What's happening
This bill requires corporations and public authorities receiving state economic development assistance to meet job and wage goals, disclose detailed outcomes, and repay benefits if requirements are not met.
Why it matters
Increases transparency and public oversight. By requiring a unified economic development budget and detailed annual reporting, the bill makes it easier for the public, lawmakers, and watchdog groups to see exactly how much tax revenue is being forgone and which entities are receiving incentives, making the system less opaque.
Links tax incentives to concrete job outcomes. The legislation mandates that businesses and public authorities set specific job creation, retention, and wage goals as conditions for receiving state economic development aid. If these goals are not met, the incentives can be suspended or clawed back, which could make these programs more effective and accountable.
Creates enforceable penalties and recapture mechanisms. The bill stipulates that if recipients fail to fulfill their obligations (such as not creating/retaining promised jobs), they must repay the value of the benefits or have their credits suspended. This reduces the risk of public resources being wasted on projects that don’t deliver promised economic benefits.
Standardizes application and reporting processes. By requiring detailed, standardized applications and progress reports—including wage, job classification, and employment impact data—the bill streamlines oversight across different agencies and programs, and helps prevent abuses or misrepresentation in the economic development process.
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Who cares
Headline styles
Hold Corporations Accountable for Taxes
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Print number 3364a
- Amend and recommit to corporations, authorities and commissions
- Referred to corporations, authorities and commissions
- Referred to corporations, authorities and commissions
Full text
12 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3364--A
2017-2018 Regular Sessions
IN SENATE
January 23, 2017
Introduced by Sens. KRUEGER, BAILEY, PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Corporations, Authorities and Commissions -- recommitted to the Committee on Corporations, Authorities and Commissions in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the business corporation law and the public authorities law, in relation to enacting the "corporate accountability for tax expenditures act"
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Short title. This act shall be known and may be cited as the "corporate accountability for tax expenditures act".
§ 2. The business corporation law is amended by adding a new article 14 to read as follows:
ARTICLE 14
CORPORATE ACCOUNTABILITY FOR TAX EXPENDITURES Section 1401. Definitions.
1402. Unified economic development budget.
1403. Standardized applications for state development assist-
ance.
1404. State development assistance disclosure.
1405. Recapture. § 1401. Definitions.
As used in this article:
(a) "Base years" means the first two complete calendar years following the effective date of a recipient receiving development assistance.
(b) "Date of assistance" means the commencement date of the assistance agreement, which date triggers the period during which the recipient is obligated to create or retain jobs and continue operations at the specific project site.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05985-02-8
S. 3364--A 2
(c) "Default" means that a recipient has not achieved its job creation, job retention, or wage or benefit goals, as applicable, during the prescribed period therefor.
(d) "Department" means, unless otherwise noted, the department of taxation and finance or any successor agency.
(e) "Development assistance" means (1) tax credits and tax exemptions (other than given under tax increment financing) given as an incentive to a recipient business organization pursuant to an initial certification or an initial designation made by the department under article eighteen-A or eighteen-B of the general municipal law;
(2) all successor and subsequent programs and tax credits designed to promote large business relocations and expansions. "Development assistance" does not include tax increment financing, assistance provided by industrial development agencies under article eighteen-A or eighteen-B of the general municipal law pursuant to local ordinance, participation loans, or financial transactions through statutorily authorized financial intermediaries in support of small business loans and investments or given in connection with the development of affordable housing.
(f) "Development assistance agreement" means any agreement executed by the state granting body and the recipient setting forth the terms and conditions of development assistance to be provided to the recipient consistent with the final application for development assistance, including but not limited to the date of assistance, submitted to and approved by the state granting body.
(g) "Full-time, permanent job" means a job in which the new employee works for the recipient at a rate of at least thirty-five hours per week.
(h) "New employee" means a full-time, permanent employee who represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years.
The term "new employee" does not include any of the following:
(1) An employee of the recipient who performs a job that was previously performed by another employee in this state, if that job existed in this state for at least six months before hiring the employee.
(2) A child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least five percent in the profits, capital, or value of any member of the recipient.
(i) "Part-time job" means a job in which the new employee works for the recipient at a rate of less than thirty-five hours per week.
(j) "Recipient" means any business that receives economic development assistance. A business is any corporation, limited liability company, partnership, joint venture, association, sole proprietorship, or other legally recognized entity.
(k) "Retained employee" means any employee defined as having a fulltime or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance.
(l) "Specific project site" means that distinct operational unit to which any development assistance is applied.
(m) "State granting body" means the department, any other state department or state agency that provides development assistance that has
S. 3364--A 3
reporting requirements under this article, and any successor agencies to any of the preceding.
(n) "Temporary job" means a job in which the new employee is hired for a specific duration of time or season.
(o) "Value of assistance" means the face value of any form of development assistance. § 1402. Unified economic development budget.
