Governor’s Empire Zone Reforms: More Politics Than Policy

Plan doesn’t go nearly far enough to end abuses, close loopholes
March 11, 2004
Nine months after the Assembly passed its own set of stringent reforms, the governor finally released an Empire Zone reform plan, but the governor’s plan fails to address the most glaring deficiencies in the program, said Assemblyman Philip Ramos (D-Central Islip), and leaves control of the zones in the hands of the people who have mismanaged the program since its inception.

"I find it hard to believe that after all this time, this is the best plan the governor could come up with," Ramos said. "Not only does the governor leave his political appointees in charge of the program, he also lets them write all the rules and gives them the power to decide who gets the rewards."

One of the chief complaints about the Islip Empire Zone in its current incarnation is that it lacks accountability. The program’s cost effectiveness and job-creation statistics have never been fully fleshed out. In fact, according to an audit performed by the Office of the State Comptroller, 78 percent of businesses receiving tax breaks in the Islip Empire Zone either didn’t create the number of jobs promised or wound up cutting jobs.

"Empire Zones may or may not be creating jobs, but nobody really knows for sure. We have to have accountability," Ramos said. "What’s even worse about the governor’s plan is that it leaves control of the program in the hands of his hand-picked Empire State Development Corporation – the same people who have allowed abuse and mismanagement to run rampant in the program in the first place. Plus, it gives ESDC full control, in essence, of deciding which businesses get Empire Zone benefits – a handy political tool for the governor."

The Assembly passed a broad reform package last year that would have ended many of the abuses in the Empire Zones program and closed its loopholes. Specifically, the Assembly’s legislation would create an Empire Zone Control Board to oversee the program, and (A.9021-A):
  • require comprehensive reports from both the Empire State Development Corp. and state Department of Taxation and Finance so that taxpayers know the true number of jobs created and the true cost of the program;
  • designate new zones based on a priority system of economic need;
  • require zones to reconfigure themselves into three distinct, contiguous areas as originally envisioned when the program was created, instead of the current scattershot approach;
  • decertify businesses that simply reincorporate without adding any new jobs in order to obtain benefits; and
  • expand the role of the state Department of Taxation and Finance to include the certification and decertification of businesses where appropriate.

"Not only did the Assembly create this program in the first place, we’ve also passed legislation to make it better," Ramos said. "The benefits of Empire Zones – good jobs, stronger communities – are too important to play political games with them. We’re not going to let the governor do that."