Gov. Andrew Cuomo. (Will Waldron, Times Union)
Gov. Andrew Cuomo on Wednesday defended the Start-Up NY program, the tax-free initiative that has created just 408 jobs in its first two years of operation, as a good “opening bid” for enticing businesses to locate in New York State.
Talking to reporters in Plattsburgh, he also said that the program costs “zero” because the tens of millions of dollars spent on advertising Start-Up NY went to a campaign that was a “generic” booster to the state’s business-unfriendly image.
“We have a number of economic development projects, and it’s important to understand the different strategies we’re using,” he said. “Start-UP NY is one program that says we will waive all taxes on new jobs that come into New York. Four hundred have been created to date, but 4,100 are in the pipeline. Why? Because we just started the program, and when a company agrees to come, it doesn’t come tomorrow. The company has to move, it has to give notice, it had to find a factory, it has to find equipment — so there is a lag time.”
“But it costs us nothing — zero,” he continued. “Because all the program says is, ‘If you come here, we won’t charge you tax.’ But they weren’t here to begin with! So it doesn’t cost us anything — it just saves them on the income tax.”
In 2013, the state Budget Division estimated that Start-Up NY would reduce expected tax receipts by $68 million, $105 million and $150 million in the three fiscal years ending next March, for a estimated total of $323 million. A Budget Division spokesman didn’t immediately respond to a query about whether those estimates had been borne out. Earlier this year, the director of the Start-Up program said the lost revenue in the current fiscal year would be $100 million — which is less than $150 million, but slightly more than zero.
A recent audit by the office of state Comptroller Tom DiNapoli noted that in the first year of the Start-Up program, ESD committed $45.1 million to advertise it — 40 percent of the total $111.6 million committed to all advertising services during that period under ESD’s $211.5 million contract with the advertising firm BBDO. (The contract is also intended to boost tourism, state agriculture and more.)
Cuomo was then asked about criticisms from those who point to the cost of the advertising campaign. Here’s his response in full:
“Yeah, except that they’re wrong — because the advertising is generic. ‘Come to New York,’ and ‘We will help your business grow if you come to New York,’ and ‘New York is not the frightful place that you thought it was,’ ‘We’re not a high-tax state — we’ll eliminate taxes.’ So that’s what the advertising did. We had a very anti-business reputation, and if you asked any company, we actually did — you ask companies around the country, ‘Would you ever move to New York?’ They’d say, ‘Oh no no no — New York is anti-business. It’s very high tax, it’s very high regulations.’ So we had a bad reputation that we had to correct to even be considered. And the quote-unquote Start-Up ads are really generic. Start-Up means, ‘Come to New York and we will help you start up your business — no taxes, but usually we’ll also give you a loan, we’ll give you an incentive, we’ll invest in your business and take an equity participation.’ But if a state wants to be competitive now, it’s going to take more than just no taxes. That’s sort of the opening bid. But most often you’re going to have to put an additional investment package on the table to be competitive with what the other states are offering.”
Here’s one of those ads, which seems rather Start-Up-specific:
And another:
And another:
The Capitol Confidential team: