Why the Grass is Greener for Biz in the Garden State

A Legislative Column by Assemblyman Dave Townsend (R,WF-Sylvan Beach)

“New Jersey is open for business.” That statement may surprise many New Yorkers, but a funny thing happened on the way to Trenton. New Jersey’s economic development agencies are succeeding where the Empire State’s have failed. Since the 1980s major companies and firms inside New York have left for greener pastures – most often to New Jersey’s more agreeable business climate. Credit the Garden State’s Business Employee Incentive Program (BEIP), a job-creation initiative which does two things New York’s problematic Empire Zones do not. First, the BEIP focuses primarily on higher-paying jobs and thus more real dollars in the way of business development; secondly, it spends a proportionally smaller amount of taxpayer funds to create quality private-sector jobs. New York State must seize the opportunity to reform Empire Zones to create a model as attractive as New Jersey’s BEIP.

The Empire Zones program started in 1986 and was originally designed to attract and retain jobs in 85 of New York’s geographically defined areas. The zones are administered by the Empire State Development Corporation which in recent years has thoughtlessly shoveled money out the door with no clear return on that investment. In fact, the so-called “reforms” taken up by the Legislature in April were so toothless, allowing companies to go on receiving subsidies while they cut payrolls, that I voted against them. In fact, I voted against a state budget which imposed over $8 billion in new and increased taxes and fees on families and businesses during a national recession. The Empire Zones cost taxpayers approximately $500 million every year, with questionable job-creation results. Conversely, New Jersey spent $7 million in taxes and generated 10,586 new private-sector jobs. The BEIP’s business-friendly grants rise in proportion to the income-tax liability New Jersey companies pay, creating an incentive for blue-chip firms to relocate and effectively rebating 80 percent of the net income taxes these companies generate over a 10-year period.

New York’s Empire Zones focus on geographic areas rather than on high-growth job sectors that would attract the best and brightest to our state. A better path to growth would mean reforming our economic development agencies to attract businesses with products and services in demand nationally instead of promoting regional competition that drives down employer quality. This year the nonpartisan Tax Foundation ranked New York’s business climate in 49^th place. That means every other state with the exception of Hawaii, an island 2,500 miles away from the continental U.S., is more welcoming of new and existing businesses than ours. The Empire Zones program is set to expire in 2010. Those of us concerned about maintaining economic growth in New York should look carefully at reform rather than let the program merely sunset. If my colleagues and I in the state Assembly can take New Jersey’s Business Employee Incentive Program as inspiration, we will have succeeded in getting the Empire State back to work, and on the path to long-term economic dynamism.

Why the Grass is Greener for Biz in the Garden State

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