For Release — February 10, 2009
Three business groups say Empire Zone changes will damage economy
ALBANY— Governor David Paterson’s budget proposal to place new criteria on existing Empire Zone companies will do immediate damage to the state’s economy and damage long-term economic development efforts. The Business Council of New York State, The New York State Economic Development Council and The Independent Power Producers of New York all oppose the changes.
The Empire Zone program has been the basis for some of the largest capital investments in New York State in recent years. In many cases, its tax credits were necessary to offset uncompetitive high costs, particularly property tax costs in New York.
“Imposing new requirements on companies already participating in the Empire Zone program will damage ongoing and future economic development efforts in New York,” said Kenneth Adams, president and CEO of The Business Council of New York State. “You’re telling a company that is honoring its deal that now the state is going to change the rules to throw them out of the program. It is a terrible message. It says that New York is the state that cannot be trusted to keep its word in an economic development deal.”
“Economic development is a competitive marketplace, and the loss of legitimacy in New York’s commitments will be used against us by other states and countries with which we compete for projects,” said Brian McMahon, president of The New York State Economic Development Council. “These actions would have a devastating effect on economic development in Upstate, where the Empire Zone program has been the primary incentive used to encourage numerous major expansion and attraction projects.”
“Due, in part, to the benefits provided under the Empire Zone program, independent power producers have invested more than $10 billion to purchase, construct, and operate their facilities here in New York State,” said Gavin Donohue, President of Independent Power Producers of New York. “Additionally, they pay annual taxes of nearly $300 million and employ more than 10,000 individuals across the state. The governor has called for additional investments to build and improve upon the statewide energy system. Unfortunately, his proposal to renege on commitments to provide Empire Zone benefits for 2008 to already eligible companies and exclude electric generating facilities from the program going forward sends a chilling message that New York will not have the policies in place to encourage such investment.”
The Governor’s Executive Budget proposal calls for retroactively applying new criteria for qualification to existing Empire Zone participants. A substantial number of the 9,800 business getting Empire Zone benefits could be removed from the program, including companies that have made major capital investments in New York These companies employ approximately 380,000 New Yorkers.
Under the proposal all businesses certified prior to April 1, 2005 will be required to show at least a 20 to 1 ratio of wages and benefits paid and capital investments at their Empire Zone sites versus Empire Zone tax credits. This one-time test will apply to all tax years for which the company has been certified since 2001. If a business exceeds this threshold, they will receive a benefit retention certificate. If not, they will be decertified, and will be ineligible for additional credits, and will be precluded from carrying forward any credits earned in prior tax years. Decertification will apply to tax years beginning on or after January 1, 2008.
Bill Stroh, Business Council of NYS - 518-465-7511
Brian McMahon, NYS Economic Development Council - (518)426-4058
Gavin Donohue, Independent Power Producers of NY - (518) 436-3749