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Shut down Start-Up NY

New York Governor Andrew Cuomo discusses Start-Up NY

New York Governor Andrew Cuomo discusses Start-Up NY at SUNY College at Old Westbury in Old Westbury on June 28, 2013. Credit: Howard Schnapp

Three years ago, the state’s Start-Up NY program was touted as “game-changing” in a news release from Gov. Andrew M. Cuomo.

So far, none of the program’s promise has become reality. State officials have pleaded for more time to prove Start-Up NY’s potential, but it’s time to end the program. Rather than throw good money after bad, the governor and the Empire State Development Corp, which oversees New York’s efforts to attract and grow businesses, should take a hard look at what, if anything, incentives programs can deliver.

Start-Up NY’s goal was to seed economic growth on and near college campuses, by offering new and expanding businesses a tax free environment for a decade. No property taxes, no sales taxes, no corporate taxes — even the employees wouldn’t have to pay state income taxes. In return, companies would create thousands of new jobs, state officials said.

But last year, Start-Up NY created just 332 jobs. Statewide.

On Long Island, it added only 36. For perspective, Long Island has more than 1.3 million jobs. Over the last five years, the Island’s average annual private- sector job growth is 18,680, the state Labor Department said. Start-Up NY’s one-year job creation is less than two-tenths of 1 percent of that figure.

As of December, Start-Up NY enrolled 159 businesses, 19 on Long Island, overall. And it’s created 408 jobs since its inception.

Some say bureaucracy and paperwork have deterred companies from participating, while the small, new firms in the program were never likely to create large numbers of jobs.

Meanwhile, the costs added up. When the program started, the governor budgeted $323 million in reduced tax revenue over three years. Due to its limited success, so far, the tax breaks only amount to $1.3 million. But then there’s the advertising, where the state has spent a stunning $53 million. That’s nearly $130,000 per job. In defending the program, the governor said the ads were generic in their aim to promote investment. They weren’t.

Start-Up NY officials say it’s too soon to measure for success, that at least four or five years are needed. Meanwhile, program director Leslie Whatley is stepping down. And perhaps, the administration revealed its own assessment of the program’s shortfall when it buried Start-Up NY’s metrics in a broader economic development report released on the Friday afternoon of July Fourth weekend.

There’s more. An audit released Thursday by state Comptroller Thomas DiNapoli raises serious questions about Excelsior, another jobs program. DiNapoli found that Empire State Development lowered job-creation goals when companies couldn’t meet them, and the agency couldn’t always document whether companies created jobs at all. Empire State Development said the study was “flawed and inaccurate.”

The governor should conduct a broader evaluation of economic development. Talk with business leaders, determine what works, and consider alternatives, including attention to investment and venture funding, rather than just tax breaks. The state shouldn’t throw incentives around without the right results. Be smart, and develop the programs that really take us to where the jobs are. — The editorial board