Two Months Late, Governorís Empire Zone Reforms Still MIA

Assembly passed broad reforms months ago to end abuses, close loopholes
January 16, 2004

Two months after calling for reform of the stateís Empire Zone program Ė and seven months after the Assembly passed such reforms Ė the Governorís promised reform plan is still missing-in-action, said Assemblymember Kevin Cahill (D-Kingston).

"The Empire Zone program is one of the most important economic development tools New York has, but there are some major abuses and loopholes that need to be addressed if the program is to remain effective," Mr. Cahill said. "Despite talking up reform, the Governor has done nothing to bring it about and his lack of leadership could have very serious consequences."

Despite helping to create thousands of jobs across the state by offering businesses in designated areas tax incentives, the Governorís administration has allowed the program to become rife with mismanagement and abuses:

  • While some communities that could greatly benefit from the program arenít included, many more well off areas are, defeating the purpose of the entire concept.
  • Some businesses have taken advantage of the benefits of the program simply by changing their name or hiring a single employee, gaming the system to pad their bottom lines at the expense of the taxpayers.
  • The programís true costs and job-creation statistics have never been fully fleshed out for the public because reporting requirements are either too lax or are being evaded by the administration.

"The Governorís had a long time to do something about these problems," the Assemblymember said. "Without a detailed proposal to fix Empire Zones, his calls for reform seem more and more like empty rhetoric."

The Assembly passed a broad reform package last year that would have ended many of the abuses and closed its loopholes. Specifically, the Assemblyís legislation (A.9021-A):

  • Requires comprehensive reports from both the Empire State Development Corp. and New York State Department of Taxation and Finance so that taxpayers know the true number of jobs created and the true cost of the program;
  • Designates new zones based on a priority system of economic need;
  • Requires zones to reconfigure themselves into three distinct, contiguous areas as originally envisioned when the program was created, instead of the current scattershot approach;
  • Decertifies businesses that simply reincorporate without adding any new jobs in order to obtain benefits; and
  • Enhances the role of the Department of Taxation and Finance to include the certification and decertification of businesses where appropriate.

"The failure of the Governor to address these issues on a statewide basis, casts an undeserving shadow on those areas, like ours, that are doing it right," Assemblymember Cahill added. Locally, the Kingston/Ulster Empire Zone assists area businesses in fulfilling the reporting requirements in order to maintain their certification and continue receiving benefits from the program. Data collected from the inception of Empire Zones (formerly Economic Development Zones) in 1994 through December 2002 (the most recent complete information available) shows a net growth of 2,492 jobs for certified businesses in Ulster County. "These numbers indicate the Empire Zone program has had a significant impact in creating employment opportunities in the area," said Mr. Cahill.

"It was the Assembly that originally championed the Empire Zone program, and it was the Assembly that has led the way with legislation to make it better," Assemblymember Cahill said. "Empire Zones mean good-paying jobs and good-paying jobs mean better futures for working families. Weíre going to keep fighting until this important program meets its full potential."