Does the Start-Up NY program deserve more time to prove its worth? The majority of respondents to this week’s RBJ Daily Report Snap Poll say no.
When Start-Up NY was launched, Gov. Andrew Cuomo said the program would help jump-start the upstate economy. However, a state report released a few weeks ago said Start-Up NY created a total of 408 jobs in its first two years.
The program allows eligible businesses and their employees to avoid paying certain state and local taxes for a decade. Companies eligible to participate include out-of-state firms, startups and a limited group of others willing to locate in “tax-free communities” at SUNY campuses, some private universities and “strategically located” state-owned properties.
According to the report, by the end of 2015 there were 441 tax-free zones and 109 businesses operating in the zones. These firms and their employees have received $1.19 million in tax benefits while investing $13 million. In the Finger Lakes region, a dozen firms have moved into Start-Up NY zones; in exchange for roughly $130,000 in tax breaks last year, they added 69 jobs.
Start-Up NY’s five-year projections are 4,140 new jobs and $230 million in investments by participating companies.
The governor has defended Start-Up NY, which has been supported by some $50 million in TV and radio ads. He says the program is just getting going and the ads promoted New York’s overall business climate, not Start-Up NY alone. Critics argue the program is costly and ineffective, and say it should be ended.
Some 485 respondents participated in this week’s poll, which was conducted July 11 and 12.
Does Start-Up NY deserve more time or should the program be canceled now?
Cancel Start-Up NY now: 72%
Give Start-Up NY more time: 28%
This program makes no sense. Tax breaks are only for employees and excludes company founders who take all the business risk.
—Brian Pitre, SkyOp LLC
Start-Up NY is lipstick on a pig that creates an unlevel playing field for businesses and does nothing to address the underlying issues of New York’s hostile business climate.
—Lester Wilson, North Syracuse
I would love to see New York foster growth of the companies that are already here. By giving huge tax breaks to new companies, it actually makes it more difficult for existing businesses as we compete for the same resources. In addition, it would be more beneficial to have a better business climate overall versus more gimmicks, specialized tax breaks, etc.
—Sig VanDamme, NimbleUser
It is a five-year program. Starting slowly is not fantastic, but it is adding jobs, of which we need here locally. As a local small business owner, we need programs and other incentives to support small business in the ROC. Not all programs hit the ground running and are still successful.
—Kim Pandina, owner and designer, Panda Wear
Start-Up NY is nothing more than a giveaway program for Cuomo’s cronies. That money could have been spent to give all existing New York businesses a tax or regulation break that would have actually spurred growth. The ongoing problem in New York is the unreasonable burden of high taxes and unnecessary regulation, coupled with a corrupt state government.
—Steve Smiley, Blackmon-Farrell Electric Inc.
Another failed attempt at window dressing the larger problems of onerous taxes and regulations imposed on New York State businesses. Only real reforms, not gimmicks, will attract more new businesses and encourage existing businesses to expand.
Taxes should be reduced equally for all New York businesses.
This project is a waste of my money. It cost $122,549 to create one job! The other companies moving out of the state and country (Sentry Safe) cost even more than that in lost jobs. The creator of this scheme is a moron.
—Daniel Mossien, architect
Start-Up NY is a farce. The $50 million spent on advertising to bring your business or start your business in New York is laughable. The business climate in New York is so hostile toward small business. You cannot qualify for any of these programs unless you fabricate your projections and then there is no accountability when you do not hit your numbers. Just my educated opinion as a small business owner receiving zero support from any program within New York State.
—Dale Ball, AdWear
The governor is right. Most of that $50 million in ads would have been spent promoting the state’s business climate anyway; they weren’t specific to Start-Up NY. And it’s no surprise that it’s taking time for this program to ramp up. Starting a business is not a quick or easy thing, and they have to start with a small number of employees.
—Matthew D. Wilson
Reduce the tax burden across the board. Stop burdening all business with regulations. Business will grow.
I am not certain we should “cancel” it now, or wait until we obtain the desired results, I certainly would not spend any more money on it, and we taxpayers do not need to have our tax dollars spent trying to convince us this is a successful program!
—J.A. DePaolis, Penfield
News stories about Start-Up NY have largely failed to point out its biggest weakness—it comes with so many requirements, strings, restrictions and punitive clawbacks that few companies would qualify, and those that do are reluctant to accept the contract terms. Its front face is very attractive, with tax reductions and other incentives; however, like so many other things about New York government, it’s not what it appears to be once you start reading the fine print. Worse, some of its mandated terms make bank financing virtually impossible since the state adds contingent liabilities that could throw the company out of covenants under most bank loan agreements, through no fault of the company but due to external market factors. Start-Up NY is typical of programs designed by bureaucrats with little real world experience starting or building a company. It is likely not salvageable, except as a public relations program to help the governor’s poll numbers.
The details of the program as we have learned them from program administrators are such that they come nowhere near the claims that seem to be intimated about the Start-Up NY program in the advertisements. Therefore, it—the program—seems to be somewhat of a scam; let’s get rid of it before more New York State civil servant heads roll needlessly.
—Franz “Rusty” Tyson
Rather than using ads to try to simply fool employers into believing New York is a good place to locate jobs, let’s double-fool employers and actually change policies and reduce taxes so we really improve the employment climate. Novel approach, isn’t it?
—Dorver Kendig, Webster
Providing tax breaks for the creation of low-paying jobs contributes to our serious problem of stagnating income levels for a significant portion of the population.
Start-Up NY is an expensive boondoggle that should be canceled. The state needs to be working on the overall business climate—corporate taxes, property taxes, personal income taxes, workers’ compensation insurance, family leave, minimum wage, high insurance costs driven by the plaintiffs bar and overly burdensome regulation—when taken together are just too much. It is time for the state to stop trying to pick winners and losers and work to make everyone a winner! Start-Up NY has taught us one thing. Expensive marketing campaigns in other states do nothing to make New York a better place to do business.
