With job cuts expected, Assemblyman Michael P. Kearns wants Gov. Andrew M. Cuomo to consider clawing back tax incentives given to First Niagara Financial Group.
In a letter to the governor, the Buffalo Democrat highlighted the Excelsior program tax credits awarded to First Niagara in 2011, which were tied to job creation and investment pledged by the bank.
Kearns said the proposed acquisition of First Niagara by KeyCorp could bring sweeping job cuts to the region, while top First Niagara executives are poised for millions of dollars in payouts. KeyCorp aims to complete its acquisition in the third quarter, but has not specified its plans for Western New York job cuts.
“In the interest of economic growth and stability in Western New York, what are your plans to ensure New York State Excelsior investments and economic growth are not destroyed at the hand of a crippling bank merger?” Kearns wrote to Cuomo. The letter was co-signed by Joseph A. Kelemen, executive director of the Western New York Law Center.
Kearns contended that Excelsior tax credits given to First Niagara added up to $28 million, apparently on the assumption that the bank collected $5.7 million each year for five years. But that was off the mark: First Niagara has actually collected $2.46 million under the program from 2012 through 2014, according to Empire State Development.
Cuomo announced the tax credits for First Niagara in 2011, tied to the bank’s plan to add 500 jobs and invest in its upstate New York operations over the ensuing five years. First Niagara was deemed eligible for a maximum of $5.7 million over a five-year period, when combining employment and investment tax credits, from 2012 through 2016.
Empire State Development said First Niagara met its job commitments and received the full jobs tax credit for 2012 through 2014, which added up to $2.12 million over three years. The bank’s 2012 investment figure came in less than projected, so it received $337,223 in investment tax credits under the program, which was below the maximum.
First Niagara said in a statement: “We have honored all commitments under the program’s guidelines. Our participation is reviewed annually by the state, and we have received certificates noting the fulfillment of our obligations.”
Even though the actual figure of tax credits collected by First Niagara was far less than he had estimated, Kearns stood by his argument that the state should try to recover the value of those tax credits, saying they were meant to support long-term investments.
“Any dollar that taxpayers are spending to subsidize a bank that is going to be leaving the area, the governor should pursue it,” he said in an interview.
Kearns wrote to Cuomo that he would like to see the state “reinvest the money in the best interest of residents in Western New York.” He said he felt that the investments made by the state and First Niagara would be “negated” by a KeyCorp acquisition of First Niagara.
Empire State Development said the tax credits awarded to First Niagara would be terminated in the event of a merger, although KeyCorp could apply to the program. The agency said the Excelsior program does not contain clawback provisions. But if a company fails to meet its job or investment commitments for a given year, it loses its ability to claim a credit for that year.