New York Reports Raise Questions about Excelsior and Start-Up NY Job Programs

July 14, 2016

A series of New York reports has caused the effectiveness of two job incentives programs to come under scrutiny. NY State Comptroller Thomas DiNapoli (D) released a report that was highly critical of the Excelsior Jobs Program. Additionally, the Empire State of Development (ESD) released a long-overdue analysis on the Start-Up NY program. The New York incentives programs claim to support job creation and economic growth, although evidence reveals that these are nothing more than empty promises.

Established in 2010, the Excelsior program provides refundable tax credits to firms that create and maintain a certain number of jobs over a 10-year period. The comptroller’s report details the lack of transparency and evaluation within the program.

Here is a summary of the findings in the comptroller’s report on the Excelsior Jobs Program:

  • $548 million issued to 328 businesses as of 2015
  • Incorrect data used to calculate jobs credits
  • Self-reported job numbers and investment costs used to authorize credits
  • Lack of documentation that businesses met eligibility requirements for the program
  • Absence of oversight caused some businesses to be overreimbursed

Businesses added 6,400 employees in the first four years of the program — a fraction of the 34,472 promised over the first decade, according to the Associated Press. In April, the state legislature quietly extended the Excelsior program until 2026.

The Start-Up NY program, created in 2013, aims to incentivize businesses to start or relocate to New York State through the promise of 10 years of tax-free operations.

Here is a summary of the findings in the ESD report on Start-Up NY:

  • $1.2 million direct tax credits issued with a return of $13 million invested in the economy
  • Companies have committed to creating 4,100 jobs by 2020
  • So far, a total of 408 jobs created (76 in 2014, 332 in 2015)
  • Created more tax-free areas across the state (441) than jobs (408)

The report, which was released three months late, caused NY Governor Cuomo (D) to go on record regarding the cost of the Start-Up NY program. “It costs us nothing — zero — because all the program says is if you come here, we won't charge you tax,” Gov. Cuomo said. However, Gov. Cuomo fails to mention the $53 million spent on advertising the program.

The Start-Up New York and Excelsior reports question the effectiveness of job creation programs everywhere. Instead of supporting incentives programs that produce uncertain outcomes at taxpayer expense, Gov. Cuomo should work on long-term tax reforms that improve the business tax system of New York as a whole.

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