Fact-checking Cuomo, Molinaro on tax incentives, mass transit and taxes

Yet the incentives haven’t proved to be especially effective. Cuomo says incentives are needed to woo businesses; his election rivals say they often waste taxpayer dollars.

The Upjohn Institute, an independent research organization, issued a report in 2017 evaluating economic incentives offered by states. It found New York provided the most ($8.2 billion, without including a film tax credit that would have pushed the figure higher) in the study. A previous study by the Citizens Budget Commission, a watchdog group, showed New York relying more and more on discretionary, targeted grants and less on across-the-board tax cuts.

CUOMO: Under Cuomo, New York has become more aggressive in offering grants for targeted industries and specific businesses. Economic development incentives more than doubled from 2010 to 2014 (from $3.3 billion to $7 billion). Among the most high-profile was the $750 million for the SolarCity project in Buffalo. His administration also has handed out annual grants to regional economic councils he created in his first year, earmarked for specific projects such as a YMCA in Wyandanch and an automated warehouse for a grocery chain in Suffolk County. “Businesses don’t come to New York State without government incentives,” Cuomo said recently. “Why? Because they can get them from any other state.”

MOLINARO: He says the state’s approach under Cuomo has been “bloated and ineffective” and is suspect because some high-profile projects have been tied to corruption scandals. He says the programs are barely audited and companies aren’t held to job promises. It is clear that this practice offers few positives, while contributing to the “pay-to-play” culture of Albany, he says. His platform calls for ending direct grants to corporations, channeling more money into job training and lowering  taxes overall as a way to let businesses compete.

FACT CHECK: Cuomo is correct in saying states are competing with one another to lure businesses. The Upjohn study estimated 33 states spent about $45 billion in 2015 — about three times the value of incentives in the 1990s. But the governor is overstating when he says companies won’t come to New York without giveaways. The Upjohn study found local tax incentives affected siting decisions only 20 percent of the time. More often, location, transportation and the number of skilled workers were bigger factors. Further, the CBC found the state didn’t track companies well on their job promises and sometimes softened the job-number requirements. It concluded the broad shift to direct grants “has not been justified” by the results.

On-time performance records for the New York City subway system are plummeting, and the Long Island Rail Road is headed for its worst performance in two decades. Meanwhile, a new report says the mass transit system faces a rapidly widening budget gap, despite a 53 percent hike in subway fares over the past decade. And other reports show the metropolitan NYC system is the most expensive in the world when it comes to labor and construction costs.

CUOMO: The governor has sought to blame New York City for the funding gap and downplays that he appoints six of the 14 Metropolitan Transportation Authority board members and its chairman. While pressing the city for money, Cuomo embraced the “Fast Forward” proposal that calls for “congestion pricing” — charging a steep toll for vehicles traveling south of 60th Street in Manhattan -- to help fund mass transit and reduce traffic. He’s ruled out raising income taxes for those earning $1 million or more annually, an idea favored by some Democrats.

MOLINARO: Molinaro too embraces the “Fast Forward” plan and congestion pricing. But he says it will work only if twinned with plans to reduce construction and operations  costs. Seizing on a New York Times report that found construction costs for the NYC  system are  seven times the global average, Molinaro said labor rules should be changed to put the mandatory number of workers on, for instance, tunnel boring machines more in line with major European cities. He calls for reducing MTA “overstaffing” on projects. And he says the MTA should do more to foster competitive bidding on projects.

FACT CHECK: The subway and LIRR have deteriorated because of a lack for  steady infrastructure repair, experts agree. Too often maintenance has been deferred for political benefit. The cars are aging. The signal system is described by the MTA itself as “antiquated.” Tunnel workers are making $118.85 per hour under the state’s prevailing wage law, according to reports. Even if backed by Republicans and Democrats, the Fast Forward plan will go only so far toward righting the ship. Cuomo’s opposition to higher income taxes could be tested if his party wins the State Senate. Molinaro’s call to reduce labor costs could run aground in the Democratic-led Assembly. The MTA has plans to fix the system, a recent state comptroller’s report said. What it lacks is money to carry them out.

Cuomo says New Yorkers pay lower taxes now than when he took office in 2011. Molinaro says New York is overtaxed and residents pay among the highest taxes in the nation.

CUOMO: The governor in 2011 reached a deal with legislators to change personal income tax rates. That deal lowered rates for most people. But for households earning $1 million or more annually, the math is trickier: The rate was 8.97 percent in 2011, but was set to drop to 6.85 percent at the end of the year because of an expiring surcharge. The new deal set the rate at 8.82 percent. On other fronts, Cuomo cut the corporate tax rate from 7.1 percent to 6.5 percent and the manufacturers’ tax to zero. On the other hand, property taxes, which are set by municipalities, have continued to rise, despite a new  2 percent property-tax cap.

MOLINARO: He bashes Cuomo for what he says is failing to significantly address New Yorkers’ tax burden. His plan calls for the state to assume the counties’ share of Medicaid costs, a move he says will reduce property taxes 30 percent. The plan also includes capping state spending growth, reducing the “millionaires’ tax,” doubling the exemption on pension income and eliminating the $4 billion the state doles out in direct grants to businesses. He says a lower overall tax rate is the key to growth, not corporate welfare.

FACT CHECK: New York ranks worst in the nation in total state and local tax burden, according to the nonpartisan Tax Foundation. It also ranks worst in income-tax collections per capita. Cuomo is correct in saying income tax rates are lower since 2011. But he’s incorrect when he says New Yorkers are paying less taxes than when he took office. That’s because property taxes — the largest tax bite for many New Yorkers — have continued to grow despite the tax cap (albeit at a slower rate). Molinaro’s Medicaid plan would be popular with counties. But when coupled with a state spending cap and possible cuts in other programs to cover Medicaid, it could run into state legislative opposition.