After years of criticism from New York State watchdog groups like the Fiscal Policy Institute and certain elected officials, a high-ranking state legislator is chiming in on demands that the wasteful Empire Zone (EZ) program be drastically reformed. Last week, State Senate Majority Leader Dean Skelos issued a press release detailing the Senate’s new “Job Creation Plan,” which calls for reforms to increase accountability in the Empire Zone program and an elimination of it upon its 2011 expiration.
The president of the powerful Partnership for New York City – a business lobby group – issued a brief statement saying it supports Skelos’ call for an end to “a program that has spiraled out of control and provides almost $500 million a year in indiscriminate tax breaks to businesses without consideration of their contribution to the state’s economic growth.”
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.
Senator Skelos and the Senate majority have not discussed better targeting of tax breaks to truly needy areas, and they have not detailed how they will ensure greater accountability (for however long the program exists) so that only businesses that create high-quality jobs receive breaks. Rather, they focus on a plan for how the state could use the money saved from reform and program elimination, supposedly to lessen the tax burden across the board, especially for manufacturers, small businesses and high tech companies.
The details of the Senate’s plan will surely come under debate, but its focus on reining in Empire Zone benefits and letting the program expire is sound. It seems that officials across the political spectrum and advocates with very different agendas finally may be reaching some consensus that the Empire Zone program needs drastic changes, or it needs to be eliminated. Reaching an agreement out how to apply the savings will be a different story.