It's Time to End New York State's Empire Zone Program
In 1986 the New York State Legislature created the Economic Development Zone program. Its purpose was to retain and attract jobs to specific areas of the State that were experiencing extreme economic hardship. Businesses locating or expanding in these areas were made eligible for public subsidies in the form of corporate income and other tax benefits.
In 2000 the program was revised and expanded. Economic Development Zones were renamed “Empire Zones” and new eligibility rules made it much easier to create new Zones and for more firms to qualify for benefits. The program’s political appeal is such that repeated efforts to “reform” it have only created more loopholes; what was once intended as a small, targeted program to assist economically distressed areas is now a vehicle for giving tax breaks to a variety of corporations, with no clear, consistent, verifiable justification for the public investment.
Today, Empire State Development (ESD) reports that there are over 9,800 certified businesses employing more than 380,000 people in 82 Empire Zones statewide. As the scale of the program has grown dramatically its costs have ballooned. In 2000 the cost of the program was $30 million; by 2008 the figure had grown to $582 million. This represents a twenty-fold increase in just eight years. In addition, firms have $900 million in unused credits that can be used in future years. The Empire Zone program has been expanded to the point that its beneficiaries no longer even have to be located within the Zones, and the Zones themselves have grown dramatically in number and size.