START-UP melts down

by Kenneth Girardin |  | NY Torch

9134352923_137dd4cc2a_zSTART-UP NY lost almost as many new job commitments as it added during 2016, signaling the end may be near for the economic development program that Governor Andrew Cuomo once touted as the greatest economic savior” for upstate New York.

The program’s 2016 annual report boasts of pledges to create 4,403 jobs over five years. By comparison, START-UP finished 2015 with 4,140 five-year job creation commitments, up from 2,085 at the end of 2014, meaning the program was previously netting about 2,000 job commitments per year. The 2016 figure means the program only added 263 more job pledges than it lost during the year, or 13 percent of the 2015 performance.

The overall dropoff in START-UP job creation is consistent with a November 2016 analysis by the Empire Center, which found the program was hemorrhaging participants, and that five-year job creation commitments were being withdrawn almost as quickly as they were being added.

That wasn’t the only disappointment: the program today reported 722 “net new jobs” had been created by the end of 2016. That’s a weak number on its own, for a program that Governor Cuomo in 2013 said would “supercharge” economic development efforts. But it’s especially paltry considering it amounts to just 316 “net new jobs” since 2015, when the program had already created 408. Empire State Development, which oversees START-UP, said in a July report that the program would end the year with 1,128 net new jobs.

To put START-UP’s numbers in context, the 178 jobs the program promises to create in the Southern Tier in the next five years amounts to only half of the positions lost from the closure of a single cheese processing plant outside Elmira, while three times as many jobs (109) were lost when Sears closed a store outside Utica as START-UP participants are creating in the Mohawk Valley in five years (37).

The 2016 report includes an unsubstantiated mention of 1,135 jobs having been created “since the inception” of the program, but doesn’t offer a description, and may include jobs created at companies that were since disqualified by the program. The number may also reflect ESD efforts to inflate START-UP’s metrics—which were hinted at in 2015, when an ESD official said the organization may begin counting “indirect” job creation toward the program’s performance.

START-UP, which allows companies to operate without paying sales, income or property taxes for five or more years, was created in 2013. Governor Cuomo in January proposed pulling the plug on the branding around the tax-free incentives, modifying the reporting and participation requirements and, most notably, making participants eligible for additional state incentives.

None of this should really come as a surprise. In fact, START-UP never was scaled to have a major economic impact, as E.J. McMahon of the Empire Center pointed out two years ago.

While some lawmakers have leveled criticism toward ESD because of the funds spent promoting START-UP, the real problem it poses is the distraction it causes from conversation about the actual culprits behind New York’s difficult business climate.

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- Kenneth Girardin is the Communications and Marketing Manager at the Empire Center for Public Policy.