Why are IDAs granted such enormous powers?
“Don’t rob Peter to pay Paul.” This old adage attributed to John Wycliffe criticizes the practice of tackling old problems by creating new ones. Granting tax exemptions to companies for projects – in the hope that the business will create new sources of tax revenue – qualifies as a practice Wycliffe would reject.
Across Erie County and New York State, 114 industrial development agencies unfortunately serve this very function. IDA decision-making is not at all clear. In addition, their decisions reduce public tax resources as IDAs hand out millions in tax breaks every month with a seeming inability to “say no” even to the most baseless requests, all the while collecting a fee on each deal they approve.
For whatever reason, IDAs have been granted enormous powers to grant tax exemptions, sometimes involving tens of millions of dollars, without effective public oversight. One such example is the Hyatt Place Hotel in Snyder. Regardless of the fact that Iskalo Development’s hotel project was located on a major thoroughfare and certain to see huge profits, faced a groundswell of community opposition and would mostly create poverty-level jobs, the Amherst IDA gave the project more than $1 million in tax breaks.
It’s way past time to re-examine where our taxpayer dollars are going, stop robbing taxpayers to pay companies that don’t need public subsidies and make sure that when companies get money, we get our money’s worth. For more information, see the Alliance for a Greater New York’s report: The $7 Billion Wager: New York’s Costly Gamble in Economic Development.
Thomas M. Grace