New York comptroller exposes IDA racket

Late last year, New York's attorney general concluded that regional economic development and industrial development (EDCs and IDAs) slush funds were rife with the potential for seal-dealing, nepotism, improper loans and exorbitant expenses.

These taxpayer-supported rackets do government business but have little oversight and are exempt from being audited by the state comptroller's office. To say nothing of the massive redundancies of similar overlapping agencies. I've opined many times that a sober and thorough cost-benefit analysis would show this.

So it's little surprise that the comptroller has recently concluded that IDAs are a huge waste of money. Comptroller Tom DiNapoli said more than 4,000 businesses received the tax breaks, but that IDAs realized 22,000 fewer jobs last year than the year before while using the economic development tool.   "Taxpayers are not getting enough bang for their buck when it comes to IDAs,"DiNapoli said, according to the Associated Press.


The comptroller noted that the cost of the average IDA-secured job increased 9 percent from 2010 to 2011.

DiNapoli proposed a bill that would allow taxpayers to better analyze the effectiveness of IDAs and their tax breaks. His bill would require clearly described job goals when a tax break is provided, followed by an accounting when the tax break expires. If the jobs promised weren't created, local governments would have a "claw back" provision to extract the avoided taxes from the company.   


DiNapoli's proposal would also require annual reports from IDAs and a report card on projects and their job success. 

Update: The Innovation Trail public radio project has a great piece on the lack of transparency in IDAs and its consequences.

IDAs and the ruse of 'economic development'

Earlier this month, the NYS Assembly Committee on Local Governments held hearings on reform of Industrial Development Agencies (IDAs).

WMHT's New York Now program devoted its show last week to reform of the controversial IDA and Empire Zone programs.

Defenders of these programs claim that these programs are ways of offsetting the high cost of doing business in New York. But the real solution to that problem is to reduce corrupt wasteful spending, such as in the state's infamous public authorities (exposed as an over $1 billion slush fund by an excellent series in The Syracuse Post-Standard).

This would lower state and property taxes for EVERYONE, rather than letting the good ol' boy network dish out tax breaks to their buddies. If anything, these special tax giveaways reduce the amount of revenue coming into the public coffers and ends up RAISING taxes for everyone else, those without good connections. Steal from the hard working small business owners so you can give $1.2 billion to the gargantuan multinational.

I'll specifically deal with Empire Zones in a future entry, but New York Now pointed out something that shocked me: IDAs have the power of eminent domain.

It's bad enough that elected bodies like a city council can seize your property and give it to monied developers. It's even more disgusting that an unelected, opaque body like an IDA can do so.

In addition to appearing on the New York Now episode referenced above, local small businessman Matt Funiciello testified before the Assembly committee. His testimony explaining the wasteful and unaccountable nature of the IDA process can be found here.