by Heather Filiberto
The New York State Empire Zone Program has been a primary vehicle to stimulate economic growth and revitalization in struggling local economies throughout New York state.
The program provides a variety of state tax incentives for qualifying businesses locating or expanding within the Zone such as wage tax credits, investment tax credits and employment incentive credits.
The Tompkins County Empire Zone was awarded in July 2006. Though still in its infancy, the Zone has already shown great promise to foster the growth of business and employment in targeted industry sectors. Empire Zone incentives leveraged an investment of more than $27 million by Tompkins County's 33 certified businesses in 2007. Those businesses employed 2,208 people and created 204 new jobs during 2007.
As we all know, the state is contending with a $14 billion deficit next year. All state programs are and should be under intense scrutiny as a means of reducing this looming crisis. However, Gov. David Paterson has made recommendations for sweeping changes to the Empire Zone Program that, if implemented, will slow economic development efforts in Tompkins County and Upstate New York, harm businesses that have already made an investment to grow and create jobs in our unique community, and negatively impact the state's credibility and ability to attract and retain business.
Among the changes Paterson has proposed is requiring a 20 to 1 cost benefit ratio for all businesses. The ratio was first introduced by the state in 2005. Each Zone was allowed to establish its own minimum ratio and make exceptions for locally identified strategic industries or businesses in areas targeted for revitalization. An arbitrary, one-size-fits-all ratio would eliminate small and medium sized businesses that, together, contribute significantly to the Upstate economy. Small high-technology companies here in Ithaca would not meet that requirement. These businesses are an essential component of our economic vitality.
The proposal would subject businesses that relied on Empire Zone benefits in making significant investments in the past to meet the new 20 to 1 cost benefit criteria, even though when they were originally certified to participate in the program, they were not subject to these criteria.
Changing the criteria after the fact would irreversibly damage the state's credibility, and it would directly impact businesses already participating in the Empire Zone in Tompkins County.
It is incorrect to assume that the program is costing the state money when companies are not living up to their projections. The Empire Zone Program is a performance-based program. Incentives are received only after a company makes a capital investment or creates jobs. No incentives are ever given to companies on the basis of projections. Is a company a failure if it projects creating 50 jobs and creates only 30? Businesses are, and should continue to be, rewarded for growth that supports our economy.
In the midst of an economic recession, instead of retreating, it is essential to invest in business and prepare our Upstate communities for the economic recovery as swiftly as possible. The state's current efforts to implement retroactive changes and a one-size-fits-all cost benefit ratio will not make the program more meaningful. Instead, the state should engage local economic development partners to help craft alternatives to the current regulations and make the Empire Zone less bureaucratic, less complex, more targeted and less costly.
Heather Filiberto is Tompkins County Empire Zone coordinator for Tompkins County Area Development.
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Cuts to Empire Zone program could slow Tompkins development
Tompkins County Area Development
200 East Buffalo Street, Suite 102A Ithaca, New York 14850 ( 607 ) 273 - 0005 |