New York ED Agencies Take Heat Over Too Much Incentive Spending

August 21, 2010 at 6:42 am Leave a comment

Yesterday’s Greater New York section details a scathing report about New York’s economic development efforts, which charges that some of the state’s economic development bodies spend too much money for too few jobs and that “spotty reporting has it made it difficult to analyze the cost and benefits of their projects.” The report is one of a number of recent reports that take a hard look at states’ various economic agencies and programs, some of which have scuttled new projects.

Another recent report from the Public Accountability Initiative took aim at Bass Pro, claiming that the outdoor equipment retailer has won more than  $500 million in public subsidies but “often fails to deliver on its promises as an economic development anchor.” Bass Pro has since announced it isn’t moving forward with a potential new project in Buffalo.

Economic development programs have long been controversial. Advocates say they are necessary job creators at a time when the economy is desperate for them. Detractors argue that such programs – which typically give companies tax breaks, grants or help pay infrastructure costs in hopes of creating new jobs – amount to little more than giveaways for projects that would likely go forward with or without government help.

While the debate about the efficacy of economic development programs is an old one, it’s gotten renewed vigor now that cities and states are dealing with the double threat of yawning budget gaps and high unemployment.

A recent Journal story notes that Governors in several states including New York and Missouri have moved to curtail or end tax incentives for businesses. A new Oregon law scaled back credits given to certain renewable-energy projects, while Iowa haled tax credits to filmmakers and reduced other economic development lures.

States – like the federal government – are under pressure to do what they can to ease the nation’s 9.5% unemployment rate (much higher in many states) but economic development agencies, like every other arm of government, are under pressure to cut costs and prove that what they do is worth what they spend.

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Entry filed under: New York Economic Development. Tags: , , .

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