- Associated Press - Saturday, August 8, 2015

ALBANY, N.Y. (AP) - New York companies have reported adding more than 6,400 employees over the past four years in the state’s premier job creation program, a fraction of the nearly 37,000 promised over the next decade in return for tax credits.

While critics still raise questions about corporate welfare, they say the relatively slow start actually reflects an improvement over a previous jobs program that gave tax credits up front.

“The linkage of tax subsidies with job creation has always been tricky,” said E.J. McMahon of the fiscally conservative Empire Center. “If a business can find a way to be more productive with one less employee, they will. … The second problem, and it’s part of this program, is the state offering credits for something many companies would be doing anyway.”

Take the Excelsior Jobs program’s inclusion of the entertainment industry, for instance.

Tax credits were promised to the highly profitable CBS network for the upcoming “Late Show with Stephen Colbert” to stay in New York and renovate the Ed Sullivan Theater, McMahon said. “As if the Ed Sullivan Theater was going to go dark without tax credits. … If they might have gone to L.A., the appropriate response should have been, ‘So what?’”



Excelsior has pledged up to $577 million in write-offs to 353 companies to offset hiring, capital and research spending since it began in 2011. So far, 63 businesses have reported taking $26 million in credits for adding 6,429 to their payrolls and making about $1.1 billion in investments.

Empire State Development, which runs the program, said more will follow, with nearly 200 businesses scheduled to claim credits of $46 million for last year.

Chief executive Howard Zemsky declined to predict how many of the promised jobs Excelsior will generate by its scheduled end in 2024, but he emphasized that hiring and investments have to come first.

“I think that generally speaking the commitments are over time, and so I don’t have any reason to believe that we won’t create the jobs,” Zemsky said. “But again I think it’s important to recognize that the credits and the jobs and the performance, they are inextricably linked.”

Tax credits convert to cash if they exceed a company’s tax liability, and the agency tries to use them only when and in the amount necessary, Zemsky said. It’s important for New York to be able to compete against other states that are aggressively pursuing businesses, he said.

New York’s comptroller began an audit of Excelsior’s performance in February, checking to see whether companies taking credits delivered on jobs and investments.

The program has some major improvements over the Empire Zones program it replaced, said Tammy Gamerman, senior research associate at the independent Citizens Budget Commission. A scathing commission report had found that many companies in the previous Empire Zones program failed to provide promised jobs in exchange for upfront tax breaks, with some simply relocating existing employees.

About $200 million in annual Empire Zone tax credits continue for companies that weren’t kicked out under tightened standards, Gamerman said. They had commitments from the state for 10 years of breaks.

Tom Tranter, chief executive of Corning Enterprises, said parent company Corning Inc. is on track with commitments to receive $40 million in Excelsior credits for 250 new factory jobs producing diesel emission controls plus investments, instead of expanding in China. The company is already the biggest employer in New York’s Southern Tier with about 5,000 people, part of its global workforce of more than 30,000.

Tranter co-chairs the regional council of business and government officials who recommend the business subsidies in the region. He recused himself from the decision on Corning, he said.

Its terms were negotiated with New York officials, based on modeling and cost differences, which are higher in the U.S. for transportation, labor and utilities, Tranter said. The company also got a $3 million capital grant.

The tax credit ranges up to 6.85 percent of wages of new hires for up to 10 years if jobs are retained. Excelsior also provides one-time tax credits for 2 percent of authorized capital spending and 3 percent of research and development.

Macy’s, for example, took $1.7 million in tax write-offs for 564 back-office jobs last year in New York City, about $3,016 per job.

Excelsior also has an annual cap on tax credits, which Gamerman called another big improvement. It’s capped at $250 million this year, gradually dropping to $50 million in 2024, the last year authorized under current law. Recent amendments have loosened restrictions and raised concerns, like extending the benefit period from five to 10 years and expanding the program to the entertainment industry and video game development, she said.

___

Online:

https://esd.ny.gov/Reports.html

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC.

Please read our comment policy before commenting.

 

Click to Read More and View Comments

Click to Hide