Cuomo administration pushes tax-free business scheme to skeptical Catskills audience

Above: Dierdre Scozzafava, the Deputy Secretary of State for Local Government, presented the Cuomo administration's proposed "Tax-Free NY" legislation at SUNY Delhi on June 6, 2013. Photo by Julia Reischel.

Governor Andrew Cuomo's rush to pass an ambitious new corporate tax break program met with skepticism from an audience of Delaware County officials and business owners at SUNY Delhi on Thursday. 

With only eight days to go in the current state legislative session, Cuomo hopes to get lawmakers to pass Tax-Free NY, a sweeping tax program that would lift taxes on corporations and their employees if they create new jobs within one mile of any SUNY campus.

Back in January, Cuomo rushed the SAFE Act, controversial gun control legislation, through the state legislature. Now he's hurrying his Tax-Free NY proposal and a slew of other initiatives, including the DREAM Act, casino gambling, and a 10-point Women’s Equality Act, into the last weeks of legislative business this spring, according to the New York Daily News.

Tax-Free NY is getting the governor's biggest push. After unveiling the plan two weeks ago, Cuomo dispatched his deputies to present it at SUNY campuses across the state. He's also collected endorsements from many public officials and business people, including Jamie Dimon, the CEO of J.P. Morgan. 

But the rush leaves little time for meaningful public input as the final details of the plan are hammered out.

The appearance by Dierdre Scozzafava, the Deputy Secretary of State for Local Government, to explain the plan at SUNY Delhi yesterday was foisted on local officials with only 48 hours' notice. A previous meeting had been scheduled for the week before and then cancelled abruptly. (After the cancellation, a Cuomo official didn't respond to the Watershed Post's request for an interview about the plan.)

Despite the last-minute invitation, around 60 people attended yesterday's event. Scozzafava told them that she would take their comments back to Albany.

Apparently, that's the only local input that will be accepted. When Delhi town supervisor Peter Bracci asked whether his municipality could be involved in crafting the details of the legislation, Scozzafava said, "By being here today, you are involved."

Jim Thomson, the chair of Delaware County's Industrial Development Agency, pressed Scozzafava about the hastiness. 

"I believe that there are eight days left in this legislative session," he said. "Is there an intent to get this to move forward before the eight days expire?

"Yes," Scozzafava said.

Many in the audience laughed.

But Scozzafava was serious. "If you ask me if I think it can be done, I do," she said.

For existing businesses, only "indirect" benefits

Modeled off a program in Albany that has brought nanotechnology jobs to the SUNY Albany campus, Cuomo's Tax-Free NY initiative aims to attract companies to SUNY campuses across the state with large tax breaks.

In a PowerPoint presentation, Scozzafava said yesterday that the details of the plan were subject to revision in the legislative process, but that tax breaks will include:

  • no business or corporation taxes for 10 years
  • no sales tax for 10 years
  • no property tax for 10 years
  • no franchise fees for 10 years
  • no income tax for company owners or employees for 5 years (Another 5 years of income tax breaks could be added, she said, depending on income.)

To qualify for the tax breaks, Scozzafava said, businesses must create new jobs and must use a physical location within one mile of the SUNY campus.

Most existing businesses won't qualify for any tax breaks.

"We have owned a wine and spirits store for 23 years," said Jerry Pellegrino, the owner of Ray's Fine Wine & Spirits in Delhi. "We have diligently paid our taxes. Is there anything in it for us?"

"As far as this specific program," Scozzafava said, "No."

"If businesses come into this community, they bring more people," she added. "I know that's not the answer you're looking for, but that is an indirect benefit that you hopefully would have."

Richard Maxey, the mayor of the village of Delhi, said that 72% of the property within the village is tax-exempt, and that he's concerned about being penalized by adding more tax-exempt properties to the rolls.

Dan Ayres, the CEO of O'Connor Hospital in Delhi and a Delhi village trustee, said that Delhi has a lack of skilled labor.

"We are desperately in need of healthcare professionals," he said. "At my hospital, almost every one of my lab technologists is from out of the country."

Scozzafava promised to relay their comments to Cuomo and his staff.

Will it work in a rural area?

While the Albany nanotech program has attracted new jobs to the city, Scozzafava had no evidence that a similar program would work in a rural region like the Catskills.

When asked if there was an example of such a program working in a rural area, Scozzafava said that she didn't know.

According to an article in the Times-Union today, a similar initiative to jump-start a ceramics industry along I-86 in the Southern Tier failed. The paper quoted Shawn Hogan, the mayor of Hornell:

A portion of the Southern Tier "was going to be the next Silicon Valley, but with the ceramic industry. It never happened," said Shawn Hogan, mayor of Hornell. The effort to develop a large ceramic industry cluster along I-86 in the western region was meant to harness research at SUNY's College of Ceramics at Alfred University and the industrial expertise of companies like Corning Inc. Hogan said that plan hasn't lived up to its promise.

In the same article, Brian McMahon, the executive director of the New York State Economic Development Council, told the Times-Union that "there's a real danger of overselling" Cuomo's plan.

Across New York and beyond, a range of groups and experts have expressed skepticism.

A Fishkill state assemblyman called it a "corporate welfare scheme" yesterday, according to Mid-Hudson News. The nonprofit Washington DC-based Tax Foundation called it a "flashy gimmick" that is not to be mistaken for meaningful tax reform. The Civil Service Employees Union has launched an ad campaign condemning the plan as "another special giveaway to business," according to the Times-Union

The New York Post ran an editorial blasting the plan on May 31. 

We’re all for lowering taxes. But if high taxes are sending business elsewhere, why not lower them for everyone instead of granting exemptions for a privileged few? Another way of putting the question is this: When will New York have politicians willing to stand up for the unglamorous businesses — the dry cleaners, bodegas, hair salons, coffee joints, clothing stores and the thousands of other enterprises that create millions of jobs, fill the state’s coffers with tax revenues and provide goods and services New Yorkers depend on? Today these businesses are taken for granted as our pols fall all over themselves on behalf of some high-tech, artistic, green or other politically fashionable industry.

More media coverage of the governor's Tax-Free NY plan

"Cuomo Plans to Lure Businesses to SUNY Sites," New York Times 

"Lalor says Tax-Free NY plan is ‘corporate welfare’", Mid-Hudson News

"State Legislative Leaders Looking For Changes In Gov. Cuomo's Tax-Free NY Plan," New York Daily News

"Governor Cuomo's "Tax-Free NY" Plan," The Tax Foundation

"CSEA attacks Cuomo tax-free zone plan Union launches ad blitz calling governor's proposal a 'giveaway'", Albany Times Union

"Tax-free plan gets a lukewarm reception: Economic development officials say they don't expect a silver bullet," Abany Times-Union