The Paterson administration wants to change the way New York businesses get tax breaks for job creation, proposing credits for research and development, capital investment and payroll costs for new jobs in high technology, biotechnology, clean energy, finance and manufacturing.
The proposed Excelsior Jobs Program would replace the Empire Zones Program, which provides tax incentives for 8,116 businesses in exchange for promises to retain or create jobs, which didn't always materialize. That program is set to expire this summer.
The administration also proposed a $25 million seed fund to help university research on new technology bridge the gap to actual business applications.
The Empire Zones Program, with credits for businesses located in 85 zones statewide, is set to end June 30, a date the administration said it accelerated by a year.
"Unfortunately, our enterprise zone program is no longer working," Paterson said in a speech to lawmakers Wednesday. "It's their last year, so we're going to put it where it belongs, in the past. We are no longer going to provide tax credits for businesses that do not provide the jobs we were promised."
However, its cost is projected to rise from $538 million this year to $551 million in the next fiscal year starting April 1, according to the Budget Division. "There are legacy costs associated with past commitments," division spokesman Matt Anderson said.
Empire State Development, due to statutory changes this year, required businesses to get recertified, reporting in December that it issued retention certificates to more than 6,600 businesses while sending notices to decertify 544. The agency said the 30-year-old program then had more than 8,700 businesses employing more than 344,000.
Basic benefits can include tax credits per employee ranging from $1,500 to $3,000 annually for up to five years, investment tax credits of 10 percent, a 25 percent tax credit for certain investments up to $100,000 and a state sales tax refund on building materials for construction or expansion.
Companies can receive Empire Zone benefits for up to 10 more years, Empire State Development spokeswoman Lisa Willner said.
"It was designed in a different economy," said ESD Chairman Dennis Mullen. The administration's new emphasis includes the legacy businesses of manufacturing and finance, small businesses and emerging nanotechnology, biotechnology and green energy, he said.
Substitute proposals would expand the research and development tax credit beyond capital to include personnel, extend the investment tax credit to accrue value beyond a zero tax base, and provide a jobs incentive tax credit for a portion of the payroll, which would rise with salaries instead of a flat amount, Mullen said.
"We looked at the competitive landscape," Mullen said. "We're competing with every state on a national basis. We're also competing on an international basis."
Paterson said the new seed fund is needed to avoid the "valley of death" common for university-based entrepreneurs that exists "between proving their research works and developing a product that can generate revenues."
"The bottom line is, to create jobs in New York state, you have to make it affordable in New York state," he said.
Paterson said New York needs to keep costs down to attract and develop business.
Skelos said they need to cut costs, especially taxes.
Source: AP News