Information that some companies in Hamburg have not gotten large enough tax breaks, while others have gotten too much, should raise serious questions not only among officials but in the general public.
The Hamburg Industrial Development Agency is one among several local IDAs that have come under the scrutiny of the state comptroller’s office. In this case, an audit focused on the Hamburg IDA’s project approval and monitoring found that 21 businesses were overbilled by $17,870 for payments in lieu of taxes, or PILOTs. Another 25 were underbilled by a total of $38,850.
Moreover, the audit determined that the IDA needed to develop a policy to recapture financial assistance given to companies that do not reach job creation goals.
Any time the public is being asked to help a business expand there should be conditions. If they are not met, there should be consequences. State law allows IDAs to claw back tax breaks if projects fail to reach 80 percent of their job and investment projections.
But the Hamburg IDA board has decided that it will stick with its current policy and not try to recapture benefits that have already been awarded because, officials say, the changes the state wants make them “uncomfortable.”
Erie County’s local IDAs often play fast and loose with taxpayer money, offering gauzy justifications for their giveaways. Think FedEx, where millions in tax breaks was believed earmarked for creating hundreds of jobs in Hamburg. The final job count is about 32. This use of public dollars is a public concern.
State Comptroller Thomas P. DiNapoli has released annual industrial development agency audits for several years and has pushed for much of that time for the State Legislature to reform IDA practices. The legislation was finally passed by both the Assembly and Senate.
DiNapoli’s IDA reforms include more uniformity with project agreements and initial applications so that communities have a better idea of what the agencies are looking for when handing out tax breaks and, importantly, what the community is on the hook for and what the companies are promising.
The standard application form would include more information than is required now and allow the actions of IDAs across the state to be more closely monitored and compared.
The comptroller deserves credit for sticking with the fight. Next up for the Legislature should be measures limiting each county to a single, countywide IDA with increased accountability and tighter rules over which projects are eligible for tax breaks.