Slow Start Spurs Calls to Stop "Start-Up NY"

One year since it was created, the "Start-Up NY" program has spent $53-million on advertising, but has only created 76 jobs. Now some unlikely partners are calling for an end to the program. Geoff Redick reports.

ALBANY, N.Y. — It has been a slow start for "Start-Up NY."

The program, created in 2014 under the supervision of New York's Empire State Development agency, created just 76 jobs in its first year, a mere 3.6 percent of the jobs it has committed to create in five years time. But Start-Up has also spent $53-million in television advertising to promote the program, both in New York State and across the country.

A cross-section of state advocacy groups have had enough.

"They're wasting taxpayers' dollars; it's just wrong," said Shaun Marie Levine, executive director for New York's Conservative Party, on Thursday. "When you create 76 jobs after $53-million being spent, it's just wrong!"

She's not alone.

"We share a view (with the Conservative Party) that this is not the way to go," says Citizen Action executive director & Working Families Party co-chair Karen Scharff. "This is a waste of taxpayer money, and it's unfair to business in Upstate New York."

Under its design, Start-Up NY has opened tax-exempt zones on 62 college campuses across New York, most of them SUNY schools, as well as a recent expansion to include Stewart Airport and Republic Airport. Businesses that are approved for participation must operate within those zones, and receive a ten-year complete state tax exemption under the program. Employees of those businesses also receive a five-year income tax exemption.

Businesses can only qualify if they are new, moving from out-of-state, or expanding current businesses. The state must also determine that the approved businesses will not compete directly with nearby, existing companies.

The state maintains that progress so far has been rapid.

"The state approved 54 businesses to join the program in 2014," writes Empire State Development president Howard Zemsky in Start-Up's 2014 annual report, released this month. "These companies committed to create nearly 2,100 jobs and invest $91-million over five years, which is a rapid start for a brand-new, first of its kind program."

Observers from both sides of the aisle are less impressed. The Fiscal Policy Institute, the National Federation of Independent Business, and Reinvent Albany have all teamed with the Conservative and Working Families Party to create a new coalition, calling for the suspension of Start-Up NY, pending a comptroller's audit of the program.

"Start-Up NY is a rehash of previously dismantled 'zone' programs," the coalition wrote in a news release, referring to the now-shuttered Empire Zone program. "Its selection process is opaque and at risk for favoritism and corruption; and sufficiently overseeing the fairness and effectiveness of the program requires expensive auditing and oversight, far beyond what is in place."

"It's time to stop," said Scharff Thursday, "and see if the money we're spending is giving any kind of return to the taxpayers. If it's not, let's shut down the program."

Levine was more blunt: "They're picking the winners and the losers," she said. "Why not cut the taxes across the board, for everybody?"

Start-Up NY has been re-funded for $50-million in the 2015-2016 state budget. That money was approved prior to release of the program's annual report.

Officials for Start-Up NY say the first-year numbers indicate the program is in its infancy. They expect significantly higher job creation and capital investment numbers by the end of 2015.
 

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