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Start-Up NY program’s effectiveness questioned

Gov. Andrew M. Cuomo, with John Mack, economic

Gov. Andrew M. Cuomo, with John Mack, economic development adviser to New York State, and Leslie F. Whatley, of Start-Up NY, speaks in Melville on Oct. 22, 2013 about the program. Credit: Ed Betz

Critics of Gov. Andrew M. Cuomo’s Start-Up NY tax-free zones program said new data show it hasn’t created enough jobs, but the program’s leader said it’s on track and needs time to bear fruit.

State officials disclosed late Friday that Start-Up NY created just 332 jobs statewide last year, including 34 on Long Island.

The announcement missed by three months a self-imposed deadline to issue an annual progress report on the program, now in its third year.

Brandon Muir, executive director of Reclaim New York, a nonpartisan advocacy group focused on keeping businesses and people from leaving the state, said the report’s release was delayed “because the results prove the strategy failed.”

Ron Deutsch, executive director of the Fiscal Policy Institute, a union-backed think tank in Manhattan and Albany, concurred, saying Start-Up NY “has spent tens of millions on advertising . . . and has only created an anemic” number of jobs. “I don’t think we can consider this a success by any measure,” he said.

However, Leslie F. Whatley, a former Morgan Stanley executive who now oversees Start-Up NY, defended the program: “You can’t go from zero to thousands in two years.”

She added that the report was delayed because some Start-Up NY companies needed help completing mandatory filings to the state.

In 2014, Start-Up NY’s first year, 76 jobs were created in the state, including four in Nassau and Suffolk counties.

As of Dec. 31, 159 businesses had enrolled in the program, including 19 locally. The Island had the second-most participants in the state after Buffalo, according to the report.

Cuomo devised Start-Up NY to attract technology companies to college campuses and to combat the state’s reputation for high taxes and lots of government regulations. Businesses in the program don’t pay state and local taxes for up to 10 years. Their employees don’t pay state income taxes for as long as 10 years.

Empire State Development, the program’s administrator, spent $45 million on television commercials between October 2013 and October 2014 to promote the program, according to an audit from state Comptroller Thomas DiNapoli.

Start-Up NY companies and their workers saved a total of $1.2 million in taxes in 2015, $122,250 on the Island. Much of the savings was derived from not paying payroll taxes on $32 million in wages paid statewide. (Local wage figures were not disclosed in the report.)

Start-Up NY companies invested $11.4 million in equipment and facilities last year, including $475,000 in Nassau and Suffolk.

Locally, MitoGenetics LLC had the best performance; it created 10 jobs, invested $316,000 and reaped tax savings of $72,400.

The company, with a lab at Farmingdale State College, develops compounds for treating diseases linked to cells that lose their energy source because of genetic or environmental causes.

Whatley said Long Island’s performance in the program was “strong.”

She predicted Hofstra University and New York Institute of Technology would soon win state approval for tax-free zones, bringing the total number of zones here to eight. Stony Brook University also is seeking a second zone, in Bethpage, she said.

“This program is a success and it’s sustainable,” said Whatley. “We have built public-private partnerships [between colleges and companies]that I believe are how we are going to build the economy of the future.”

She also said criticism of the number of jobs created was unfair.

“Expectations need to be based in reality,” said Whatley, who is leaving her Start-Up NY post Friday for a job in the private sector. “This program is on track; it’s working.”


2014, year 1

  • 54 companies statewide; 10 on LI
  • 76 jobs created statewide; 4 on LI
  • $1.7 million invested statewide; $38,900 on LI
  • $56,561 tax savings statewide; $7,603 on LI

2015, year 2

  • 105 companies statewide; 9 on LI
  • 332 jobs created statewide; 34 on LI
  • $11.4 million invested statewide; $475,000 on LI
  • $1.2 million tax savings statewide; $122,250 on LI

*Figures aren’t cumulative

Source: Empire State Development

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