NY Job Creation Program Falls far Short of Expectations, Audit Finds

The Empire State Development Corp., which provides millions of dollars in tax credits to companies that promise to expand and add jobs, has been unable to verify that many companies met their obligations, auditors reported Thursday. 

Auditors with the state comptroller's office found that the corporation lowered job creation goals after companies failed to meet expectations and that it didn't verify if jobs were full time or part time. 

Auditors examined 25 companies, concluding the agency could not produce evidence that several created promised positions and didn't simply shift jobs under the Excelsior Jobs Program. As of June 2015, those 25 companies were authorized to receive 39 tax credits totaling $4.84 million. 

"ESD needs to stop lowering the bar and giving companies a pass when they fall short of promises," Comptroller Thomas DiNapoli said. "ESD needs to ensure these businesses are not taking advantage of state taxpayers." 

Agency spokesman Jason Conwall said Thursday that auditors didn't find a single instance where incentives were improperly provided and that they apparently ignored the program's success, so far admitting 434 businesses that have committed to creating more than 44,445 new jobs, retaining nearly 158,000 existing jobs and investing $4.2 billion. 

"Any truly objective review would show this program is cost-effective, performance-based, and incentivizes business growth by only providing tax credits to those that have achieved their job commitments and investments," Conwall said. 

In an earlier written response to a report draft, compliance director Benson Martin said the findings were factually incorrect. Companies are required to detail employment and investment information, including when individuals were hired and hours worked, with the employment information checked against their quarterly tax-withholding reports, he wrote. 

According to auditors, those tax forms were present for very few of the 25 companies. In one case, Empire State Development used a higher wage amount than was actually paid, according to the tax forms, resulting in $187,062 in excess tax credits authorized to the company for 2012. 

They cited agency reports showing 1,152 businesses applied to participate in the program from September 2010 through March 2015. The state accepted 328 and committed more than $548 million in tax credits in return for job and investment commitments. 

An Associated Press analysis last year showed New York companies had reported adding more than 6,400 employees over four years, a fraction of the nearly 37,000 promised over the next decade. Critics questioned whether it was ongoing corporate welfare but said the relatively slow start since its inception in 2010 marked an improvement over a previous state jobs program that gave corporate tax credits up front. 

In April, the program was extended for two years, through 2026, in the state budget adopted by lawmakers. Democratic Gov. Andrew Cuomo's administration originally proposed a five-year extension.