5/27/15: Albany Times Union - Recapture and Protect Incentives

A recent Times Union editorial lamented the fact that many industrial development agencies in New York state are far too lax in tracking tax incentives offered to businesses, and also highlighted the fact that these incentives often do not produce the jobs promised during the application process. This is a stunning abuse of taxpayers' money.

But there are ways to do this right. The Erie County Industrial Development Agency is an example.

In January 2014 the ECIDA adopted a clawback/recapture policy, and we're also at the forefront of other measures designed to scrutinize such incentives, ensure accountability, and protect local taxpayers and workers. Our board of directors understands IDAs are not private entities, but fiduciaries of the public, and our policies are designed to protect the public's money.

Under the ECIDA's recapture policy, businesses must clearly define their job-creation goals prior to any incentive being granted, with the ECIDA closely monitoring the progress of companies receiving tax breaks. Unlike in any other county in New York, businesses that do not reach 80 percent of their stated job creation goals are subject to the recapture of all incentives received and termination of any future incentive.

This policy leaves no room for misunderstanding: If a business wants a tax incentive, it must produce the jobs the tax incentive makes possible. If that does not happen, the money is returned to the IDA. This is the kind of responsible and rigorous attention to incentives and their proper usage that residents demand and should expect from all IDAs in New York.

Furthermore, and contrary to what some claim, instituting a recapture policy does not deter private sector investment. Since passing the policy, the ECIDA incentivized more than 20 projects, resulting in approximately $200 million in private sector investment, the creation of more than 400 permanent jobs, the retention of 800 jobs, and the creation of more than 1,000 construction jobs to service those projects. Each of these projects includes a recapture requirement.

The ECIDA is also at the forefront of the gender pay equity issue, and is currently drafting a policy requiring any company seeking an incentive to prove that it pays female employees commensurately with males for the same work. Despite the fact that the Equal Pay Act was passed more than 50 years ago, women are still paid, on average, 77 cents for every dollar a man makes for the same job. It's shocking that this disparity still exists and disheartening to see so many agencies willing to tacitly perpetuate this inequality, but in Erie County we are acting to end it.

We should never reward a company that discriminates against its female employees with a tax break, and I encourage other IDAs around the state to follow our lead and join in the fight against pay inequality.

The ECIDA has also enacted policies providing for a larger share for local labor to be used on any incentivized projects. This policy ensures the people asked to provide the tax break directly benefit from their investment in the project by prohibiting the importation of out-of-area, and usually low-wage, workers to construct the project.

We at the ECIDA understand tax incentives are necessary tools to be used to grow our region's economy, but they must be used wisely and ensure a continuing benefit to our region. We have enacted policies that protect our citizens' investment in projects. These policies could be replicated elsewhere, and I call on all other IDAs in New York to enact similar policies. If they do so, it will result in the protection of the public's money and the further growth of the economy of New York.

View the article on the Times Union website.