New York state spends about $7 billion on tax incentives and business subsidies each year. Regional Economic Development Councils, or REDCs, were put in place in 2011 to help coordinate this spending at a regional level.
Don Boyd, a senior fellow at the Rockefeller Institute of Government said the way business subsidies and tax incentives are being implemented in the state amounts to bad policy.
“It’s neither good tax policy, nor good spending policy, nor good budgetary policy," he said. "It’s important to have elected officials in the decision making process on a fairly regular basis because these things can easily grow out of control or grow in ways, or be used in ways, that were never intended.”
Josh Goodman, a researcher with the state economic development tax incentives project at the Pew Charitable Trusts, says many states in the U.S. don’t know whether their incentives are effective.
He says the picture differs from state-to-state, depending on what sort of evaluation process is in place.
Currently, Goodman said, New York sits in the middle of the pack.
“We didn’t see that New York was evaluating all of its major tax incentives regularly. So there wasn’t a schedule in law that says all tax incentives have to be evaluated. So if New York were looking to improve that would be one of the things it could do,” he said.
The little reporting that’s done on New York tax incentives, such as the Comptroller’s report into Industrial Development Agencies, strongly suggests the need for a change in policy, Goodman said.