Empire Zones ~ Proceed With Caution

Building Empire Zones

Before the first bill or even the first official speech in this year's legislative session in Albany, the three men who run New York's state government called for the cameras. Once the lights were on full, and the microphone canted in their general direction, Gov. George Pataki; the Senate majority leader, Joseph Bruno; and the Assembly speaker, Sheldon Silver, announced the creation of three new Empire Zones around the state. One would be in Nassau County, one in Livingston County and one in Chinatown.

If they beamed like rich patrons handing out post-holiday goodies, that is because that was just what they were doing: doling out one of the best tax breaks that New York State has to offer.
Which raises this question: Will these new zones create jobs, or will they do little more than reward political cronies, as too many of them have done in the past?

Empire Zones were created 20 years ago to stimulate long-term economic growth in distressed communities. It was and is an excellent idea, if it works the way it was intended to work. But two years ago, in a random sampling of Empire Zones across the state, Comptroller Alan Hevesi and his auditors reported a series of failures in the oversight and operation of these zones.

One notable example was a real estate company in Syracuse that created one job at an annual salary of $26,000 but claimed a tax credit of more than $250,000. Another was a Rochester company that added one $10,000-a-year position and got a tax credit of $137,000. As Mr. Hevesi noted: "Giving companies tax breaks is giving away real money."

Although the comptroller has said he intends to continue checking on how the 75 zones operate, it is not clear, really, whether the Empire Zone program has improved since his audit. Only one important thing has really changed: the way that these zones are handed out across the state.

Previously the governor's appointees controlled the awards. Now the governor and the two legislative leaders decide among themselves who gets these valuable tax breaks, which is why each man had a reason to smile for the cameras last week. Mr. Silver was especially relieved that his own district finally earned its bonus. Chinatown and the Lower East Side of Manhattan lost over 50,000 jobs after Sept. 11, 2001, but Mr. Silver noted sourly that it took four years for his district to get the help it deserved.

Maybe it is better for three politicians to control who gets these rewards, instead of just one. But the bottom line should always be not who has the clout to distribute these useful benefits, but which blighted areas can best use them.

Copyright 2006 The New York Times Company. Reprinted with permission.
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Click HERE for a look at the Cortland County Empire Zone.

Next Week: The "visioning" process gets underway in Elmont.