Out of the Zone

July 15, 2008

New York State’s

widely criticized

Empire Zone program (known as

“Enterprise Zones”

in most states) is in a state of disorder. This past weekend, the

Syracuse Post-Standard


on the lack of progress by government officials and state agencies in making the program more effective. The article points to mild reform


that didn’t pass, and efforts by the state to kick out only a handful of the ineligible companies registered with the program (a subject on which we’ve

previously blogged

). But as critics call for the state to do more to rein in Empire Zone tax credits, New York City has been expanding them.

In recent months, the city has taken steps to bring some previously ineligible companies into the program by granting them the status of “

regionally significant projects

” (RSPs). Empire Zones were established to subsidize companies creating jobs in economically stressed communities, but RSPs don’t even need to be in an Empire Zone in order to receive the

multitude of tax credits

available to companies that are. The concept of RSPs was created in 2005 by the New York State legislature, but until late last year all NYC companies receiving Empire Zone credits were physically located with a Zone.

Last December the city

approved designation of its first RSP

, and last month it held a

hearing on another

(which has not yet been approved). Good Jobs New York testified at hearings for both projects (




), arguing that while these two companies seem to be responsible employers creating good manufacturing jobs, New York City must be very careful in opening the door for more companies to take advantage of a program that has been


as “perhaps the best example of good economic development intentions gone wrong.”

The Empire Zone program was created to bring jobs and investment into impoverished communities, but it has strayed far from its initial intent. Clearly, the program is broken (

a number of lawmakers

think it’s beyond repair). And if something is broken, fix it – don’t add to it.