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State Comptroller and IDAs

May 9, 2012

In a report issued last week, the Comptroller concluded there is, at times, a tenuous link between job and IDA tax breaks; DiNapoli purportedly found that 4,000 businesses received tax breaks, but fewer than 22,000 jobs were created and the cost to each taxpayer for jobs secured was more than $2,500.  DiNapoli proposed legislation that would allow for better analysis of IDAs and the subsidies they received.

http://osc.state.ny.us/localgov/pubs/research/idaperformance2012.pdf

Other states appear to be wrestling with the same issue…how can economic development efforts be meaningfully measured?  Minnesota’s solution was to establish a first-in-the-nation subsidy accountability law.  Their metric, which follows, is

  • Communities and public agencies that provide economic development subsidies must develop uniform criteria for all their subsidy deals, including a specific wage floor for these jobs;
  • Public hearings must be held before business subsidies worth more than $100,000 are awarded;
  • All businesses receiving more than $75,000 in loans or $25,000 in other subsidies must enhance jobs or create a net increase in jobs in Minnesota within two years; subsidies to retain existing jobs are permitted only if the job loss is “specific and demonstrable;”
  • Businesses receiving subsidies must continue operations on the site for at least five years;
  • Businesses that fail to meet job creation and wage goals must repay the subsidy with interest and face other financial penalties, and be barred from receiving future subsidies in the state;
  • Subsidy agreements, including the type, public purpose, and amount of assistance, as well as specific job and wage goals and the date they need to be reached must be disclosed annually to the public;
  • Progress in achieving the goals of each subsidy and information on businesses that did not meet goals must also be disclosed.

http://www.drummajorinstitute.org/library/report.php?ID=48

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