From the 29 January 2007 Greater Niagara Newspapers 

This is the second in a four-part series about Industrial Development Agencies

TAX BREAKS AND BROKEN PROMISES
By Bob Confer, www.BobConfer.net

Segments of our society have a hunger for entitlements. They feel they are owed something from the government in the form of financial security. These individuals are the bad seeds of government subsidization for they make a life out of living off the taxpayers and staying on the welfare rolls. They cannot comprehend the fact that our nation was never devised in such a fashion and that any obligations really should go both ways. Fortunately, they do not represent the norm, for there are a lot of good, hard-working people who receive public benefits like welfare and food stamps yet do their darnedest to bring home an income and create a better tomorrow.

The business sector is no different in regards to such opposing mindsets. There are countless businesses that have over the years accepted some sort of corporate welfare such as tax breaks or PILOTs. Many of those businesses, like mine, understand the two-way street of obligations and have followed through with the news jobs and capital investment that had been promised in effort to get those breaks. A year and a half ago my company received a PILOT for a distribution center, promising 3 new jobs at that site. There are now 9 employees there who are connected to the creation of another 18 jobs around the corner at our non-PILOT manufacturing center. By creating 27 jobs in Niagara County we held up our end of the bargain and then some.

But, alas, businesses like mine are the minority. Most businesses that apply for tax abatements are exactly like the lifelong social welfare recipients so despised by society. They continue to receive corporate welfare but never come close to the expectations that they were supposed to achieve.

A 2006 study conducted by the State Comptroller showed this problem in dramatic fashion. Random sampling of nearly 100 projects from a half-dozen IDAs found that only a third of the projects met or exceeded job creation goals while the vast majority of the projects – 64 businesses – failed to achieve promised job growth and/or saw their employment drop.

Extrapolate those percentages to all active IDA projects across the state and the situation gets incredibly scary. The 100 projects sampled represented one-eighth of all active projects for the 6 selected IDAs. One can statistically transform those 64 broken promises to 512 of them based upon that number of active projects. Mind-numbing, yes, but, still, that’s 512 bad deals amongst only 6 IDAs. New York State consists of 115 IDAs in total. Therefore, one can theoretically assume there are 9,800 illegitimate IDA projects across NY. This is disturbing. How many more tax dollars do citizens have to pay because there are almost 10,000 businesses that break their promises?

Unfortunately, there is nothing that we can do as taxpayers. The evil acts of these businesses can only be prevented by the IDAs who empowered them. But, to do so, there needs to be a major shift in the culture of IDAs. The numbers prove that most if not all IDAs are milksops by nature. One can’t help but wonder in frustration why the IDAs would let these businesses walk all over them and every taxpayer. Every PILOT is created like a contract, clearly listing in black and white what the business must do to win and maintain the tax savings. Yet, despite the clarity of obligations, the savings are maintained even with a lack of jobs and investment.

The only way to initiate this culture change and make IDAs – and ultimately businesses – more accountable is heavy-handed governance from Albany. New York State can demand that every IDA initiate what is called a “clawback.” Basically, there are two forms of clawbacks and both are very effective tools. Clawbacks can come about as a money grab: If a business fails to live up to its job creation objectives the IDA captures from that business the lost taxes and returns this lost revenue to the host municipalities. In the other form of clawback a broken promise yields a broken contract and the business no longer receives its corporate welfare.

Accountability is not rocket science, but it seems to be to IDAs and the businesses that abuse them. In a perfect world, these businesses should be fully-burdened taxpaying entities because they failed to play by the rules. But, instead their evils remain intact. Unless IDAs start playing hardball these businesses will continue to abuse the towns, cities, and taxpayers that helped them, never returning the wonderful favors bestowed upon them.

 

This is part one of a four part series about industrial development agencies

What’s B.A.D. with I.D.A.s
By Bob Confer, www.BobConfer.net 

As we’ve so painfully discovered over the past few months, industrial development agencies do much more harm than good. It was “our” IDA that took the act of taxation without representation to the extreme and gave one corporate entity - AES’s Somerset facility – unprecedented preferential treatment that included a behemoth Payment In Lieu Of Taxes (PILOT) granted without the standard obligations of required job growth and investment. This odd deal that was purposely and deviously devised in contrary to the norm was also ironed-out in near-secrecy and its end results will be detrimental to all of Niagara County’s taxpayers…citizens and corporations alike.

