Tax-Free NY

I just returned from a presentation by Robert Megna, Director of the New York State Division of Budget, at SUCO's Morris Hall. He was here to present the Governor's Tax-Free NY initiative, an attempt to create new jobs by carving out tax-free zones within or adjacent to SUNY facilities statewide (this includes community colleges). The idea is that any business that was new, or expanding, or diversifying, and was thereby creating new jobs, could locate on or near a SUNY facility and enjoy ten tax-free years. In the words of the Governor's press release: 

Tax-Free NY will entice companies to bring their ventures to Upstate New York by offering new businesses the opportunity to operate completely tax-free – including no income tax for employees, no sales, property or business tax – while also partnering with the world-class higher education institutions in the SUNY system. 

That's a pretty good deal. The idea behind it is that companies can take advantage of the proximity to a SUNY campus. This, the thinking goes, would be beneficial in a number of different ways, but especially in that there would be easy access to a well-educated workforce. Each campus would establish their own plan to implement this program, and would choose companies to participate based on this plan. Retail and financial product companies, according to Mr. Megna, were probably not ideal for this plan.

There is much more to come on this. There are lots of questions, of course. Companies can locate on campus or 'adjacent land,' this phrase does not, apparently, mean what you think it means: 'adjacent' can mean one or two miles away (for instance, downtown Oneonta). 'Adjacent' land that these companies occupy becomes state land, and is taken off local (for instance, city and county) tax rolls.

Initially, this sounds like a kind of inverse unfunded mandate for city and county:  instead of requiring us to spend more, it requires us to raise less revenue. When I asked Mr. Megna how the affected localities would join in the process and have a say regarding their lost revenue, he didn't, frankly, think that this was a very important issue. Of course, if the program is wildly successful, and incubates great economic growth, it won't matter. 

Mr. Megna used the old Empire Zone process as an example of an economic stimuls plan that didn't work (it was too easy to game the system: companies could benefit from the tax break but not create any economic benefit), and, on a number of occasions, noted that the Tax-Free NY planners had learned from the Empire Zones's mistakes.

Let's hope we're not listening to another presentation, in another ten years, about a new plan that has learned from the mistakes of Tax-Free NY.