New York state lawmakers have sliced in half the new jobs businesses must create to qualify for the state's Excelsior Jobs tax incentives.
The changes to the Excelsior tax credits were lost in the frantic finish of the Legislature's annual session. The cramming ended in the early hours of Saturday morning.
Now, manufacturers need to create 10 new jobs to qualify for potential Excelsior Jobs benefits - not 25 jobs, as they had before. A distribution site needs to create 75 jobs, not 150 as before. A financial services data center needs 50 jobs, not 100. A software developer needs to add five jobs, not 10.
The new standards are an answer to complaints among local economic developers that the Excelsior incentives were too paltry, and too exclusive, to sway business decisions.
It is also an effort to throw a bone to companies already in New York state, which aren't the primary beneficiaries of Gov. Andrew Cuomo's new initiative that waives a decade of taxes for select companies.
"This will open the program to smaller businesses, which is especially relevant upstate. Most manufacturers don't have 25 jobs. This allows more companies the opportunity to at least ask the state (for help)," says Ken Pokalsky, top lobbyist at The Business Council of New York State Inc.
The state is not putting any more money into the Excelsior tax credits. But the changes do mean the state will roll over some unused tax credits into the next year. Up until now, they were just discarded.
"The first year, they used $1 million of the $50 million cap. That other capacity was gone for good," Pokalsky said.
The state created Excelsior in 2010, signaling a new era of scaled-back incentives at a time of record budget deficits.
Excelsior succeeded Empire Zones, which critics blasted as corporate welfare. Empire Zones were undoubtedly far more generous, giving $550 million or more every year to as many as 9,000 businesses in every sector.
At its peak in 2015, the Excelsior program will pay out less than half that, a total of $250 million.
Many companies have not yet tested the Excelsior program. Instead, they are clinging to the last years of their Empire Zone benefits, which begin expiring in 2014.