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Much-touted Start-Up NY programs spent over $53 million to create just 441 jobs

Much-touted Start-Up NY programs spent over $53 million to create just 441 jobs

And it’s only going to get worse.

Governor Andrew Cuomo’s “tax-free” plan to bring technology jobs to New York has long been considered a failure, and buried in Friday afternoon’s holiday weekend document dump is a report that demonstrates the degree of the latest NY boondoggle’s failure.

When first launched in 2014, problems with misinformation and unclear advertising that cost New Yorkers million swirled around START-UP NY.

Newsmax reported at the time:

New York, rated the worst state in which to set up a business, is trying to lure entrepreneurs with a seductive new TV commercial that promises: “Move here … and pay no taxes for 10 years.”

. . . . But critics say the devil is in the details: the plan, which is centered on the creation of tax-free zones, contains many regulations and exceptions that will make it hard to work as promised.

. . . . The program doesn’t actually guarantee 100 percent tax-free status — and it only applies to a specific segment of the business world. In other words, it’s a lot more complicated than 30-second media spots put forth, says a lawyer who has dissected the program.

“This is a complicated program with extensive regulations and guidelines,” Kevin McAuliffe, a partner in the law firm of Hiscock & Barclay, was quoted as saying on “The benefits can be lucrative, but they will not necessarily eliminate all tax liability.”

Start-Up NY applies only to new or certain expanding businesses that are willing to partner with universities in the state and locate near their campuses.

Some businesses are exempt from the plan, including retailers, hotels, medical providers, and law offices.

The next year, in 2015, Forbes highlighted the failures of the fledgling program, calling the returns “laughably small” and point to crippling regulations and an “alphabet soup of bureaucracies” interested in naive political idealism rather than in hard facts, returns, or outcomes.

Forbes reported at the time:

After months of foot-dragging, the Empire State Development Corporation released a report last week about Start-Up NY, a program that it began under Governor Andrew Cuomo to attract tech innovation. Despite Cuomo’s promises, the report found that Start-Up NY spent millions in marketing dollars, while creating laughably small returns. Thus, it fits into the ESDC’s broader culture of failure, and should be a rebuke for someone who has presidential ambitions, yet reinforces the policies that have contributed to economic decline throughout New York.

. . .  . The report summarized the first year of a program that Cuomo launched in 2014 to create tech clusters in the state, giving tax breaks to tech-related businesses that open near college campuses. The state has already spent $47 million on advertising, and overall public expenditures for the program’s first three years are expected to be $323 million. Total job creation figures after five years are expected to be 2,085, but so far that figure stands at a whopping 76 jobs.

. . . . The reason for the failure, says the report, is that the ESDC runs programs without checking whether they “have succeeded or failed at creating good jobs for New Yorkers or whether its investments are reasonable.” Instead, these programs are an alphabet soup of bureaucracies that advance popular political causes, without worrying about returns. These range from START-UP NY [to a host of other feel-good projects].

Things aren’t much better this year.

The Ithaca Journal reports:

Businesses participating in the state’s Start-Up NY program created 332 jobs in 2015 after creating 76 in 2014, according to a new state report.

The report from Empire State Development, the Cuomo administration’s economic-development branch, was released Friday evening ahead of the holiday weekend, a time notorious for government agencies to release unflattering news.

It was more than 90 days late: By law, the report was due March 31.

It’s not clear that anything was learned from the first two failed years . . . or changed to improve the program’s success.  Instead, it appears the same failed plan is in place with its supporters dreaming wistfully of what they would like to see happen in the coming years.

The Ithaca Journal continues:

The state has spent tens of millions of dollars promoting the program, including $53 million from late 2013 to early 2015. The bulk of that cost was spent on seemingly ubiquitous television advertisements.

After two full years, the program has created more tax-free areas across the state (441) than jobs, according to the report.

. . . . The report does little to tout the Start-Up program’s current job-creation results, putting the number of jobs created last year into a footnote while choosing instead to tout the companies’ five-year projections. The companies have “committed to creating over 4,100 jobs” in their first five years, according to the report.

This sounds like the typical progressive “feel good” government project: big and unrealistic dreams, lots of taxpayers’ hard-earned cash, crippling regulations, miles of bureaucratic red tape, and little perceptible improvement.

[Featured image via JanosNYC]


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Bet a lot of pockets got lined, but that was the real reason for the program and not to create jobs.

Tech startups actually don’t pay a lot of taxes because investors actually don’t want profits, at least not at that stage, they want growth. What matters a lot more is operating costs and New York’s are some of the highest in the country. And salaries are expensive because you’re competing for tech skills with the financial sector. Northern Virginia is a much better option with its cluster of Internet & defense companies and good schools and infrastructure, although of course Democratic rule is doing its best to change all that.

Its hard to say if / when there will ever be a new Silicon Valley, although it makes sense that there would be given California’s problems and just the fact that it’s a big country. But its a certainty that it wouldn’t be in NYC.

We need separation of business & state.

It wasn’t a failure to all of Cuomo’s friends (and likely Cuomo, too) who make millions on what is a bad joke to the rest of use.

Every democrat in the nation is operating under the same moral code as the two most corrupt political figures in United States history: Obama and Clinton.

I’m sure, if they did an investigation of this, they’d find the Republicans that are standing in the way of this program’s success.

Probably George W. Bush’s fault.

So instead of taking care of the businesses that were in NY and left because of the onerous taxes and stupid, stupid energy policies, New York blew 53,000,000 for 441 jobs!

Wow, what morons.

With their gun nuttery they drove off over 2000 jobs when they caused Remington to move their operations.

I’d be smug about it but I live in Ct now, and frankly, its no better. We dismantled extensive hydro energy to centralize supply and now buy it from Canada. Doh!

BTW, it has been long known that financing startups seldom results in success but rather funds business plans the private market won’t touch. Thereby subsidizing long shots.

No real job descriptions, just claims that jobs were created, but it will be true that ” you did not create that business” the government funding did. I really want to see the products and the sales and the losses. I do not believe there will be any profits.

Another Voice | July 3, 2016 at 11:57 pm

Empire Center for Public Policy early on identified some of the earlier Start Up businesses reporting “new job” hires but were actually people currently working in a NY business which “re-created themselves” as a new Start-Up business in the designated tax free zones when the Start-Up Program opened up with waiver of state tax dollars incentive and rewards. What was the old employee is now the newly hired re-employed. Many of these “New” businesses were within a radius of less than 25 miles of their previous locations. The jobs numbers, as few as they are, are not a reflection of the reality of the actual new hire count but another government program used to scam the tax dollars being thrown around. The chronic unemployment figures have not been impacted at all in any of the designated zones by what Cuomo professed it would do.

OnlyRightDissentAllowed | July 4, 2016 at 9:01 am

The NY program sucked. Christy’s programs sucked. In Texas the tax rebate programs sucked. In fact, in Texas, an accountant friendly with the Governor set up a company that made its money on a contingency basis – a percentage of the tax savings.

Texas companies just have to threaten to leave and they can get the tax breaks. AMD explored moving to Texas and decided to remain in CA. Ryan’s company tried to sue them for the tax breaks they would have received. He was laughed out of court.

If you guys want to write an article about how tax breaks to create jobs don’t work, I am all for it and the NY tax breaks surely failed. But it is hardly an isolated case. For more years than I can remember, NJ has offered breaks to get financial companies to move across the river. Few if any jobs were actually created. In fact Lehman got a combination of tax breaks, subsidies and below market rent to move to Jersey City. As we should all be aware, Lehman erased jobs, but they had already pocketed the subsidies.