New York is a tale of two economies: The struggling upstate one, which giant subsidies have failed to revive, and wealthy New York City, which gives out almost $4 billion in tax breaks and “competes” with neighboring New Jersey and Connecticut for offices and stadiums in a race to the bottom. In 2018, a highly publicized $2.8-billion subsidy deal with Amazon to build part of its second headquarters in Queens fell apart under intense opposition (Amazon went to Virginia, which offered $750 million).
Common to both are the quasi-private, powerful agencies that run economic development: the Empire State Development (ESD) Corporation at the state level and the network of Industrial Development Agencies (IDAs) at the local level. The agencies, composed of city or county appointees, are granted enormous power to not only award bundles of state and local subsidies, but also acquire properties through bond issues and lease them to businesses at reduced rates.
Both project and program costs offer some transparency. The ESD issues annual reports and publishes disclosures on the state’s data portal “Open NY,” which also includes beneficiaries of the exemptions through Industrial Development Agencies. However, some programs are missing information about either the projected or the actual job, wage, and/or investment outcomes.
Both the tax expenditure reports and the tax abatement notes in the Annual Comprehensive Financial Reports are detailed and thorough. New York’s localities generally report tax abatements in accordance with Statement No. 77, including taxes exempted as part of IDAs. The exception is New York City’s school districts, which are part of the city government and do not have independent financial reporting.
What New York fails to do well is to thoroughly evaluate the effectiveness of its subsidies. Except for the annual performance reports by the comptroller on the IDAs, there have been over the years no more than a handful of isolated evaluations. There is neither a regular schedule nor a dedicated staff for undertaking the analyses necessary to improve subsidies.