The New York Post published this op-ed on October 15, 2009
The Depository Trust and Clearing Corp. yesterday announced its decision to move 1,600 jobs from Lower Manhattan to New Jersey. The news is disappointing but not surprising: DTCC is moving because New Jersey has a stronger economic-development program than New York.
DTCC is just the latest in a string of firms lured across the Hudson by state incentives. Since the '80s, major New York employers have moved tens of thousands of jobs to places like Jersey City, Tampa and Stamford.
To prevent future employer move-outs and attract business investment to revitalize our economy, New York needs some new tools to compete with other states and countries that are aggressively trying to poach our jobs. The state fiscal crisis leaves us with little public money for economic development, so we need to be creative and make some hard choices, starting with a decision to hold the lid on state spending and taxes.
What's New Jersey's secret? Its Business Employee Incentive Program targets high-paying jobs, in effect rebating to employers 80 percent of the income taxes they generate from new-job creation over a 10-year period.
And the grant's size rises in tandem with the income tax a company pays. That gives firms a powerful incentive to locate as many high-paying jobs in a BEIP-eligible location as possible.
Critics call BEIP overly generous. But the numbers indicate otherwise: In 2006 the program generated $68 million in tax revenue, created 10,586 jobs and cost the state just under $7 million in foregone taxes.
Connecticut has an equally attractive incentive that has lured companies from New York. It offers a deep research-and-development tax credit that grows in proportion to the number of high-paying research jobs a company creates in the state.
With its great universities and research institutions, New York is a center of scientific discovery; several regions -- including New York City -- are building significant industry clusters around these assets. But we can encourage this activity with a refundable tax credit that will insure that we both grow and diversify our economy with private as well as public investment.
Since 1986, New York state's chief economic-development program has been Empire Zones -- which is targeted at geographic areas rather than growth-sector industries. It costs the state over $500 million a year, with little impact in terms of job creation or economic growth.
The good news is that Gov. Paterson and the Empire State Development Corp. are working with business and development groups statewide to create a replacement program to be enacted in the coming legislative session, when Empire Zones are set to expire. The bad news is that the recession is putting pressure on employers to save money however they can -- accelerating their search for lower-cost locations.
New York needs to act quickly to bring down costs and create stronger incentives for economic development.