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Report: $8.6 billion spent on state, local business aid in 2016

Carol Kellermann, president of the Citizens Budget Commission,

Carol Kellermann, president of the Citizens Budget Commission, seen on March 21, 2014, said better reporting is needed to assess the value of tax breaks and grants given to businesses. Photo Credit: Patrick E. McCarthy

State and local governments gave more tax breaks and grants to businesses in the last two years than ever before without also increasing efforts to ensure jobs are created, a fiscal watchdog charged.

The nonpartisan Citizens Budget Commission estimated this week that keeping companies in the state and aiding their expansion projects will cost state and local governments $8.6 billion this year, a 5 percent rise from 2014.

The increase was mainly derived from gains in expenditures by industrial development agencies and other nonstate agencies that help businesses. The figures include the value of tax breaks and grants as well as the cost of advertising campaigns, employee salaries and other expenses.

Still, the Manhattan-based commission reserved most of its criticism for Empire State Development Corp., the state’s primary business-aid agency, and other state agencies.

“Without better metrics and reporting, it’s impossible to know what value taxpayers receive from these investments,” commission president Carol Kellermann said Monday. “The cost continues to grow but not the needed transparency.”

Empire State Development spokesman Jason Conwall said the agency’s programs, which require jobs to be created before aid is given, “have helped to create and retain tens of thousands of jobs.”

He also said the commission failed to note in its 10-page report a steep decline in New York State’s unemployment rate and the creation of 800,000 private-sector jobs since Gov. Andrew M. Cuomo came to office in 2011.

The report’s footnotes, covering three pages, show commission staffers reviewed laudatory studies of the development programs published by the Cuomo administration.

The report’s Monday release is in the wake of federal bribery charges lodged last week against former Cuomo aides and construction companies building a gigantic, state-funded solar-panel factory in Buffalo.

The commission criticized the $750 million energy project, saying the state shouldn’t have agreed to assume all the construction costs. If SolarCity backs out of the deal or closes, taxpayers would be “left holding the bag,” the commission said.

The project is supposed to create 5,000 jobs over 10 years.

Among state programs, tax breaks for manufacturers increased the most between 2014 and this year, up 423 percent to $293 million.

The brownfield tax credit program, to help clean up contaminated industrial sites, shrank the most, down 74 percent in the two-year period to $130 million.

The report follows an earlier assessment by the commission in February 2015. Then, the commission called for government investments to be aligned with economic strategies, more public disclosure of project costs and benefits, and one economic development budget that encompasses all programs.

The commission on Monday praised recent changes that limit the scope of state tax credits to clean up brownfields and spur business investment. It also said Cuomo’s Regional Economic Development Councils “have been a critical tool for coordinated economic development spending.”

However, David Friedfel, the commission’s director of state studies, said, “it’s time for the state to improve its own accounting of these investments by creating a consolidated economic development budget.”

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