As was made so readily apparent here, IDAs tend to abuse their power to offer tax cuts. Realize, though, that the problem is so much deeper than the symptoms allude to. In the bigger picture of all things governed this power is improperly granted in the first place: It truly is taxation without representation. A board of individuals is appointed (typically upon cronyism) by elected officials who then sever their ability to regulate taxation by granting to this board the ability to say who receives tax cuts and how big these tax cuts should be. The powers afforded by the legal structure of IDAs gives them an ability to do as they see fit with absolutely no accountability to the governments who empowered them or to all of the taxpayers affected by their decisions. When all is said and done, it’s these unfortunate taxpayers who then have to shoulder an unwelcome and unfair burden when properties come off the tax rolls because the IDAs allow it.

This ability to (un)tax at will is just one example of what’s wrong with IDAs. Their problems are many and far reaching. Two of the biggest flaws of IDAs are their negative impact on tax bases due to job flows and their ability to mask what’s wrong with local and state governments.

It has been a normal occurrence over the past couple of decades to watch companies and jobs flow from one state to another. They move from depressed places like New York to areas that they consider Lands of Promise, such as “business-friendly” states like South Carolina or Texas. In the past, most companies typically never would have made such moves, but they do so quite often now thanks to the pervasiveness of IDA’s and economic development agencies. These IDA’s are now anywhere and everywhere as each locality, even towns themselves, seem to have one. With a cornucopia of taxpayer-funded giveaways (which can fund a move) and less-taxed or tax-free properties available at their disposal, the IDAs bait the profit-hungry companies into their lands. Therefore, any “victories” claimed by an IDA are errant boasts, for they typically cause a huge loss in taxes and jobs someplace else, maybe some state far away, or maybe even in the neighboring municipality. Somebody someplace is getting hurt by an IDA.

These competitive packages offered by IDAs also do a favor for the governments who empowered them. The packages end up being band-aids, having the subliminal ability to mask what’s wrong with government (namely high taxes) and eliminate political accountability.

New York’s economic development circles perfectly exemplify this effect. We are the highest taxed state in the nation yet still have decent amounts of new development in certain locales because IDA packages take away – at least for that company - the competitive disadvantage that New York has. If IDA packages were not offered, New York’s tragic business environment would be made apparent and development would not occur here. This psychological tool shows why IDA’s tend to remain so popular with many politicians: it offers them a crutch that can save face and allow them to continue with their lack of fiscal prudence and high spending habits.

In the end, it’s easy to see that IDAs are more of a drain on an economy than they are economic saviors. This truth is best exemplified locally by the AES giveaway, which in the whole scheme of things represents only the tip of the dirty IDA iceberg. Sadly, it’s this sort of iceberg that may one day sink the veritable Titanic known as the US economy.

 From the 15 January 2007 Greater Niagara Newspapers

A MODERN DAY TEA PARTY
By Bob Confer, www.BobConfer.net

Did you happen to catch who was crowned as Time’s Person of the Year for 2006? It was you. It was me. It was each and every one of us. The magazine’s editors realized that the honor that was once bequeathed upon the likes of FDR, Ronald Reagan, and Martin Luther King, Jr. was more appropriately awarded to humanity as a whole for accepting the mantle of civic responsibility and using the networking afforded by the digital age to make real differences in people’s lives by sharing information and critiques of political and economic leadership. Time’s belief is that this interconnectedness and its grassroots efforts are destined to make a better tomorrow.

Analysis of the situation can be taken much farther and beyond the confines of the internet. This cumulative and intense effort to bring about real political change has been in the making for over a decade now, beginning with the genesis of talk radio in the 1990’s, which was immediately followed by key developments in information technology. Consistent and meaningful political debate has become a norm of day-to-day life because it is anywhere and everywhere thanks to a massive information pipeline that has grown to include talk radio, hundreds of cable and satellite TV channels, alternative newspapers, and an internet that has gone from nothing to something in the a very short period of time.

Sure, some people had for decades been keen on political change – look at the peace movements of the 60’s and 70’s as example – but it was hit and miss and not a part of contemporary culture. Those who were highly critical of government and taxes were looked at as oddities. More often than not these concerned individuals – who have now proven to be ahead of their time - were looked at as demented gadflies or strange conspiracy theorists.

Oh, how times have changed! Back in the 1980’s who would have thought things such as my column, Scott Leffler’s radio show, or Tom Christy’s TV show would be so popular? Who back then would have listened to, believed in, and be incited by those shows and their regular callers - the Als, Edwinas, and Felixes of the world - who are so adamant about the need for change? And, who, back then, in their wildest dreams would have ever believed there would be hundreds of millions of people – bloggers, webmasters, and browsers - connected by computers sharing their thoughts and beliefs about politics and life in general on an instantaneous and intelligently critical scale?

