“Hollywood comes to Onondaga. Who would have ever guessed?”
The answer, of course, is “no one in his right mind.” But that didn’t dissuade Gov. Andrew M. Cuomo from saying the words in March 2014 to a crowd of Syracuse dignitaries. With public investment and generous corporate tax breaks, the Queens native explained, Syracuse, a city with an average annual snowfall of 123.8 inches, was poised to become Hollywood East.
Nearly four years later, New York taxpayers own an empty, snow-covered 52,000-square-foot building in Central New York that cost them 15 million bucks to build.
Winter rave anyone?
Taxpayers got off cheap in Onondaga: Cuomo’s failing Riverbend project in Buffalo is expected to cost us $750 million when all is said and done. (That’s the one where we’re subsidizing billionaire Elon Musk’s dimming SolarCity business.) Cuomo’s Startup New York program burned $53 million in TV ads alone over two years to create 408 jobs. And Empire State ratepayers will shell out $7.6 billion over the next 12 years to keep three money-losing upstate nuclear power plants open.
Cuomo is hardly alone among government leaders. North Carolina dropped $20 million to convince Chiquita to move its headquarters from Cincinnati to Charlotte in 2011. Shortly after settling into its new digs, the banana king was bought by a Brazilian firm which promptly shut the Charlotte facility. President Barack Obama’s half-billion-dollar Solyndra bust is another cringeworthy example.
But oftentimes state tax incentives are effective — that’s the problem. Governors and mayors increasingly understand that they need to make Monty-Hall-like deals to land large businesses in their cities and states. It’s no surprise, then, that businesses are getting better and better at playing hard to get. Amazon has government leaders across America applying every shade of lipstick under the rainbow to try to score the retail behemoth’s second headquarters.
They almost have to. How do you stand in the shadows when everyone else is showing leg?
There’s been loads of empty talk in America about the political left and right putting aside differences to work together. In most cases that’s never going to happen. It’s akin to asking the Yankees and the Red Sox to agree to a perpetual tie. But corporate welfare is a rare patch of common ground where progressives and conservatives could actually begin to do something together without either side sacrificing its political principles. Conservatives — true conservatives — believe in free markets; liberals hate subsidizing private industries.
I’ve read the Constitution backward and forward, and I can’t remember any language in it about the federal government writing laws to benefit one company over another. I’m pretty sure the same applies for our individual state constitutions. But government at every level is now waist-deep in a corporate deal-making game we cried foul over for decades when Japan and China did it. Government and business was supposed to be like politics and religion in the America I knew — as separate as possible. That notion seems quaint today.
Cuomo is talking about restructuring New York’s taxing system to get around a new federal tax code that caps exemptions for state and local taxes at $10,000 per year. That may or may not be a good idea in the end. A better one would be broadly reducing New York’s high tax and regulatory burden to attract businesses without having to give away the store.
A better idea still might be working to band states together against the very corporate gamesmanship. It’s a wide open political lane for anyone looking to attract broad, cross-party national appeal.
William F. B. O’Reilly is a consultant for Republicans.