(a) For each state fiscal year ending on or after June thirtieth, two thousand eighteen, the department shall submit an annual unified economic development budget to the governor, senate and assembly. The unified economic development budget shall be due within three months after the end of the fiscal year, and shall present all types of development assistance granted during the prior fiscal year, including:
(1) The aggregate amount of uncollected or diverted state tax revenues resulting from each type of development assistance provided pursuant to law, as reported to the department on tax returns filed during the fiscal year.
(2) All state development assistance.
(b) All data contained in the unified economic development budget presented to the governor, senate and assembly shall be fully subject to the freedom of information act.
(c) The department shall submit a report of the amounts in subparagraph one of paragraph (a) of this section to the department, which may append such report to the unified economic development budget rather than separately reporting such amounts. § 1403. Standardized applications for state development assistance.
(a) All final applications submitted to the department or any other state granting body requesting development assistance shall contain, at a minimum:
(1) An application tracking number that is specific to both the state granting agency and to each application.
(2) The office mailing address, office telephone number, and chief officer of the granting body.
(3) The office mailing address, telephone number, and the name of the chief officer of the applicant or authorized designee for the specific project site for which development assistance is requested.
(4) The applicant's total number of employees at the specific project site on the date that the application is submitted to the state granting body, including the number of full-time, permanent jobs, the number of part-time jobs, and the number of temporary jobs.
(5) The type of development assistance and value of assistance being requested.
(6) The number of jobs to be created and retained or both created and retained by the applicant as a result of the development assistance, including the number of full-time, permanent jobs, the number of parttime jobs, and the number of temporary jobs.
(7) A detailed list of the occupation or job classifications and number of new employees or retained employees to be hired in full-time, permanent jobs, a schedule of anticipated starting dates of the new hires and the anticipated average wage by occupation or job classification and total payroll to be created as a result of the development assistance.
(8) A list of all other forms of development assistance that the applicant is requesting for the specific project site and the name of each state granting body from which that development assistance is being requested.
S. 3364--A 4
(9) A narrative, if necessary, describing why the development assistance is needed and how the applicant's use of the development assistance may reduce employment at any site in New York.
(10) A certification by the chief officer of the applicant or his or her authorized designee that the information contained in the application submitted to the granting body contains no knowing misrepresentation of material facts upon which eligibility for development assistance is based.
(b) Every state granting body either shall complete, or shall require the applicant to complete, an application form that meets the minimum requirements as prescribed in this section each time an applicant applies for development assistance covered by this article.
(c) The department shall have the discretion to modify any standardized application for state development assistance required under paragraph (a) of this section for any grants that are not given as an incentive to a recipient business organization. § 1404. State development assistance disclosure.
(a) Beginning February first, two thousand nineteen and each year thereafter, every state granting body shall submit to the department copies of all development assistance agreements that it approved in the prior calendar year.
(b) For each development assistance agreement for which the date of assistance has occurred in the prior calendar year, each recipient shall submit to the department a progress report that shall include, but not be limited to, the following:
(1) The application tracking number.
(2) The office mailing address, telephone number, and the name of the chief officer of the granting body.
(3) The office mailing address, telephone number, and the name of the chief officer of the applicant or authorized designee for the specific project site for which the development assistance was approved by the state granting body.
(4) The type of development assistance program and value of assistance that was approved by the state granting body.
(5) The applicant's total number of employees at the specific project site on the date that the application was submitted to the state granting body and the applicant's total number of employees at the specific project site on the date of the report, including the number of fulltime, permanent jobs, the number of part-time jobs, and the number of temporary jobs, and a computation of the gain or loss of jobs in each category.
(6) The number of new employees and retained employees the applicant stated in its development assistance agreement, if any, if not, then in its application, would be created by the development assistance broken down by full-time, permanent, part-time, and temporary.
(7) A sworn declaration of whether the recipient is in compliance with the development assistance agreement.
(8) A detailed list of the occupation or job classifications and number of new employees or retained employees to be hired in full-time, permanent jobs, a schedule of anticipated starting dates of the new hires and the actual average wage by occupation or job classification and total payroll to be created as a result of the development assistance.
(9) A narrative, if necessary, describing how the recipient's use of the development assistance during the reporting year has reduced employment at any site in New York.
S. 3364--A 5
(10) A certification by the chief officer of the applicant or his or her authorized designee that the information in the progress report contains no knowing misrepresentation of material facts upon which eligibility for development assistance is based.
(c) The state granting body, or a successor agency, shall have full authority to verify information contained in the recipient's progress report, including the authority to inspect the specific project site and inspect the records of the recipient that are subject to the development assistance agreement.
(d) By June first, two thousand nineteen and by June first of each year thereafter, the department shall compile and publish all data in all of the progress reports in both written and electronic form.
