States Lack Policies to Enforce Economic Development Subsidy Programs: New York State receives a D+ grade

Advocates Respond to New York’s D+ Ranking in Accountable Economic Development

Contact: Kristi Barnes, ALIGN Kristi@ALIGNny.org, 212.701.9469 office 718.755.5136 cell

Bettina Damiani, Good Jobs New York Bettina@goodjobsfirst.org, 212.721.7996 office 347.432.0315 cell

New York, Buffalo, Ithaca, NY--A new report analyzing the performance standards and enforcement policies of the states’ major economic development programs was released today by Good Jobs First, a non-profit, non-partisan research center based in Washington, DC. The study, Money-Back Guarantees for Taxpayers: Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs, shows that most states are highly inconsistent in how they monitor, verify and enforce the terms of job subsidies that cost taxpayers billions of dollars per year.  New York State had one of the poorest track records, receiving a score of D+ and ranking 45th out of the 50 states plus the District of Columbia. 

Press Release with comments from New York State advocates

Digging Deeper into New York State’s D+: How to make it better

New York State’s D+ grade on Good Jobs First’s report, Money-Back Guarantees for Taxpayers: Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs is unacceptable. Taxpayers deserve to know if officials are tracking how economic development subsidies are being used and if companies are being accountable to their job creation promises

Though the grade is accurate, it is disappointing. New York could easily adopt statewide procedures—many of which are already implemented at the New York City Industrial Development Agency—that would create a systematic and transparent recapture policy. Our research shows that some firms in New York State have had subsidies recouped or denied for breaking promises. However, the reporting and transparency of the details of these recaptures is shoddy and inconsistent at best. Knowing how well economic development programs are working shouldn’t be a guessing game: Economic development officials need to provide New Yorkers a detailed accounting of which companies are keeping their job promises and what happens to those that don’t. 

Examples of policy and transparency procedures in New York State are below and should be considered starting points to establish a policy for all of New York State’s economic development programs.

Company specific information on recipients of the New York City Industrial Development Agency is available in its Annual Investments Project Report. This report is an excellent standard for NYS to follow. One area of improvement in New York City IDA reporting would be for the agency to provide an explanation of why funds were recaptured.

We presume there are general clawback provisions in Empire State Development grant and loan programs and possibly in other state economic development programs.  A report GJNY released last year on the agency’s post 9/11 Job Creation and Retention Program indicates there are clawback provisions that are enforced: More information on the $13.4 million was recaptured from recipients of this program and examples of New York State’s clawback language is available here.  But since this information is not public we cannot confirm that clawbacks are either systematically in place, nor routinely enforced.