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Editorial: Here come the inspectors

Dear Business Owner:

Thank you for opening your company in Erie County. We’re glad you’re here, but that fact is, we don’t really trust you. Let’s have a look at your books.


The Erie County Industrial Development Agency

That’s not a letter that went out from the IDA last week, but it captures the spirit of the unwarranted intrusiveness that is about to begin. Because of a foolish policy adopted by the IDA, companies that have accepted its incentives are being forced to open their books to outside auditors to prove they are paying men and women equally.

Everyone, at this point, should understand – and demand – pay equity between men and women. Anything less is unfair and treats women with shameful disrespect. It’s also illegal, according to state and national laws, which is where the IDA trips over itself.

Knuckling under to pressure from Erie County Executive Mark C. Poloncarz, the IDA decided that it needed to peer into the private books of businesses to satisfy itself that they were complying with requirements that other entities already are required to enforce. Now, more than two years after the IDA drank this Kool-Aid, random audits are beginning. At least one of 37 companies that have received IDA benefits since the policy took effect is going to have to submit to a financial groping. More are expected later in the year.

IDA President Steven Weathers insists that it won’t be much of a burden on companies, since the audit relies on payroll records that they are required to submit to federal and state agencies. But that only underscores the pointlessness of the exercise: This information is already being submitted for review. Why do it again? Just for grins?

It’s exactly the kind of overbearing regulation for which New York is famous. However painless it turns out to be, it’s an obvious disincentive for companies to locate in Erie County. Why not go to Niagara County or Monroe County? Why not go to Pennsylvania or Virginia or North Carolina? New York and Erie County need to be in the business of overcoming the state’s well earned reputation as unfriendly to business, not going out of their way to cement it.

The IDA is on potentially safer ground if it thoughtfully enforces its claw-back regulation on incentives for companies that fail to live up to their promises. There is at least some sense in requiring beneficiaries to do what they say, given that other taxpayers are picking up the slack for the benefits they receive.

And, indeed, the IDA has shown some restraint in reviewing the performances of its beneficiaries. At Niagara Blower last year, the question was whether the company should have been required to repay all or none of the $42,000 in sales tax exemptions it received since it didn’t produce all of the jobs it had anticipated. In the end, the parties compromised, with the company refunding a proportionate share of the incentive equal to the shortfall in its job creation.

There is a fair question whether it should have had to repay any of it, given that the cause – an unforeseen slump in its key energy markets – was beyond its control. Nevertheless, the IDA at least showed some flexibility.

Critics such as Dottie Gallagher-Cohen, president of the Buffalo Niagara Partnership, say that in many other instances, the IDA has been iron-fisted on this issue, to the unnecessary detriment of business. Common sense needs to rule here.

It’s always dicey when agencies try to manipulate economic markets, for whatever reason – good or bad. The county may not have paid a price yet for its intrusive audit policy, but the likelihood remains. It should drop this unnecessary program, while being sure its claw-back policies are consistent and fair.

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