Jeff Aaron writes on pressconnects.com - “The state Senate and Assembly have passed budget legislation that includes a provision to repeal the tax on the revenue of industrial development agencies, or IDAs.

The tax had been in existence for two years and was intended to generate up to $5 million. The legislation authorizing the new tax, called a cost recovery fee, was included in New York’s 2009-10 budget.

The fee roughly equals about 5 percent of the gross revenues reported by the IDAs for 2008. In same cases, the tax was levied on “pass through” revenue, such as Payment In Lieu Of Taxes where the IDAs simply collected the payments from businesses and remitted it to the local taxing jurisdiction.”

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Ted Phillips of Bond Buyers writes about the role that regional planning will play in New York Gov. Andrew Cuomo’s economic development program.

“Lieut. Gov. Robert Duffy said the size of the role that bonds will play in New York Gov. Andrew Cuomo’s economic development program is uncertain and will include the creation of regional economic development councils.

The regional councils, which will coordinate resources and strategies between the myriad of existing state agencies, were embraced by Mario Cuomo more than 16 years before his son’s election.

Duffy, who will chair the 10 councils on behalf of Cuomo, met with upstate business leaders last week to get their input on the concept as policy details are still being crafted.

“Before they’re rolled out we’re asking questions, we’re asking what do you feel has to be a part of this?” Duffy said in an exclusive interview. That way, “when they are rolled out not only will it contain the conceptual framework of what the governor wants to accomplish, but it also will contain input that we’re soliciting … from around New York State.”

The state’s primary economic development agency, the Empire State Development Corp., will play a key role. It’s being reorganized to fit into a regional planning model, Duffy said.

Former Gov. Eliot Spitzer effectively split the ESDC by appointing upstate and downstate chairmen. Former Gov. David Paterson subsequently reversed the practice.

The regional councils will compete for $200 million of grants through the ESDC for projects that create jobs. The corporation already doles out grant money under a range of programs and through member items enacted by legislators…

Kenneth Adams, president of the Business Council of New York State, said this approach has the potential to succeed where previous approaches have failed.

“This is a more sophisticated approach than we’ve seen in the past because it recognizes that it’s not a simple upstate-downstate question,” Adams said.

“If the councils are well run and really engage local business owners and entrepreneurs and investors and lenders and other economic development officials at the local level, you start to develop localized approaches as opposed to a kind of top-down approach coming from an ESDC bureaucrat in Albany or New York City.”

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Keith Goldberg of the recordonline.com writes - “A state bill regulating how industrial development agencies do business — including a requirement that workers on IDA projects be paid prevailing wages — died last week in the Legislature for the second straight year. And a local co-sponsor of the bill isn’t counting on another resurrection anytime soon.

“I don’t see it happening,” said Assemblywoman Annie Rabbitt, R-C-Greenwood Lake. “There’s just too much turmoil and groups of people trying to kill it.”

The bill — which also mandated groups such as local governments, school districts, unions and environmental groups to serve on IDA boards — was anathema to business groups and local IDAs themselves.

“The more regulations, the more standards put on incentive programs, the more difficult it makes to compete,” said Maureen Halahan, president of the Orange County Partnership. “We’re (New York) already in trouble.”

The Ulster County IDA, which had a prevailing-wage policy before scrapping it last year, was one of several groups pushing hard to kill the bill.”

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The Poughkeepsie Journal reports - “The Dutchess County Legislature will vote Monday on a resolution to create a local development corporation that would help finance construction projects for nonprofit groups.

The resolution was amended to say the corporation’s board of directors will be encouraged to direct nonprofits to hire a local labor force for a project.

The Legislature’s Budget, Finance and Personnel Committee voted 11-1 Thursday for the resolution. Legislator Joel Tyner, D-Clinton, said he voted “no” because he thinks the development corporation should have wage standards.”

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Alaina Potrikus of the Syracuse Post-Standard writes - “Local economic development leaders have joined a statewide fight against $5 million in fees issued by the New York State Department of Taxation and Finance earlier this year.
Industrial Development Agency officials from Madison, Onondaga, Oswego and Oneida counties signed on as part of a lawsuit filed by nearly three dozen agencies last week opposing the tax they say is designed to help state officials close the ever-growing budget gap.

The agencies, tasked with attracting new businesses and supporting existing ones, received the bills in February, although the tax was approved in last year’s state budget.

Locally, the Syracuse IDA was hit the hardest, with a $242,003 assessment. Madison County faces a tax bill of $12,577. Onondaga County IDA’s bill: $54,384; the city of Auburn’s was $47,400; and Oswego County’s $32,861.”

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The Watertown Daily Times reports - “A new state tax cuts into grant and payments-in-lieu-of-taxes money that industrial development agencies pass on to local municipalities and businesses.

The state Department of Taxation and Finance has levied a 4.72 percent assessment on gross revenues from every industrial development agency in the state. The assessment, approved as part of the 2009-10 budget, brings $5 million into state coffers.

