Our state senator, James Skoufis, newly elected in the 39th district, raised an issue last week that he really should pursue once he gets to Albany.
How should taxpayers subsidize business?
The inspiration for his intervention was the news that the Orange County Industrial Development Agency was getting requests for help from two developers who plan on adding hotels in the region. As he noted, we seem to have a lot of hotels already and it is no mystery why. Tourism is up, government spending to lure tourists is rising in tandem and the region is frequently being mentioned in national and international stories about great places to visit.
Those who plan on building more hotels know this. That’s why they want to take advantage of a booming market. So Skoufis raises a good point when he wonders aloud whether taxpayers really need to become partners in this enterprise, contributing a hefty amount of tax dollars for a return on investment that is hard to quantify.
His criticism comes at a good time. The IDA already is under scrutiny for providing tax subsidies to a business that had begun construction and hired extra workers. And that project pales in comparison with what is most likely the largest tax subsidy of them all, the $2 or $3 billion that New York state and city are chipping in to lure Amazon’s new half-a-headquarters to Long Island City in Queens.
In an era when transparency seems to be the promise and goal of many a politician and elected leader, there is nothing more opaque than the way businesses get subsidies from people who neither have a chance to weigh in on the transaction nor see any reliable accounting.
Consider Start-Up New York, Gov. Cuomo’s signature program to trade tax breaks for jobs and investments. We know that the state spent at least $50 million on promotions, especially the ads you could not help but see on television boosting the governor as much as his program. And the payback for that investment has been a few hundred jobs.
In most cases, we have no idea how many jobs these giveaways create because nobody keeps track. If Skoufis really wants to make a difference, that’s where he should start.
True transparency on this issue would require two elements.
The first is a public and continuing accounting of the return on investment. Businesses know to the penny how much they take in from taxpayers, how many people they hire, how much those employees make. We, the unwilling silent partners, deserve to know what the owners know.
The second concerns the amount our officials are giving away on our behalf. If we are going to be on the hook for a few billion dollars, if Andrew Cuomo and Jeff Bezos know the estimates, then we should know as well.
Imagine if that figure had been common knowledge before the deal was made. Imagine if people in Orange Country had known that Legoland was getting $25 million or more.
People still might support these expensive deals, but they would do so knowing what they involved before it is too late.