BCIDA: Where Are the JOBS?!?!

By Emma Pulaski

Perhaps the BCIDA’s most important task is job creation in Broome County. The BCIDA, like all other IDAs, use their tax exempt status to unilaterally give companies tax abatements (i.e. tax breaks) in exchange for the economic benefit these companies provide the area, mostly through job creation and increasing (at the end of their payment-in-lieu-of-taxes (PILOT) agreement, which last at minimum 10 years) the net property values.  One of the ways IDA effectiveness can, and is, measured is by calculating the cost to taxpayers incurred for each job created or the “job cost”.  There are, however, a variety of ways that the job cost can be calculated.  New York State, for example, divides the net tax exemptions (column C) by the net job change (column F) for their job cost (column G). (See chart 1 below) According the “Annual Performance Report on New York State’s Industrial Development Agencies” assessing IDA performance in 2010, the BCIDA was responsible for giving $3.1 million in net tax exemptions, but in turn was credited with “creating” 1,771 jobs, which amounts to a job cost of only $1,752.  On the surface this looks like a great payoff: taxpayers spend $1,752 in return for a job.  This job will presumably add more than that amount to the community through increased spending and taxation.

Chart 1

How Much Does Each IDA  “Created” Job Cost You?

A

         B

C

D

E

F

G

H

  YEAR

Number of Projects

Net Tax Exemptions Given in a Year

Sum of fulltime Jobs Before IDA Involvement for all Projects*

Sum of Current Fulltime Jobs for all Projects**

Net Job Change (E-D)

Cost Per Job C/F)

Job Change from Previous Year

2006

36

$22,829,815

5870

8029

2159

$10,574

Unavailable

2007

39

$33,495,301

5762

7964

2202

$15,211

Unavailable

2008

42

$48,22696

5762

5538

-224

NA

Unavailable

2009

42

$24,479,72

3752

5366

1615

$1,516

-172

2010

42

$3,102,270

3680

5451

1771

$1,752

+85

2011****

41

$3,521,692

331

4388

1073

$3,282

-177

*IDA Projects last a minimum of ten years.                                                                                                                                                                                                                                                                        **This number includes jobs created in that year and in the previous years as well.                                                                                                                                                            ***This number is from my own calculations and controls for projects whose PILOTS have expired.                                                                                                                               ****The NYS Comptroller’s Office has not put out numbers for 2011. These numbers are from my own calculations.     

This calculation, however, is deeply flawed because “net job change” is reflective of the total number of jobs created over the lifetime of an IDA project while the amount given in tax exemptions is from a single year.  Thus a job “created” up to ten years ago is compared to the tax exemption given in a single year.  The tax exemption, although the amount changes from year to year per the individual PILOT agreement specific to each project, is doled out every single year to an IDA project.  In contrast, “net job change” is calculated by subtracting the total number of jobs currently existing at a site receiving IDA benefits from the total number of jobs at a given site before it received IDA benefits.  Although the later number changes from year to year (more often times than not reflecting a loss in jobs compared to the year previous) it is made up mostly of job position which were “created” in past years.  The NYS numbers compare apples to oranges.  

In fact when we examined the financial reports from 2008 to 2011 in conjunction with the NYS Comptroller’s reports from 2006 to 2010, the BCIDA’s performance is much more mixed than the job cost number suggests (see chart 2). From these numbers it is clear that fewer and fewer jobs are being impacted by IDA assistance, despite the fact that the number of projects is growing.  In 2006, 8,029 people were employed in jobs receiving IDA support, while only 4,358 held that status by 2011.  During that same period, the IDA added 5 new projects, going from 36 to 41 total projects.  This means that the new projects the BCIDA took on during those years were producing fewer jobs than projects who stop receiving IDA support.  Projects like Universal Instruments which employed 346 people at the time their PILOT agreement ended in 2010 were replaced by projects like the Millennium Pipeline, expected to employ 6 people, but by 2011 did not employ anyone; and the Binghamton University downtown dorms on Water St in Binghamton, which only employed 15 people by 2011.  In actuality, from 2008 to 2011 the BCIDA projects lost jobs. Controlling for projects that ended during those years (as in the case of the Universal Instrument project highlight in the previous paragraph), BCIDA projects lost 172 positions between 2008 and 2011, gained 85 back from 2009 to 2010, but lost another 177 from 2010 to 2011  (see column H).  During this period Willow Run Foods (-146), Frito Lay (-52), AIG (-51), and Penguin (-34) were the biggest drivers of the lower job numbers for the BCIDA.  These numbers are in contrast to numbers put out by the BCIDA in their annual measurement report which states that in 2011 they helped create 58.5 jobs. It is possible that the 58.5 jobs were created that year only if the BCIDA added all the jobs gained without subtracting the jobs lost; the BCIDA only looked at half the equation.

So how should we measure the IDA with respect to job creation?  The best way would be to compare the aggregate tax exemptions over the lifetime of an IDA project to the average number of persons employed over the same time period.  This, by the way, is a measurement consistent with a recommendation made by the Comptroller’s report in 2008, 2009, and 2010 which calls for each project to be evaluated on its objective merits after the project is complete to determine the success, or lack thereof, of a given project.  In order to “improve transparency” the report calls: “for every completed project, the [annual] report card [from each IDA] should contain…the actual project cost, total gross tax exemptions provided, total PILOTS paid over the life of a project and an evaluation of whether job creation and retention goals were met”.  The BCIDA still does not publish these numbers, demonstrating not only a lack of willingness to improve, but also to be open with Broome County’s public.  

The next best thing to performing this task for the BCIDA by going through the last fifteen years of financial records, is by using the numbers provided by a 2011 Comptroller’s report on the BCIDA.  That investigation examined the 11 IDA projects started between 2004 and 2011.  Even though the report declares that these projects were “in the best interest of the community”, it goes on to show that $87 million in tax exemptions (most coming from real property taxes which are used to fund schools, county and local governments) were handed out for the creation of 578 jobs.  This means that the per job cost for the projects during this period was $150,519.  The median household income in Broome County in 2009 was $43,309.  Effectively, the IDA gave away, over a seven year period, the equivalent of one year’s income of over 2000 households at 2009 levels in Broome County.  

Whatever any individual may think about my calculations, the onus for demonstrating the effectiveness the BCIDA’s job creation abilities is the responsibility for the BCIDA and the NYS Comptroller.  This they have patently failed to do.  

What Has the IDA Cost You?
Has your school laid off teaching staff?

Is your city closing senior centers?

Do your parks need repair?

 Below is the reason why.
Tax Exemptions Given out through BCIDA sponsorship, 2008-2011

(includes State sales tax, county sales tax, and mortgage recording  tax )

  *Includes State Sales Tax, County Sales Tax and Mortgage Recording Tax

1

2

3

4

5

6

Year

County Prop. Tax Exemption

Local Prop. Tax Exemption

School tax Exemption

Other Tax Exemptions*

Total Exemptions in a Given Year

2008

   $467,516

   $212,740

$1,603,240

$2,480,800

  $4,764,296

2009

   $735,136

   $454,500

$2,481,971

   $389,368

  $4,060,975

2010

   $677,916

   $131,105

$1,965,836

   $602,061

  $3,376,920

2011

   $640,787

   $640,787

$1,964,776

   $751,332

  $3,521,692

Totals

$2,521,355

$1,439,132

$8,015,823

$4,223,561

$15,723,883

Image

 Where are these smiling faces when the projects fail to deliver jobs and taxes?

 Image

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