These New York Agencies Benefit From Giving Away Taxpayer Money
State and local governments love giving out taxpayer money so private companies will choose to do business there instead of someplace else. Each U.S. state has some form of an economic development agency whose primary purpose is to incentivize companies to set up shop within the state or to keep them from leaving.
A new report by economic development watchdog Good Jobs First finds that New York’s agencies are specifically incentivized to give out as much taxpayer money as possible, in order to pad their own bottom lines.
In New York, industrial development agencies (IDAs) are “public benefit corporations” established under state law to foster economic development in the state. IDAs have the authority to exempt preferred projects from sales, property, and mortgage taxes, and their members are appointed by county legislators.
New York has 107 IDAs, and Good Jobs First analyzed data from the 104 for which sufficient data were available.
“IDAs budgets are driven by the size and number of the deals that they award, because a large portion of their budgets are based upon the transaction fees they collect from each project,” the report notes. “Essentially, these fees are money that businesses pay to the IDA in exchange for enabling the tax breaks.”
How much of a difference does this make? In 2018–2022, New York IDAs’ operating revenues totaled over $361 million, of which $289.2 million—80 percent of the total—came from deal fees.
Deal fees make up only 57 percent of IDAs’ total revenue, though the report notes that “total revenue includes non-operating revenue, such as subsidies/grants, which are irregular sources of income….Operating revenue is generally considered a better indicator of an entity’s financial health.”
Of the 104 IDAs examined, 70 received more than
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