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State’s oversight of millions in tax incentives inadequate, study says

Gov. Andrew M. Cuomo in Albany on March

Gov. Andrew M. Cuomo in Albany on March 18, 2015. The Pew study criticized the progress reports for Start-Up NY, Cuomo's tax-free zones on college campuses for expanding businesses. Photo Credit: AP / Mike Groll

New York State is among 23 states that lack independent oversight of millions of dollars of tax incentives awarded to businesses, according to a study released Wednesday.

The Pew Charitable Trusts, a nonpartisan think tank based in Philadelphia, said New York doesn’t have a plan to regularly evaluate the state tax credits, grants and other incentives given to companies in return for promises to create jobs and purchase machinery and buildings.

The reviews that are done are sporadic and some are conducted by Empire State Development, the state agency that awards tax breaks.

Pew research officer Josh Goodman said there should be a schedule for evaluating tax breaks and the reports should ideally be produced by consultants, university researchers or the state Department of Taxation and Finance, not Empire State Development. The reports then should be part of a formal review by the State Legislature.

The 23 states designated as “trailing” in their oversight programs “haven’t put in place an evaluation plan . . . a regular process for evaluating incentives,” Goodman told reporters in a webcast conference. “High-quality evaluations carefully assess the results of incentives for the state’s budget and economy.”

Empire State Development spokesman Jason Conwall said New York’s incentives “are cost-effective and generate a positive return . . . while spurring the creation of thousands of jobs and billions [of dollars] in private-sector investment.”

He also said New York seeks to support building projects and company expansions that fit into a regional development strategy.

The Pew study comes about a month after the adoption of New York’s 2017-18 state budget, which establishes a requirement for an annual report of all ESD programs, to be produced by ESD.

However, Goodman said the budget change wouldn’t improve New York’s standing.

The new budget “requires a variety of descriptive reporting but does not mandate that the state use this reporting to draw conclusions about the success of the programs or how they can be improved,” he said.

Besides New York, the other “trailing states” include California, Illinois, New Jersey, North Carolina, Pennsylvania and South Carolina.

The top performers in the Pew study were Florida, Indiana, Iowa, Maine, Maryland, Minnesota, Mississippi, Nebraska, Oklahoma and Washington.

Pew, in its study, criticized ESD’s yearly progress reports for Start-Up NY, Gov. Andrew M. Cuomo’s tax-free zones on college campuses for expanding businesses. Pew said the Start-Up NY report was months late last year and an evaluation of the 3-year-old program’s results isn’t due until Dec. 31, 2020.

Pew said, “With a regular evaluation process, New York lawmakers would have timely, consistent information to assess the performance of all its tax incentives.”

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