IDA officials complain they did not receive adequate notification of the fee and that it unfairly taxes items that aren’t really earnings for the agencies.

Gross revenue includes collections of payment-in-lieu-of-taxes and grant revenue, but IDAs don’t actually keep any of that money. They pass the money directly on to local municipalities and businesses or programs that they serve as the applicant for.”

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Brian McMahon, the executive director of the New York State Economic Development Council writes in an op-ed in today’s Buffalo News.

One and a half million New Yorkers have left our state since 2000, more than any other state. They left mainly because of the lack of job opportunities caused by high taxes and high electric, workers’ compensation and Medicaid costs.

In order to overcome these cost disadvantages and compete for economic development projects, municipalities in New York use their industrial development agencies to lower this tax burden in an effort to level the playing field and encourage businesses to invest and create jobs. Too often, though, New York is eliminated from consideration as an investment location because of the very high cost of doing business here.

Now, legislation sponsored by Assemblyman Sam Hoyt and Sen. Antoine Thompson, both Buffalo Democrats, and another measure proposed by Gov. David A. Paterson, would make things even worse. These proposals would impose job-killing wage mandates on the construction of most industrial development agency-financed projects, as well as the permanent jobs they create.”

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Two New York City daily newspaper editorial boards oppose wage mandates for projects built with Industrial Development Agency (IDA) assistance.

Both The New York Post and The New York Daily News editorials agree with The Business Council of New York State that these mandates would kill jobs.

The Post writes:  “Gov. Paterson’s poll ratings may be poor, but that’s no reason for him to try to buy union support with a bill that would destroy jobs.

Alas, that seems to be his thinking in promoting legislation to force developers and landlords at state-assisted projects to pay workers, essentially, union scale.

Salaries at such projects would have to be in line with “prevailing wages” — i.e., union wages. In New York City, that would be a hefty $19.20 an hour — nearly three times the $7.25 minimum wage.

And, again, the bill would cover not just construction workers on a project but also a landlord’s workers far into the future — including “guards, doormen, building cleaners, porters, handymen, janitors, groundskeepers, elevator operators and collectors of garbage.”

Leave no worker behind, it seems, in terms of pay — even if it means leaving far too many of them behind when it comes to jobs.

That’s right: In one fell swoop, the bill would make many projects uneconomical — even with the state assistance (which usually covers just a small portion of the costs, anyway).”

Read the editorial.

The Daily News writes: “There may be no place on the planet that generates more noble-sounding but awful ideas than Albany. In the latest, Gov. Paterson and the Legislature would attempt to repeal the laws of economics.

At the behest of politically powerful SEIU 32BJ, the union for building service workers, the officials are considering imposing wage mandates on projects that get economic development incentives to create jobs.

To qualify for benefits such as low-interest loans and tax breaks, construction firms would be obliged to pay based on local union contracts - which generally call for higher wages than nonunion workers make.

Similarly, building management companies would have to provide doormen, custodians and other workers with prevailing wages based on the 32BJ contract. Finally, all employers that occupy the building would have to pay at least $19.20 an hour in New York City - almost three times the normal minimum wage.”

Read the editorial.

“Why — in the middle of the worst crisis since the Great Depression — would the governor want to kill an economic development program that has created over 200,000 new jobs?” said Kenneth Adams, the president of the Business Council of New York State in a New York Times article. “It’s a proposal that destroys hope for economic recovery in New York.”

Read the article.

Legislature makes needed changes, but leaves one step untaken

The following is part of an op-ed that appears in today’s Buffalo News.

“Another day, another piece of good legislation meant to distract voters. This time, legislators in Albany passed a measure to reform the way state authorities operate. Too bad they don’t do anything about how they operate.

In particular, it’s too bad they won’t cut spending to fill a deep, and growing, budget deficit. More broadly, it’s too bad they won’t change the rules of their chambers to empower minority party members and wrest iron control from the hands of each chamber’s leader. It’s too bad they won’t operate like a democracy.”

To read the rest of the op-ed click here.

David Robinson writes in the Buffalo News - “Imagine this scenario: Chris Koch and other top executives at New Era Cap Co. are sitting down, trying to figure out which of its U. S. factories to keep open, either one in Derby or a sister plant in Alabama.

They paw through stacks of paperwork, comparing incentives, labor costs, taxes and utility rates. They weigh the pros and cons of each facility. They discuss all the intangibles they can think of.

“Wait,” someone says. “A big piece of the puzzle if we stay in Derby are the tax breaks we’d be getting, tax breaks through an industrial development agency. We can’t afford all the strings that are now attached to them. Alabama’s looking better and better.”

That conversation didn’t happen— but it could happen a lot if Gov. David A. Paterson succeeds in pushing through his frightening proposal for IDA reform that would require most companies receiving tax breaks through those agencies to pay workers—and even some vendors— higher wages.”

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