sales tax. Most IDA deals feature a break on both state and local sales levies.
Cuomo's 2015-16 proposed budget accuses IDAs of awarding tax breaks to companies that don't always create jobs or invest in new equipment and buildings. In such cases, state sales tax should be returned, and his proposal would authorize the state Tax Department to get it back.
Cuomo also alleges that IDAs foster unfair competition by helping some businesses but not others in the same industry and region.
A lobbyist for IDAs said Thursday more state oversight would undermine local governments and slow approval of tax breaks, giving New Jersey, Florida and other states an additional advantage over New York.
"Local economic development agencies have to be able to act at the speed of business in order to be effective, and this throws a ton of molasses into that process," said Brian McMahon, executive director of the New York State Economic Development Council, which represents IDAs, including eight on Long Island.
Morris Peters, a spokesman for Cuomo's budget office, said the governor has empowered local officials, through his Regional Economic Development Councils, to formulate and implement job-creation plans. Cuomo replaced "New York State's traditional top-down development strategy with an innovative approach that enables regional stakeholders to develop long-term plans based on regional priorities," Peters said.
Two years ago, Cuomo sought to prohibit IDAs from aiding retailers, to restrict tax breaks to key industries, and to have his regional councils approve each IDA deal. Leaders of the State Legislature nixed all but the prohibition on tax breaks for retailers; however, some local IDAs have used exceptions to help car dealerships and other retailers.
Separately, Cuomo's budget calls for the regional councils to improve job training at community colleges. He also wants the councils to steer state resources to select industries to maximize hiring.
Kevin Law, president of the Long Island Association business group, said the colleges' initiative would produce "the skill sets needed for the jobs of tomorrow."
To boost technology startups, Cuomo would award $50 million to SUNY and CUNY presidents to help turn academic research into companies.
To aid low-wage workers, Cuomo would crack down on the fees charged by employment agencies. His budget book says: "Many of New York's most economically distressed workers spend thousands of dollars to engage employment agencies bent on scamming people when they are most vulnerable."
Cuomo's state budget for economy, business
Gov. Andrew M. Cuomo's proposed 2015-16 budget includes initiatives aimed at boosting the economy and regulating development aid. Among them:
State oversight of tax breaks to expanding companies from industrial development agencies
State tax credits for entertainment businesses that create at least 100 jobs
Up to $720 million in state tax credits and grants, to be awarded through a fifth competition among 10 Regional Economic Development Councils with a focus on key industries
$25 million for "I Love NY" tourism ads and events, including a wine competition on Long Island
Streamline the issuing of state business licenses and permits
Loan program for small suppliers waiting for payment from large customers
Crackdown on fees charged by employment agencies for low-wage jobs
Source: NYS Division of the Budget