A real world example of how tax cuts fare as job creation tools
Little Job Creation Is Found in Audits of Tax-Break Zones
By MICHAEL COOPER
ALBANY, March 16 - An East Harlem business reported receiving half a million dollars in state economic development tax breaks, even though it created only two jobs that paid a total of $14,080 a year. Six Staten Island businesses reported losing jobs, but claimed $15,600 in tax breaks. Three Queens businesses also lost jobs, but claimed $40,000.
Those claims were included in audits of three economic development zones in New York City that were released here on Tuesday by the state comptroller, Alan G. Hevesi. The audits are the latest in a series that have been called flawed by the Pataki administration.
The comptroller has been examining Empire Zones, the struggling areas where businesses are given tax breaks for making investments and creating jobs. Mr. Hevesi released an audit last week charging that businesses in eight zones elsewhere in the state got tax breaks even though they lost jobs. The audits released yesterday suggested that businesses in city zones were even less successful in creating jobs.
Only 15 percent of the businesses in the East Harlem zone met or exceeded their targets for creating jobs, the audit found, while 38 percent created fewer jobs than they had projected and 46 percent added no jobs or lost some. In a zone on the north shore of Staten Island, 20 percent of the businesses met or exceeded their job targets, while 34 percent fell short of their goals and 46 percent added no jobs or lost them.
The zone in South Jamaica, Queens, was slightly more successful, the audit found. Thirty-nine percent of the businesses there met or exceeded their job targets, while 16 percent created fewer jobs than they had projected and 45 percent added no jobs or lost some.
Charles A. Gargano, the chairman of the Empire State Development Corporation, which oversees the zones in conjunction with local boards, charged that the audits demonstrated a fundamental misunderstanding of how the program works. He said the program gives tax breaks only for jobs created, not on projections.
But officials at the comptroller's office said that their audits were based on the annual reports filed by the businesses within the zones, and that the businesses themselves reported getting tax breaks but not creating jobs.
Corporation officials said that some tax breaks could be granted for reasons other than job creation, and that the auditors would do better to look at the tax forms filed by the businesses. They also noted that some loopholes were closed after the period audited, from 1999 to 2002.
