The new state budget removes a requirement that businesses participating in the Start-Up NY tax-break program report annually on how many jobs they’ve created and how much money they’ve invested in their operations, state officials confirmed Thursday.
How the change happened is in dispute.
The reports, mandated since Start-Up NY began three years ago, had been used by state agencies to determine companies’ continued eligibility. Failure to file a report resulted in removal from the program.
The requirement was left out of the 2017-18 budget by accident, according to an official in the state Budget Division, who requested anonymity. “This change was an inadvertent omission that occurred while we were consolidating pieces of statute,” he said Thursday.
The official also said Gov. Andrew M. Cuomo’s administration wants Start-Up NY companies to continue to file yearly employment and investment data.
The administration is exploring how to remedy the budget mishap. The official said, “It could be either a change to statute or an administrative solution.”
However, some in the State Legislature said no mistake had been made, arguing that past reports about Start-Up NY had yielded little information.
“We already knew what it was going to say . . . that it [Start-Up NY] hasn’t been successful,” said Scott Reif, a spokesman for the State Senate’s Republican majority. “We thought there was more value in requiring the governor to produce a comprehensive report on all of the programs” run by Empire State Development, the state’s primary business-aid agency.
Empire State Development has issued one such report, in 2016, after its 2015 Start-Up NY report set off intense criticism about the program’s effectiveness. The new state budget requires Empire State Development to publish broader reports in the future.
Companies in Start-Up NY pay no state and local taxes for up to 10 years and their new employees pay no state income taxes for as long as 10 years. The tax-free zones are located on or near college campuses.
The 2017-18 budget repealed section 438 of the state Economic Development Law, which states, “Any business located in a tax-free NY area must submit an annual report . . . such information shall be sufficient for the commissioner [of economic development] and the commissioner of taxation and finance to monitor the continued eligibility of the business and its employees to participate in the Start-Up NY program and receive the tax benefits.”
Empire State Development had been required to issue a progress report on Start-Up NY by April 1 each year. Past reports sparked controversy because Start-Up NY participants have created 1,135 jobs in 2 1⁄2 years while the state spent $53 million in advertising to promote the program.
A spokesman for the Assembly’s Democratic majority didn’t respond to a request for comment on Thursday.
The legislature has so far turned down Cuomo’s proposals to rename Start-Up NY and to loosen job creation requirements. For example, the governor has wanted to give businesses up to five years to hire one person and still receive aid.
Statewide, Start-Up NY had enrolled 212 companies as of Dec. 31; about 20 are on Long Island, mostly at Stony Brook University.