Industrial development agencies play a vital role in our economy. They have the power to use our tax dollars to create jobs. Unfortunately we have an oversupply of IDAs in Western New York. They are quick to point out that they are self-funded; taxpayers' dollars do not pay their expenses.
So exactly how does it work? Every deal generates a "fee" from the recipient of the IDA's largess, a small percentage -- around 1 percent -- of the deal, their vig so to speak. So to stay alive they have to keep making deals, giving away our tax dollars. Deals for all kinds of folks, as pointed out in recent stories in The Buffalo News. It's hard to imagine that some of the recipients really had a choice as to where they were going to locate their enterprises. Unless, of course, the choice was between one local community and another local community.
Some of our local communities have an IDA and others do not; that hardly seems fair. And how about competitors? Is it fair to move a widget store into a community and bestow tax breaks on it, when a long-standing widget store in the same community has to pay its taxes?
Then there's the musical chairs game. Let's say a developer has a row of small business sites that gained a great tax break a decade ago but now it's running out. That's easy; just go over to the next town and build a new row of sites with a brand new set of tax breaks, move the tenants and all those jobs and leave the empty site behind. Of course another developer can come in, buy the old site, update it and get a new set of tax breaks for a new set of tenants.
If this sounds like moving the deck chairs on the Titanic around, you are getting the idea. It goes even beyond the interplay between communities, it shows up between counties. It's not unusual to have a business enticed to move from county to county or even to leapfrog over several counties as happened recently when a long-standing Western New York business was swept up and deposited about 100 miles away.
IDAs have voracious appetites. They have staffs to pay, office expenses, etc., so they have to keep those deals coming. At 1 percent, they have to give away millions in tax revenue to keep their jobs. One percent of $1 million is only $10,000, that won't go far to keep the IDAs in business. So imagine how hard they have to look for more and more deals.
Former Gov. Mario Cuomo froze the growth of community IDAs. Now it's time for his son to rein in this nonsense and reduce the number of IDAs to one per county -- actually one per metropolitan area would be even better. And then he needs to give Empire State Development oversight of the deals between counties. If a widget maker wants to move from Binghamton to Syracuse that's fine, but not if there are tax breaks involved. It's time to put an end to this craziness.
W.T. "Bill" McKibben is a Buffalo-based author and consultant.