Archive for December, 2010

Subsidy News Whirlwind Hits NYC

December 9, 2010

New York City is ending 2010 with a subsidy transparency bang. In addition to transparency reforms around public hearings at the New York City Industrial Development Agency passed by its board in September, this week Mayor Michael Bloomberg signed a bill, spearheaded by Council Member Diana Reyna, establishing broad changes to how New York City reports on company specific discretionary deals. Starting in 2012 New Yorkers will:

  • Have access to details on projects for the life of a deal. Currently details on projects approved before 2005 were only made available for the first seven years. Now information on the largest deals that occurred in the 1990’s and early 2000’s won’t slip out of the public’s view;
  • Be able to analyze data in an electronic format (like Excel) on the web. A regular concern voiced by GJNY over the years has been the lack of access to IDA data. While the company-specific information currently available on the EDCs website in PDF format is useful it’s impossible to truly analyze over 500 pages worth of deals without having electronic access to the data within it;
  • Know the value of land sales. When NYC sells city-owned property taxpayers should know how much it was sold for. For community members and fiscal watchdogs, knowing if property was sold at or below market rate can be a critical bit of information for analysis and/or community organizing.

And topping it off, this week the Fiscal Policy Institute released a report summarizing the value of economic development subsidies in New York State and there’s a new national state-wide subsidy tracker and other useful tools from Good Jobs First.

Of course, all these new data means there’s more work to do. Expect 2011 to be very busy year.


December 9, 2010

Online disclosure of the names of companies receiving state and local tax breaks, cash grants and other subsidies for job creation is becoming the norm around the country, but there is wide variation in the quality of the reporting and about a dozen states are still keeping taxpayers in the dark, according to a report published today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC.

Illinois, Wisconsin, North Carolina, and Ohio were found to have the best economic development disclosure.

“With states being forced to make painful budget decisions, taxpayers expect economic development spending to be fair and transparent,” said Good Jobs First Executive Director Greg LeRoy. “Claims that sunshine would hurt a state’s business climate have been discredited, trumped by people’s rising expectations about government information being online.”

In addition to the report, entitled Show Us the Subsidies, Good Jobs First also released two new online tools relating to state government economic development practices: Subsidy Tracker, a searchable database that brings together subsidy recipient information from numerous state governments; and Accountable USA, a set of webpages on each of the 50 states and the District of Columbia summarizing their track record on subsidies. All these resources are available at no cost on the Good Jobs First website.

“The outpouring of job-subsidy data is a breakthrough for state government transparency and accountability,” said Good Jobs First Research Director Philip Mattera, principal author of Show Us the Subsidies and leader of the six-person team that produced the report, Subsidy Tracker and Accountable USA. “Enhanced disclosure makes it much easier to monitor the tens of billions of dollars in taxpayer revenues that are being diverted to private parties each year.”

Show Us the Subsidies rates the reporting practices of 245 key economic development subsidy programs from around the country on the inclusion of information such as company-specific dollar amounts, job-creation and wage-rate numbers, and the geographic location of subsidized facilities. Programs are also evaluated in terms of how easy it is to find and use the online data. Each program is rated on a scale of 0 to 100 (with extra credit for including advanced features). The scores for the programs in each state are then averaged to derive a state score.

The report’s key findings are as follows:

  • Thirty-seven states provide online recipient disclosure for at least one key subsidy program.
  • Based on our scoring system, the states with the best averages across their programs are: Illinois (82), Wisconsin (71), North Carolina (69) and Ohio (66).
  • Thirteen states and the District of Columbia currently have no disclosure at all, although one of those states, Massachusetts, is slated to come online as enacted legislation takes effect. All our scoring is based on what was available online as of November 26, 2010.
  • Since 2005, half a dozen states have enacted legislation mandating subsidy recipient reporting in one or more program, the most recent being Massachusetts.  Several other states have moved toward transparency through administrative action alone.
  • Four states provide recipient reporting for all the key programs we examined: Missouri, North Carolina, Ohio, and Wisconsin.
  • Of the 245 programs we examined, 104 of them (42 percent) have online recipient reporting.
  • For the country as a whole, the average program score is 25. Ignoring those with no disclosure, the average rises to 59. Nineteen programs are above 75, including three that score over 100, thanks to extra credit. The top-rated programs in terms of disclosure are in Illinois and Texas.
  • We also provide the results in the form of letter grades, but in a way that diverges from the usual system used in schools. We limit the failing grade of F to those states with no disclosure at all, and we stretch out the ranges for the lower passing grades (see the table below for details). Using this system, Illinois gets a B; Wisconsin gets a B-minus; North Carolina and Ohio get a C-plus; and Missouri gets a C. Seven states get a C-minus; seven get a D-plus; nine get a D; and nine get a D-minus.

“Our findings tell two different stories,” LeRoy said. “The first is one of the steady spread of transparency across the nation. The other is that some states still inexplicably keep taxpayers completely or partially in the dark. The accountability movement has made great advances but still has a long way to go before job subsidies are as transparent as other categories of state spending, such as procurement.”

Pfizer Pays Up

December 8, 2010

Yesterday, Bloomberg News reported pharmaceutical giant Pfizer paid New York City $24.7 million for subsidies it used along with a penalty, for failing to live up to promises made in a $46 million corporate retention package awarded by the Industrial Development Agency in 2003.

While this is indeed welcomed news, it’s diminished by the fact that the subsidy package should never have happened in the first place.

As GJNY testified at a hearing before the subsidy was awarded, Pfizer is a mainstay of Manhattan’s East Side and didn’t need taxpayer’s money to expand its offices. Others, angry at Pfizer’s drug policies concerning distribution of drugs to poor people and those with HIV and AIDS, were offended that public money would go to the pharma giant’s real estate pursuits. To top it off, in June of 2003, an executive was quoted in Crain’s New York saying the firm never planned to leave the city.

While details are sketchy, we assume the company fell out of favor with the city after closing its Brooklyn plant in 2007 where it’s been since the mid 1800’s and when word got out about reductions in its workforce and Manhattan office space. The Pfizer deal, while egregious, shows that the Bloomberg Administration allows for strong recapture (compared to his predecessor Rudy Giuliani) especially in the very early years of a deal; the city can demand 100% repayment and penalties for job losses before June 2011. Though the city’s handling of the MetLife deal shows recapture provisions aren’t always equally enforced.

The city, as of yet, hasn’t put out a press release detailing where the Pfizer deal went array, but it shouldn’t be shy about holding companies accountable.