—Aaron Hilger, Builders Exchange
Reduce taxes for all businesses in New York State rather than the select few.
—Bruce Anderson, Alpha & Omega Parable Christian Stores
I want to see a reduction in taxes across the board, along with a reduction in some regulations that make doing business in NYS more expensive and complex compared to other states. The state reduced some regulation for the beer and wine industry and businesses and job creation took off, helping to fuel a resurgence and tourism in some regions. What other industries can this state and the Finger Lakes region thrive in? This is what our lawmakers need to think about, then determine if excessive regulation is in place holding back expansion and development.
Tax-free zones, what a laugh! There is no such thing as a tax-free zone. The same services, providing schools, snowplowing, etc., are still provided by the local communities, only now the services are paid by a smaller group—the homes and businesses which were there before the latest great idea de jour.
I’m OK with the program, but the advertising (promotion) is ridiculous; $50 million in advertising? Why isn’t the media reporting on the waste of $50 million at the top of every newscast?
If the taxation and regulatory environment in New York was more favorable to business, programs such as this would not be necessary. That’s where the focus needs to be, reforming the tax code and business regulations.
I don’t agree with the premise that we need a program like Start-Up NY. Instead, government should level the playing field for all businesses by lowering the taxes and regulations so they are competitive with other states.
The program should be discontinued. If you want to jumpstart the economy, real business climate changes need to be made by lowering taxes and reducing regulation for all businesses. These ads for Start-Up NY provide the perception that New York is a good place to do business. Gov. Cuomo needs to spend more time cutting government expenses, taxes, regulation and corruption. Without these changes, companies will continue to leave New York.
—Mike Hogan, Information Packaging Corp.
This is a tough question to answer thumbs up or down. On the one hand, the program hasn’t produced results that justify the tax breaks. On the other hand, we all know that New York’s taxes are outrageous. If the governor recognizes that business tax reduction creates jobs, why hasn’t he reduced business taxes across the state?
—John Calia, Fairport, NY
Let’s see—dump a pile of money into an advertising campaign, and then make it virtually impossible to navigate the red tape involved in the program. Typical of New York State administration. How about this concept: Lower our taxes, pare the administration and make it easier to do business in New York! Companies are fleeing the state like startled deer, and heading to regions where businesses are welcomed. How blind can we be?
—Lou Calarese, Applied Audio & Theatre Supply
It’s all pork, attempting to legitimize the government spreading his political largesse (or lack thereof). Kill it now.
—Diane Harris, president, Hypotenuse Enterprises Inc.
When local, state or federal governments pick winners and losers, we are in trouble. On a larger scale, the former Soviet Union collapsed because too many of the country’s resources were in the hands of the inefficient government. To a smaller extent, this is what is happening in New York and the United States. Do you really trust Andrew Cuomo, Barack Obama, etc. and the government bureaucracy to allocate resources properly? Too much government is similar to the mob, which is a “trickle down” economic system and is doomed to failure because of inefficiency. I once heard that a Congressional Budget Office hearing stated that the government sector is 500 percent less efficient than the private sector. The focus should be on the reduction of taxes at all levels while reducing the cost and size of government. This will unleash the private sector.
—John Rynne, president, Rynne, Murphy & Associates Inc.
Use the money to lower taxes for people already here.
Reduce taxes, reduce regulation, free up small local banks to help small local businesses—problem solved. At least until politicians try to “help” us again.
—Kenya Burn-Moore, Rochester
This is just an excuse for the governor to create a PR campaign to glorify himself and do favors for his political allies. The whole idea of giving preferential tax treatment to a few at the expense of others is questionable, at best. And, what about the companies hurt by being forced to compete for employees with companies that have a built-in cost advantage and those landlords who lost tenants when the existing companies ran to SUNY properties to get those tax giveaways? The only positive thing to come out of this program is the state’s tacit admission that New York taxes are keeping employers out of the state.
—Jim Cronin, Classic Fashion Resources Inc.
It won’t hurt to give it more time while a better program is built and launched. Smart people in other states laugh at the ads. Not as smart people think Andrew Cuomo must be a great leader and would make a great president, which is the real purpose of the advertising.
As of July 2015, the state spent $161 million out of a $237.5 million pot for the overall campaign; about 60 percent went to out-of-state ads. Internet marketing spending is currently surpassing TV ad spend. How much did this campaign spend on digital? Did they use NY-based vendors to create the advertising/marketing? Our startup was declined by the program because we were too small and already in New York.
—Nicholas Livadas, Livadas Consulting
New York State ranks 50th (or close to it) in the U.S.A. in most categories that include business start-ups, growth and job creation. How about reducing taxes and regulations for all businesses, whether they’re existing or start-ups? The states that adhere to these policies have positive results to show for it. New Yorkers constantly elect politicians and in many cases unelected “officials” make decisions that are so detrimental.
—Todd Black, Black’s Hardware
If the business climate as a whole was more favorable for businesses, then businesses would want to locate in New York. If the taxes were lower, then businesses would want to locate here. I’ve been in business for more than 35 years and no one has helped me out. The business climate as a whole needs to change for all businesses in New York State.
—Jennifer Apetz, Ferrel’s Garage
Lower taxes for all, not connected or corrupt cronies.
—Dave Giambattista, Fairport
The role of government is to provide infrastructure. Not to tilt the tax burdens in favor of a few, at the expense of the vast majority. How about if the governor spent his time eliminating waste and corruption, then reducing the tax burden on all of us?
—Tom Shea, Thomas P. Shea Agency Inc.
7/22/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.