In the traditional sense, poaching has existed for millennia, particularly after exclusive land ownership became a thing. In the European Middle Ages, peasants accused of poaching were liable to hanging, castration, blinding, or being sewn into a deerskin and hunted down by ferocious dogs. So what happens when poachers are not peasants? Not much. In the United States, governments run a race to the bottom using a never-ending treadmill of subsidies, abatements, and above all, cash from the taxpayers. State and local development officials brazenly cook the books to get breaks for their preferred jurisdictions (New Jersey for example).
A New York State of Mind
In New York State, poaching businesses or projects cross-region (or even county to county) appears counterintuitive and unethical. This state of affairs is encouraged by firms playing towns against one another. The arena for these shenanigans is the Industrial Development Agencies (IDA’s) that pepper the state like so much buckshot.
Also working on the same turf are the local development commissions (LDCs). Unlike IDAs, LDCs are creations of any county, city, town, or village without special enabling legislation. Any legally incorporated municipality can launch an LDC for a variety of reasons. Also, they can float bonds without voter approval. But, “entities are used to avoid constitutional or statutory provisions that would apply to projects undertaken directly by a local government.”
What could go wrong (In the Bullseye for YOU, Orange County!)?
LDCs are a story for another time. The shrouded practices of the IDAs & the LDCs are enshrined or ignored in the law. Yet, their growth in New York has been explosive.
One quirk of the law, however, has had a signal malign impact. Nothing prevents an IDA from providing grants or tax subsidies to an in-state business. Worse, the IDAs have lured companies from another IDA. All of which defeats the purpose of economic growth. It’s child’s play for a company lawyer to manage the sleight of hand required to leap from subsidy to subsidy. Things are bad enough in New York, what with Rick Perry and other cowboys trying to poach companies across state borders.
The Road to Damascus Moment
In 2019, a brave Hudson Valley State Senator, James Skoufis, decided to peek under the IDA hood to investigate the – get this – 583 public authorities.
The Investigation uncovered a lot: in 2018, public authorities collectively spent approximately $54.2 billion in operating expenses and held a total of $282.1 billion in outstanding debt.
The Senator and his colleagues gasped a collective “Yikes!” and got to work. Happily, they introduced a raft of legislation – some now law, some still in process.
Here’s the Bill, and it’s a rare and beautiful bird for New York state. Sometimes, the Red Pen can wreak wonders. When it becomes law, a blow for hard work and enterprise will land.