It is much too soon to accurately judge whether Start-Up NY, the state’s innovative effort to attract new business, is working, but the early signs are encouraging.
It’s unfortunate that such an incentive program is even needed, but it’s a fact of life in tax-and-spend New York. Such incentives are not needed in business-friendly states. But New York State, where political dysfunction reigns, is an expensive place to start and run a business.
Who would come here?
Gov. Andrew M. Cuomo had to think outside the box if he was to have a whisper of a chance of making this state look attractive to new businesses. Start-Up NY is one way to make that happen.
Its incentives include eliminating for a decade sales and property taxes and state business and corporate taxes for companies that locate on or near college campuses. Moreover, newly hired employees will not pay state income taxes for up to 10 years.
The lure is working at a slower pace than anticipated, with only 76 workers hired last year by dozens of companies that invested only $1.7 million while earning $56,561 in tax breaks. Those are disappointing numbers compared to the governor’s hoped-for “thousands of much-needed jobs.” But again, the program is barely two years old. There are indications that we will soon see dramatic increases before long.
As News business reporter Stephen T. Watson wrote, no college has had as much success as the University at Buffalo in bringing new businesses and new jobs into the tax-free zones. The university has made deals with 42 companies that promise to hire nearly 1,500 workers and invest $47.2 million over five years.
UB’s efforts represent 37 percent of all 110 companies involved in the program across the state. Indeed, there is no question that the college represents the model of how this program should work and that nine other Western New York schools in the incentive program have gotten off to a comparatively sluggish start. UB benefited greatly from its expertise in life sciences and its experience working with area companies. It also already had on staff experts in economic development, along with plenty of space for the new companies.
Smaller campuses must play catchup, perhaps drawing on what has worked elsewhere.
One startup company partnering with UB made a big splash last week. Tablet maker Bak USA announced a multimillion-dollar investment from B. Thomas Golisano. The billionaire founder of Paychex is buying 50 percent of Bak USA and will join the company’s board as a strategic adviser.
The founders of the company were looking for a location for their next tablet production facility and the tax breaks offered through Start-Up NY brought them to Buffalo.
Golisano, former owner of the Sabres, who was looking to once again invest in this city, has enough confidence to add the company to his portfolio. His investment should help ensure the company is able to reach the 100 employees it pledged to hire by the end of 2015, and the 267 employees it planned to hire within five years, the goal when accepted into the program last year.
Golisano’s endorsement of Bak USA instills confidence in both the company and Start-Up NY.
The program is really only just beginning to ramp up, meaning its success or failure can’t yet be measured.
Not all companies involved in the program will succeed. In fact, many may fail. That’s just the nature of entrepreneurial capitalism. But the ones that do succeed should bring the predicted thousands of good-paying jobs to the state.