It has been proven through this movement that all people are intrinsically “demented gadflies.” Every one of us in our own way does care about laws, legislations, and where or hard-earned dollars are going. We just needed a catalyst to fire us up. But, why now? Why did it take so long to wake up? Because, quite basically, the information wasn’t there before this newfound Information Age. We had no idea how badly we were being massacred or how much waste was being consumed by those we pay taxes to. By being uninformed, we had nothing to fight for and nothing to fight with. Knowledge is power, so, finally, we are completely empowered and can use every tidbit of data and commentary to hold the powers-that-be truly accountable.

You could almost say that there is a modern Tea Party taking place. The Boston Tea Party of yore was a major symbolic turning point in American history. It was an angry and immediate revolt against taxation and bad government. This new age Tea Party is a similar turning point in American history. It is even angrier – it’s much more than just tea this time around – and is even more immediate depending on need. If something dirty or moronic happens in the political world the news of it is spread through the ‘net in mere hours and the whole nation is on top of the issue, bringing about change in a relatively rapid and highly-accountable fashion as compared to the way things used to be done. We, not the government, are in control now.

This wonderfully adventurous Tea Party and its end results - a better America and a better Earth - are only possible because of you and your efforts. Time Magazine was right…your voice matters and you are a leader. Having said that, wear your “Person of the Year” award with pride. You deserve it.

From the 08 January 2007 Greater Niagara Newspapers

A NEW ERA IN ALBANY?
By Bob Confer, www.bobconfer.net

Here we are, January, 2007, welcoming a new year in New York State. Chances are, we may be welcoming more than just a new year, for this could be the dawning of a new era as well thanks to a much-welcomed change in leadership. George Pataki is no longer our governor after suffocating us with over a decade of Big Government. He and his administration spawned economic doldrums that forced businesses to die and people to move out of the Empire State while the rest of the national (and global) economy grew at sometimes stunning rates.

We now find ourselves led by Eliot Spitzer who has keenly positioned himself as the anti-Pataki and a harbinger of prosperity. One can’t help but feel optimistic, for he has brought with him an uplifting platform that touts the cutting of taxes, the resurrection of the upstate economy and the reformation of the very-broken political system in Albany. Pataki failed miserably on all such counts, but you are left feeling that Spitzer can do it. He’s a compelling figure who despite not having past executive experience has many people following him and believing in him as governor. If he brings along with this innate leadership ability as much vim, vitality, and success as he brought to his role as attorney-general then good things can and will happen. He has a proven track record of getting results and that is just what Albany needs.

But, for as much as I am optimistic, I am as equally pessimistic. While the chief executive of New York State changed, the rest of the mess remained the same. The incumbency rate for the state legislature exceeded 90% yet again in the 2006 election, guaranteeing the continued viability of the status quo we have known for far too long. Basically, the legislative branch that Spitzer will attempt to reform is the very same one Pataki captained for years. This legislature is so deeply entrenched in bad habits like cronyism and pork (and rewarded for it by the voters) that Spitzer may be fighting a losing battle.

Along those lines and probably much more detrimental to success, legislative heads Joe Bruno and Sheldon Silver were once again anointed the “chosen ones” by their peers. It’s disconcerting that our elected officials would continue to empower them after they led the poorly-performing Senate and Assembly through every year of Pataki’s pitiful tenure and New York’s ultimate demise. The legislature will never operate properly – and New York will never improve – with these two in charge. They dictate how each and every member of their respective houses vote, whether or not it is in the best interest of various New York communities and people. In essence, legislative passages become the whim of Bruno and Silver and not the whim of the voters who empowered the legislature. In such “leadership” roles these two are quite like mafia dons…they strongly and dictatorially control the outcome of everything that happens under their rule by dictating the behaviors and practices of all.

This corrupt legislature and Bruno’s and Silver’s grip on it all pose one gigantic obstacle that Spitzer must overcome if he wants his platform to succeed and for his era to be a good if not great era. With such a scenario I am torn between pessimism and optimism. Do I believe he can make do on his promises? Or, do I just default to the belief that he will be unsuccessful battling such an oppressive force?

I would prefer to remain optimistic until I see otherwise. History has quite often shown that one man following a higher calling with incredible drive and determination – as well as complete indifference to those want to bring him down - can make a real difference. I am hopeful Spitzer is such a man. If he is, New York will once again be the “Empire” State. If many of us are wrong and he is not as advertised, then our home state will further sink into the grave.