(e) If a recipient of development assistance fails to comply with paragraph (b) of this section, the department shall, within twenty working days after the reporting submittal deadlines set forth in such paragraph (b), suspend within thirty-three working days any current development assistance to such recipient under its control, and shall be prohibited from completing any current or providing any future development assistance until it receives proof that such recipient has come into compliance with the requirements of paragraph (b) of this section.
(f) The department shall have the discretion to modify the information required in the progress report required under paragraph (b) of this section consistent with the disclosure purpose of this section for any grants that are not given as an incentive to a recipient business organization. § 1405. Recapture.
(a) All development assistance agreements shall contain, at a minimum, the following recapture provisions:
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the business corporation law and the public authorities law, in relation to enacting the "corporate account- ability for tax expenditures act"
Purpose
To provide a comprehensive record of all economic development incentives that are entered into between state entities and businesses in order for the Legislature and the Governor to make well informed decisions about tax expenditures.
Summary of provisions
Creates the State Corporate Accountability for Tax Expenditures Act. Provides that State economic assistance provided by any state agency, public authority and/or public benefit corporation, as an incentive to a business organization must be based on the terms of a written incentive agreement between the department and the business organization. Every agreement must identify the specific State economic assistance to be provided to the business organization during the term of the agreement and lists terms the agreement must contain. Provides that State economic assistance incentive agreements must provide that if a business organ- ization either fails to make the requisite level of capital investment in the project or fails to create or retain the specified number of jobs within the specified time frame, as provided under the Act authorizing the State economic assistance, the business organization shall be deemed to no longer qualify for the State economic assistance. Provides that the full content of all written incentive agreements are to be published.
Read the full memo (942 words)
Existing law
None.
Justification
Every year, New York State spends billions of dollars on economic devel- opment incentives and subsidies, mostly for large businesses. These subsidies take many forms: corporate income tax credits, property tax abatements, low-interest loans, empire zone credits, rebates, utility rate reductions, deferrals on taxes that would other wise be paid, incentives to invest in research and development, training grants, land site preparation and infrastructure financing. In return, companies promise economic development, especially the creation of new jobs and/or promise assistance to lower income and or elderly New Yorkers.
There is currently no comprehensive system of standards or oversight for the distribution of economic development subsidies and incentives. Because these subsidies are usually offered through off-budget public authorities (of which there are more than 600 in New York State) or as tax expenditures built in the State budget, but rarely approved as free- standing legislation, decisions about the allocation of economic incen- tives and evaluation of the economic benefits to residents of New York State provided by those incentives are not subject to significant public or legislative scrutiny or review. In fact, it is currently not possible for New York State to accurately calculate the cost effectiveness of these incentives, and once granted, measures initiated the name of economic development are seldom audited nor do they sunset, especially tax breaks.
The state's structural budget problems mean that we must ensure public transparency and ongoing review of expended dollars and lost State revenues. We need to evaluate whether these models are working, what benefits they are providing in comparison to other proposed uses of state funds and the impact of inequities in our tax policies due to the use industry specific tax expenditures. We also need to exercise due diligence through legislative and public oversight to make sure that programs are run efficiently and that the state gets the best return for the public for each state dollar. Dollars spent on economic development incentives and tax breaks should be reviewed with the same degree of scrutiny as dollars spent on all other government programs.
Many of the corporate tax expenditures were enacted for the purpose of encouraging investment and job creation in New York, however, the effi- cacy of the expenditures have yet to be analyzed and measured. By having the Tax Department submit a report on all the State's tax expenditures, credits, deductions, exclusions, exemptions or any other tax benefits to the Senate, Assembly and the Governor, informed decisions can be made based on the efficacy of the existing programs. Absent this legis- lation, there are very real economic costs to the state of New York. All too frequently, the state has provided subsidies, loans and tax breaks to companies that then failed to create jobs as promised. Companies such as Kodak, General Electric, Nine West and Rubbermaid all laid off large numbers of employees after receiving state incentives through, the Empire State Development corporation. Other major companies, such as Merrill Lynch and Bausch and Lomb, have significantly cut their work- force after taking incentives for increasing employment.
These cases are hardly unique - a 1997 study by former state Senator Franz Leichter discovered that companies receiving state economic incen- tives at that time actually had a net loss of 1,765 jobs during the previous year. More recent data indicates similar trends. According to the Empire State Development Corporation, companies receiving incentives for additional job creation suffered a net loss of 3,316 jobs in 2002. New York State simply cannot afford to be giving money, to companies that are not providing real economic benefits to the state.
In addition to real job creation, companies should be expected to have a record of good corporate citizenship if they are going to receive public support. Currently there are no such standards. If subsidies are really going to benefit the people of New York, the businesses that receive them should be required to pay living waves, avoid criminal activity, and work with the communities in which they are located.
Fiscal implications
Increase in cost for additional audit equipment.
Local fiscal implications
Increase in cost for additional audit equipment.
Effective date
This act shall take effect on the one hundred twentieth day after it shall have become a law.
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