Out of the Zone

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New York State’s widely criticized Empire Zone program (known as “Enterprise Zones” in most states) is in a state of disorder. This past weekend, the Syracuse Post-Standard reported on the lack of progress by government officials and state agencies in making the program more effective. The article points to mild reform legislation that didn’t pass, and efforts by the state to kick out only a handful of the ineligible companies registered with the program (a subject on which we’ve previously blogged). But as critics call for the state to do more to rein in Empire Zone tax credits, New York City has been expanding them.

In recent months, the city has taken steps to bring some previously ineligible companies into the program by granting them the status of “regionally significant projects” (RSPs). Empire Zones were established to subsidize companies creating jobs in economically stressed communities, but RSPs don’t even need to be in an Empire Zone in order to receive the multitude of tax credits available to companies that are. The concept of RSPs was created in 2005 by the New York State legislature, but until late last year all NYC companies receiving Empire Zone credits were physically located with a Zone.

Last December the city approved designation of its first RSP, and last month it held a hearing on another (which has not yet been approved). Good Jobs New York testified at hearings for both projects (first and second), arguing that while these two companies seem to be responsible employers creating good manufacturing jobs, New York City must be very careful in opening the door for more companies to take advantage of a program that has been described as “perhaps the best example of good economic development intentions gone wrong.”

The Empire Zone program was created to bring jobs and investment into impoverished communities, but it has strayed far from its initial intent. Clearly, the program is broken (a number of lawmakers think it’s beyond repair). And if something is broken, fix it – don’t add to it.

2 Responses to “Out of the Zone”

  1. An EZ Pass to EZ Reform? « Says:

    […] As we’ve blogged previously, too many businesses receive Empire Zone benefits without creating new, good jobs, or sometimes any jobs at all. Additionally, the program has strayed far from its original intent of targeting private investment and job growth to the state’s most economically depressed neighborhoods. With new Empire Zones designated frequently, there is now at least one in every county. Making matters worse, some business can receive benefits even if they fall outside of a zone. […]

  2. Post-Standard Database Sheds Light on Empire Zone “Winners” « Says:

    […] on June 30, 2010. Yet, despite action to scale back the program, New York City has taken efforts to expand it by allowing certain projects outside of Empire Zones to nevertheless secure Empire Zone benefits. […]

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