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After Amazon deal collapses, some want to ban corporate giveaways

Some lawmakers and activists are seeking to start a movement so states and cities won't engage in bidding wars for companies.

A view of Long Island City from the

A view of Long Island City from the elevated Court Square subway station. Amazon has canceled plans to build a headquarters in the Queens neighborhood. Photo Credit: Corey Sipkin

ALBANY — The demise of the Amazon deal to come to Queens has heartened some New York lawmakers and activists who criticize corporate giveaways as wrongheaded.

 Now, they are trying to ban such company-specific inducements altogether, hoping to start a movement that will prevent other states and cities from forking over playing off one another in bidding wars. They call their proposal “The End of Corporate Welfare Act.

 “It’s not just about Amazon — there is a deep issue here,” said Assemb. Ron Kim (D-Queens), a sponsor of the anti-subsidy legislation. “I think Amazon leaving abruptly and the grassroots groups clearly claiming wins is in and of itself a turning point in how we view growth in our communities.”

Besides New York, six other states are considering such legislation, including New Jersey, Connecticut and Massachusetts, according to Governing Magazine.

 Critics say the anti-subsidy legislators misread how New York’s business-incentive programs work and the State Legislature itself created incentive programs years ago precisely to lure businesses here. If these lawmakers truly wanted to “level the playing field” and still attract business, they say, they would include a rollback of business taxes along with a reduction in subsidies — but that isn’t what is proposed.

 “I don’t think there’s any doubt it would” put New York at a competitive disadvantage, Ken Pokalsky, vice president of the New York State Business Council, said of the anti-subsidy legislation.

 Amazon on Feb. 14 canceled its plans to build a campus in Long Island City — with 25,000 jobs — after fierce criticism about its anti-union stance and the $3 billion it was set to receive in state and city incentives — including a private helipad.

Other states considering a ban on company-specific incentives are Florida, Arizona and Illinois. The legislators pushing the ban in New York say it’s time to end “decades of wasteful spending” that benefits “but a few of the wealthiest companies.”

“For decades, cities and states have been incentivized to pursue a "Race to the Bottom," rolling out increasingly lavish economic welfare policies whenever multinational corporations announce plans to move locations, build new headquarters, or expand operations,” Kim and Sen. Julia Salazar (D-Queens) said in a memo filed with the bill. “Corporate executives then sit back and wait as different regions jostle to offer them the best corporate subsidies package.”

In an interview, Salazar said the proposal shouldn’t be seen so much as an anti-Amazon bill, but a “bill challenging this decadeslong practice” of giving taxpayer-backed subsidies to wealthy corporations.

“No matter what people believed about the Amazon deal, there is a very broad consensus that subsidy contests, like the one Amazon started, are just horrible economic-development policy,” said Sen. Michael Gianaris (D-Queens), who was the face of the anti-Amazon push.

He said he’s not opposed to incentives meant to encourage a type of industry or help a struggling economic region. The Amazon case featured neither, he said.

 Supporters of the deal to lure Amazon have noted that all but $500 million of the package would have come from existing business-incentive programs, which center on tax abatements. In that sense, they noted the Amazon package wasn’t all that different from deals New York has offered to a range of manufacturers.

 Pokalsky said many companies looking to launch or relocate in New York want to know if they qualify for tax abatements, energy-efficiency grants or low-cost electricity programs. Empire State Development, the state’s economic development agency, often assembles the incentives in one package to try to land companies. Lawmakers themselves authorized such programs, recognizing New York has high taxes and business costs, he said.

 Gov. Andrew M. Cuomo, who, together with New York Mayor Bill de Blasio, brokered the Amazon deal, has made the same arguments.

 “Nothing in the Amazon transaction is new. The tax incentives we provide for single business transactions are usual and typical and have been operational for decades. They are long-standing programs supported by both Democrats and Republicans in both the city and the state,” Cuomo wrote in an op-ed soon after criticism began.

 Cuomo, a Democrat, who suffered a political setback when the deal collapsed, has pointed out other states offered the company far more financial incentives than New York. And the political reality is, the governor said, states must compete against one another.

“One could argue that in a perfect world no city or state would be legally allowed to offer incentives and there would be no competition for individuals or businesses. True,” Cuomo said. “But this is not a perfect world. Our state is in an intense daily competition with other states and, indeed, other countries.”

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