Upstate New York’s left hand has been itching for generations — jobs pouring out of the state, leaving the economy a bust. Gov. Andrew Cuomo hopes to reverse that trend with his Tax-Free NY program — switching the itch from the left to right hand, thus revitalizing the upstate economy by creating new jobs.
Will it work? It’s worth a shot. But the governor should be honest about the implications to reduced tax revenues. He says there won’t be any, but we’re not sure about that.
So the governor’s got this itch. He wants to develop tax-free business zones in upstate communities — mainly around SUNY campuses. After all, 93 percent of New Yorkers live within 15 miles of a SUNY Campus, 97 percent within 20 miles.
“If you took the North Country out ... that number would change dramatically,” Cuomo said during his May 29 Tax-Free NY announcement in Albany.
That’s great news for creating jobs in Plattsburgh (SUNY Plattsburgh and Clinton Community College), Saranac Lake and Ticonderoga (North Country Community College).
For many of our readers, however, it does nothing. We’re not most New Yorkers. We’re the 3 percent. Large expanses of the Adirondack Park contain communities more than 20 miles from a SUNY campus.
With blackflies vastly outnumbering residents here in the sticks, the governor should also develop an economic development program for the 3 percent. Something more than buying private land, adding it to the state Forest Preserve and promising economic development in the wake of these multi-million-dollar land deals. Tourists who visit the wild lands — mostly pork ’n’ beaners who stay in tents and bring their own food — have little impact on the local economy. They may buy bug dope at Hoss’s Country Corner in Long Lake, but that’s not job creation.
Luckily, the governor has made inroads in the Adirondack Park. He genuinely likes it here. He’s setting up the Adirondack Challenge event in Indian Lake in July, promoting the Adirondack Park through I Love New York. We’re wholeheartedly behind this event and thank him for his support and attention. But that’s still not job creation.
When the governor made his Tax-Free NY announcement, he said, “You can’t do more than this,” meaning the state can’t do more than freeing businesses from all state taxes for a limited amount of time — 10 years for sales, property, and business/corporate taxes. “You can’t go lower than zero.” And employees would be exempt from paying income taxes for five years.
The goal is to set up tax-free communities that promote entrepreneurship and job creation. But we don’t like the time limit for the tax exemption. What happens after 10 years? Do the businesses close shop or simply move to a state that’s tax-friendly more than 10 years?
And while the state’s budget director says there is “no cost” to the state, meaning there is no out-of-pocket expense, there is most definitely a cost when you don’t collect taxes.
We’ve already seen what happens when revenue falls short of expectations. After the country’s economic collapse and federal bailout of Wall Street firms in 2008, many financial institutions were paying a lot less in state taxes. And that reduction in tax revenue led to a budget deficit reaching $15 billion for the state.
We’re not saying these tax-free zones will result in a $15 billion budget shortfall, but there will most likely be some reduction.
When there’s a reduction in sales tax, government agencies that reap the benefit of those taxes need to make up for the shortfall: the state, counties and towns in some instances.
What happens when businesses don’t pay property taxes? It means higher taxes for the other property owners. Shouldn’t the state be generating economic development that adds businesses to the tax rolls instead of taking them off? That’s why there’s a stigma for having tax-exempt properties in town ... no revenue. In this tax-cap era, this could make balancing budgets even harder for some communities and school districts. Many are already cutting jobs.
Details, such as eligibility requirements, still need to be worked out for Tax-Free NY. How will the state measure the 1-mile radius around SUNY campuses? As the crow flies?
So what does the State Legislature do with this “game changer,” as Cuomo calls it? “It can only be good,” he said. We’re not totally convinced yet, but we don’t have any better ideas.
We’re asking our state legislators to ask the governor tough questions and get some honest answers before casting their votes on this program. Don’t get caught up in the hype and the promise of new jobs. There is a cost here. And please talk to your constituents before scratching Andrew Cuomo’s latest itch.