Economic development or legalized theft?

The Post-Standard is arguably the best paper in New York in investigating corruption, lack of transparency and other issues in state government. A few years ago, they did a series on the secret, unaccountable slush funds known as state public authorities.

Now, the paper has a series focusing on dubious practices within the state's Empire Zone program.

Empire Zones were designed to provide incentives to businesses as a way to spur job creation. Supposedly, they were to be a boon to small businesses. However in many cases, they have degenerated into little more than patronage. They are merely tax givebacks to large corporations in exchange for nothing, reports the Syracuse daily. In other words, legalized theft.

Take this report on Pyramid, which also runs the Aviation Mall in Queensbury.

The Pyramid Cos. warned Syracuse politicians in 2001 that without Empire Zone tax breaks it would not transform the Carousel Center mall into Destiny USA, a $1.7 billion resort.
In the five years since, not a single beam, block or 2-by-4 has been erected for Destiny USA.

Yet Pyramid founder Robert Congel and his partners are already claiming Empire Zone tax breaks worth $7 million per year.

The 40,000 new Destiny jobs Pyramid predicted don’t exist. But New York taxpayers reimbursed Pyramid for its Carousel Center property taxes in 2004 and 2005.

And it can continue to claim these tax breaks through 2015.

Not surprisingly, Gov. George Pataki defends the program, claiming it has created thousands of new jobs. The paper notes that in many cases, this is nothing but a fiction, a shell game.

Pataki's numbers are inflated, however, to include thousands of jobs that already existed in New York state, a Post-Standard analysis has found.

The governor counts 1,700 jobs at Endicott Interconnect Technologies as new jobs. That company was formed in 2002, when local investors bought a division of IBM. The new owners inherited about 2,000 workers.

The governor counts the Buffalo Sabres' workers as new employees, although the team has been playing since 1970.

The governor counts 477 jobs at Harden Holdings as new jobs. That's the new name for Harden Furniture, which reincorporated in 2002 and claimed all of the old employees as new.

How could this happen?

The Department of Economic Development calculates job creation by simply adding up the numbers the companies provide every year on a document, notes a spokeswoman. But we have no independent way of verifying what is reported by the business," she said.

If this is the state's idea of rigorous accountability procedures, no wonder the program operates like it does.