We need to reform IDA policies

We at the Center for Cost Effective Government don’t always agree with Newsday’s editorials, but we are with them 100% on their latest editorial demanding the state reform the rules applying to industrial development agencies, especially on Long Island.

We have long been critics of these policies that allow for handsome tax breaks for developers who would’ve gone forward with their construction, regardless of whether the brakes were provided.

IDA tax brakes were meant to create incentives to lure in companies to create numerous high paying jobs for Long Island. But many of these IDAs have now become vehicles to provide tax giveaways for business entities that don’t need them in the first place and would have been built anyway.

We see this with the tax breaks given for the construction of storage facilities or parking lots, where few, if any, long-term jobs are created.

Now we’re seeing it more and more going to developers of new housing.

For years, developers have been complaining that the impediment to them constructing more housing is lack of zoning approval. It was never that they couldn’t make money from the construction.

They are more than eager to build without tax relief, if they would just get their zoning approval. But recently, they’ve wised up and now go to the IDA claiming that they really want to build this needed housing, but can only do so if they get a tax break.

This of course is nonsense, but the IDAs are falling for these ploys far too many times. You could make the claim that incentives could be rationalized if there are enough affordable units that are set aside by the developer. By doing so, the developer forgoes additional profit and would be compensated through the tax relief. But we think that they would build it anyway if you just put a requirement in the zoning approvals that said approvals are conditional upon a certain percentage going for affordable housing.

So Newsday is suggesting a number of reforms which we have pushed for for many years as well.

Let’s put in place a specific formula that ties the amount of money given to a tax break to a certain number of high paying jobs that are created.

Let's also prohibit pre-existing companies from seeking tax breaks, simply as a bribe to prevent them from moving out of state. If we start giving these brakes to some companies, we open the door to having to give it to all of them. Every business is pressured by high taxes, electric rates, and other over regulation.

IDAs can be beneficial, as when we bring in big companies such as Leviton, Canon and Computer Associates.

But not when we’re building parking lots, storage facilities, and housing that would’ve been built anyway.

Steve Levy is Executive Director of the Center for Cost Effective Government, a fiscally conservative think tank. He served as Suffolk County Executive, as a NYS Assemblyman, and host of “On the Right Side Podcast.” Costeffectivegov@gmail.com