Gov. Andrew M. Cuomo’s program of tax-free zones on college campuses for expanding businesses will cost New York State more than $100 million in lost tax revenue in the fiscal year beginning April 1, according to new estimates.
Start-Up NY, in its second full year of implementation, provides startups, existing companies that are expanding and those new to the state with exemptions of up to 10 years from state and local taxes. Their employees don’t pay state income taxes for as long as 10 years.
Cuomo’s budget office yesterday estimated Start-Up NY participants would save $104.5 million in the 2016-17 fiscal year. That’s $1.5 million lower than the $106 million estimated for the current fiscal year ending March 30.
The number of businesses participating in Start-Up NY has more than doubled in the past year from 73 to 157.
Morris Peters, a budget office spokesman, said the difference between cost estimates for the two years was due to a revision “downward slightly” of sales tax collections.
Longtime state budget expert E.J. McMahon of the Albany-based conservative think tank Empire Center for Policy, said he thought the budget office “overestimated [the 2015-16 costs] and now they are correcting . . . and they overestimated based on the hype in which this program has been smothered.”
Leslie F. Whatley, the former Morgan Stanley executive who now oversees Start-Up NY, said the program cost New York $56,560 in lost tax revenue in 2014-15, not the $59 million projected by budget officials in early 2014.
She predicted the program’s benefits to the economy and universities would be greater than the cost to the state treasury: “If you are creating jobs and putting businesses in space that’s already off the tax rolls because it’s on college campuses, you aren’t taking anything away.”
Start-Up NY participants, as a group, have pledged to create 4,278 jobs over five years and invest more than $225 million in facilities.