Subsidies in spotlight following Amazon pause
Watchdogs say at least $10B in current state budget
ALBANY — The news of Amazon’s pause on construction and hiring for its Virginia offices offered an opportunity for New York state Senate Democratic Majority Leader Michael Gianaris to deliver a form of “I told you so.”
“Maybe a multi-billion dollar subsidy for the biggest corporation in the world to build an office was a really bad idea after all,” Gianaris, D - Queens, said in a tweet Friday following news that Amazon would temporarily halt its construction of its “HQ2” in the suburbs of Washington, D.C.
Gianaris’ remarks, a month before the state budget is due, elicited a sharp range of responses, and not just along typical party lines.
Elizabeth Marcello, senior research analyst at the good-government group Reinvent Albany, posed a question: “So then why does he approve of propping up the film/ TV industry with taxpayer dollars?”
A day earlier, Marcello and other good government and fiscal watchdog groups, rallied for state lawmakers to reject what they estimate is at least $10 billion in corporate subsidies tucked into the $227 billion spending plan that Gov. Kathy Hochul has pitched to the Legislature.
“I often get asked what corruption looks like and I think it looks like spending $10 billion a year on discredited corporate giveaways,” Marcello told reporters at the Capitol on Thursday.
The governor’s proposal is an expansion of the film tax credit program, which Hochul is pegging at roughly $7 billion, in addition to subsidies to subsidies for horse racing, theaters and startups.
Good government groups and fiscal watchdogs say state lawmakers should refuse to agree to $10 billion in corporate subsidies, which often are in the context of tax credits or bonding opportunities, and in turn, invest the state’s money in child care, health care, education, environment and infrastructure.
The pitch offers similarities to what Gianaris argued four years ago when balking at an Amazon headquarters to be built in his district, which was projected to create up to 40,000 high-paying jobs.
“The deal as presented is so historically bad it can’t form the basis of a reasonable negotiation, and the typical horse-trading that occurs to obtain community approval is not going to work here,” Gianaris told Bloomberg in 2019.
On Fox’s “Good Day New York” he said: “Let’s acknowledge that we should start over and see if we could do it right.” And, according to The Associated Press, he described the offer as “offensive” to residents and taxpayers who are coping with the condition of the city’s subways, schools and housing. He was concerned about the potential displacement of the people who reside in Queens.
Amazon said its delay in Virginia does not mean it’s giving up on building its East Coast headquarters. The company had hired about 8,000 employees.
If Amazon had opened in New York, and hired 8,000 employees through last year, it likely would have been slated for at least $120 million in grant money and $69 million in tax breaks, based on a disclosed memorandum of the deal in 2019. The jobs would have had to have been valued at a minimum of $150,000 per full-time employee to be eligible for meeting required hiring goals to receive the tax breaks.
The nearly $200 million in subsidies for Amazon would have accounted for a small portion of the more than $2 billion in state tax breaks and roughly $3 billion in overall incentives that was offered.
“It’s just a shame that the politics stopped the project over jobs that would’ve helped further diversify New York’s economy,” Rich Azzopardi, spokesman for former Gov. Andrew M. Cuomo, told the Times Union on Friday.
Cuomo had heavily pushed for the Amazon headquarters, but ran up against Senate Democrats who had taken over with a supermajority, after years of either being in the political minority or holding a narrow majority.
“It is unfortunate that the governor is trying to divide the Democratic Party at this crucial and historic time,” Senate Democrats’ spokesman Mike Murphy said at the time. “The Senate Democratic Majority Conference and our partners in the Assembly finally returned New York as the progressive beacon to the rest of the country.”
The narrative, in some ways, played out in a similar fashion this year for Senate Democrats against the governor.
With their supermajority, Senate Democrats would go on to block Hochl’s nominee for chief judge, the first-ever rejection of a nominee to the Court of Appeals since New Yorkers agreed to the judicial appointment system in 1977. Gianaris and organized labor leaders were among the most outspoken voices on the issue. In an op-ed in City & State, Gianaris described it as “not our first break with the old way of doing business” and a “new style of governance” to “champion the best interests of those outside the political apparatus.”
Senate Democrats, despite some vocal opposition, were unable to block Hochul’s $1 billion subsidy for a new stadium for the NFL’S Buffalo Bills, which she wedged into the state budget last year in a last-minute move.
And with little opposition or notice, state lawmakers agreed to up to $10 billion in tax credits over 20 years for
It’s just a shame that the politics stopped the project over jobs that would’ve helped further diversify New York’s economy.”
— Rich Azzopardi, spokesman for former Gov. Andrew M. Cuomo
the growth of new “green” semiconductor manufacturing projects. Watchdogs described it as the largest-ever subsidy in state history. Hochul defended it as necessary to entice companies in the industry and a companion tax break to ones drafted up in Washington by U.S. Senate Majority Leader Charles E. Schumer.
It would ultimately lead to Micron deciding to bring its business to the Syracuse area, which could deliver 50,000 jobs, although only 9,000 are projected for those who would actually be working in the chip-fab plant. Reinvent Albany recently criticized the deal, which the state estimates will deliver $100 billion to the economy, as negative to the environment and likely in conflict with New York’s climate goals.
Marcello, with Reinvent Albany, describes corporate subsidies as “pay-to-play” corruption, backed by economic ideas that are “simply dumb” and disproved on whether the tax breaks yield what they’re marketed to return. State officials say otherwise.
Democrats in favor of the subsidies have argued they are necessary to entice businesses, from semiconductor manufacturers to movie sets, to come to New York. When Hochul was defending the need for the $1 billion subsidy for the Bills, for her hometown team and in an election year, she said the team was ready to leave New York for another state, which would be a blow to western New York.