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Start-Up NY should be suspended, audited, group says

An unlikely coalition from New York's political right

An unlikely coalition from New York's political right and left has called for the suspension of Gov. Andrew M. Cuomo's Start-Up NY economic development program after reports of modest initial success and significant marketing costs. Credit: AP

Six groups, including two state political parties, are calling for the suspension of Gov. Andrew M. Cuomo's tax-free zones program for businesses to expand on college campuses.

The coalition also called on state Comptroller Thomas DiNapoli to conduct a comprehensive audit of Start-Up NY, which enrolled 93 companies from May 2014 through March, including 21 on Long Island.

The coalition said too few jobs had been created so far to justify the $53 million spent on Start-Up NY advertising since December 2013.

A spokesman for the program's administrator, Empire State Development, rejected the proposed suspension Wednesday. A DiNapoli aide said he is auditing the ad spending now.

Most of the Start-Up NY companies hadn't yet moved to campuses in the year ended Dec. 31, 2014. Only 76 jobs were reported statewide for the period, including four at Stony Brook University.

However, program participants are expected to create 2,805 jobs statewide over five years, with 239 in Nassau and Suffolk counties.

Under Start-Up NY, businesses do not pay state and local taxes for up to 10 years if they fulfill their employment promises. Their employees would not pay state income taxes for as long as 10 years.

"The initial reports show limited job creation amid major taxpayer costs," said coalition member Mike Durant of the National Federation of Independent Business, which represents small businesses. "Albany should . . . broadly reduce the sizable tax burden on small employers to create jobs."

Ron Deutsch of the Fiscal Policy Institute, a union-backed think tank, said, "We have decades of experience with failed 'designated tax-free zone programs' and Start-Up NY seems to be on track to be the next one."

The coalition also includes the Conservative Party, Working Families Party, Citizen Action and Reinvent Albany.

"It's no secret that some members of the professional left and the professional right have been opposed to this program," said Jason Conwall, a spokesman for Empire State Development. "But the fact is that because of Start-Up NY, companies from across the country and around the world are now coming to New York to create thousands of jobs and invest hundreds of millions of dollars."

DiNapoli spokeswoman Jennifer Freeman said, "As audit resources become available, we will assess whether a [full] audit of Start-Up NY is appropriate."

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