In Gov. Andrew Cuomo’s proposed budget, the state’s Industrial Development Agencies, or IDAs, would no longer be able to grant state sales tax exemptions for economic development projects. Instead, that authority will go to Cuomo's Regional Economic Development Councils.
It’s a move that has the local economic development agencies upset.
Right now, New York's IDAs have the ability to give out local and state tax breaks in order to encourage economic development.
The governor says the change will keep IDAs accountable by requiring them to have projects that involve state tax exemptions to be approved by the regional councils. It's also estimated to save the state $7 million this budget season and between $13-14 million in subsequent years.
Erie County IDA director Al Culliton said the change will limit IDA's ability to support community redevelopment and smart growth projects.
“It seems to me that it is not a smart decision to eliminate the state sales tax, because the return on it is much higher than what is going to be saved for one year,” says Culliton.
Culliton says he understands the governor’s desire to monitor or even cancel some projects that the IDAs are doing, but it will hinder their ability to revitalize cities like Buffalo.
Don Alexander, the executive director of the Jefferson County IDA, worries that requiring an extra level of approval for a development project will just slow down the already lengthy process of allocating tax breaks.
"I see it as another unnecessary step in a process which is convoluted, to say the least, as it now sits, even without that element," he says.
Jefferson County already has a longer-than-average process for giving out tax breaks, requiring local lawmakers to sign off on every deal.
"We can’t afford to thicken this process, or we’re going to lose business," Alexander says.
New York is home to about 115 IDAs - first created in the 1970's - which give out about $500 million every year in hopes of creating or preserving jobs.
The governor's regional councils were formed two years ago in an attempt to localize state economic development efforts. The councils are made up of local economic development officials and academic leaders who serve on a volunteer basis (as do IDA board members).
