The controversial Start-Up NY economic development program that granted lucrative tax breaks to businesses has created 288 new jobs in Western New York in its first three years, a new state report said.
The 288 jobs at the 43 companies participating in the Start-Up NY program in Western New York jobs amounted to 40 percent of the 722 net new jobs that were created last year by all of the 141 businesses statewide that have been accepted into the program and submitted reports to the state. A total of 212 firms had been accepted into the program by the end of last year.
The Cuomo administration had hoped that the program would become a magnet for early-stage businesses by offering them the potential to operate free of virtually all state taxes – including state income tax for eligible employees – for 10 years.
But the report also indicates that the pace of job creation has been sluggish, not only in Western New York, where three of every 10 companies participating in Start-Up NY are based, but across the state.
Kenneth Girardin, an analyst at the fiscally conservative Empire Center for Public Policy in Albany, said the report is a sign that "the end may be near" for an economic development program that Gov. Andrew M. Cuomo once touted as "the greatest economic savior" for upstate New York.
Howard Zemsky, the president of Empire State Development, still sees value in the program.
"Start-Up NY is proving to be one of the most cost-effective, innovative and valuable tools in New York's economic development tool box," Zemsky said.
The Cuomo administration earlier this year proposed a makeover for the Start-Up NY program, rebranding it as the Excelsior Business Program. The Cuomo proposal would put new eligibility limits on companies, including a requirement that they not be profitable yet, while also backing away from job creation targets that had proven to be difficult to reach under the existing program.
"This new report should be the nail in the coffin for a program that was effectively dead on arrival," said Brandon Muir, the executive director of Reclaim New York, a New York City-based advocacy group.
Among the report's findings:
- Western New York companies pledged to make investments totaling $22.4 million over a five-year period. Those firms invested $3.6 million of that sum during 2016.
- The local firms created 247 new jobs last year and have created 288 net new jobs during the life of the Start-Up NY program.
- The local companies received tax benefits totaling $893,000 last year. That works out to a little more than $3,600 in tax savings for every new job created.
- Most of the tax benefits went to employees at the participating companies, whose pay is not subject to state income tax. Those state income tax savings amounted to $785,000 last year. Another $107,000 in tax savings went to the companies themselves.
- In all, the 43 Start-Up companies in Western New York have pledged to create 1,127 net new jobs over five years.
- Most of the job creation so far has been centered in just three companies - employee benefits provider Liazon Corp., tablet computer manufacturer Bak USA and online auto auction company ACV Auctions. Those three companies accounted for 201 of the 288 net new jobs created by Start-Up NY companies in Western New York. Liazon's 134 net new jobs amount to almost half of all the local jobs created by Start-Up NY companies.
Statewide, Start-Up NY companies have created 722 net new jobs, meaning that those positions had been in place for at least six months during 2016. In all, 1,135 jobs were created by the companies, though not all of them were in existence long enough to be counted as a net new job.