Segments of our society have a hunger for entitlements. They feel they are owed something from the government in the form of financial security. These individuals are the bad seeds of government subsidization for they make a life out of living off the taxpayers and staying on the welfare rolls. They cannot comprehend the fact that our nation was never devised in such a fashion and that any obligations really should go both ways. Fortunately, they do not represent the norm, for there are a lot of good, hard-working people who receive public benefits like welfare and food stamps yet do their darnedest to bring home an income and create a better tomorrow.

The business sector is no different in regards to such opposing mindsets. There are countless businesses that have over the years accepted some sort of corporate welfare such as tax breaks or PILOTs. Many of those businesses, like mine, understand the two-way street of obligations and have followed through with the news jobs and capital investment that had been promised in effort to get those breaks. A year and a half ago my company received a PILOT for a distribution center, promising 3 new jobs at that site. There are now 9 employees there who are connected to the creation of another 18 jobs around the corner at our non-PILOT manufacturing center. By creating 27 jobs in Niagara County we held up our end of the bargain and then some.

But, alas, businesses like mine are the minority. Most businesses that apply for tax abatements are exactly like the lifelong social welfare recipients so despised by society. They continue to receive corporate welfare but never come close to the expectations that they were supposed to achieve.

A 2006 study conducted by the State Comptroller showed this problem in dramatic fashion. Random sampling of nearly 100 projects from a half-dozen IDAs found that only a third of the projects met or exceeded job creation goals while the vast majority of the projects – 64 businesses – failed to achieve promised job growth and/or saw their employment drop.

Extrapolate those percentages to all active IDA projects across the state and the situation gets incredibly scary. The 100 projects sampled represented one-eighth of all active projects for the 6 selected IDAs. One can statistically transform those 64 broken promises to 512 of them based upon that number of active projects. Mind-numbing, yes, but, still, that’s 512 bad deals amongst only 6 IDAs. New York State consists of 115 IDAs in total. Therefore, one can theoretically assume there are 9,800 illegitimate IDA projects across NY. This is disturbing. How many more tax dollars do citizens have to pay because there are almost 10,000 businesses that break their promises?

Unfortunately, there is nothing that we can do as taxpayers. The evil acts of these businesses can only be prevented by the IDAs who empowered them. But, to do so, there needs to be a major shift in the culture of IDAs. The numbers prove that most if not all IDAs are milksops by nature. One can’t help but wonder in frustration why the IDAs would let these businesses walk all over them and every taxpayer. Every PILOT is created like a contract, clearly listing in black and white what the business must do to win and maintain the tax savings. Yet, despite the clarity of obligations, the savings are maintained even with a lack of jobs and investment.

The only way to initiate this culture change and make IDAs – and ultimately businesses – more accountable is heavy-handed governance from Albany. New York State can demand that every IDA initiate what is called a "clawback." Basically, there are two forms of clawbacks and both are very effective tools. Clawbacks can come about as a money grab: If a business fails to live up to its job creation objectives the IDA captures from that business the lost taxes and returns this lost revenue to the host municipalities. In the other form of clawback a broken promise yields a broken contract and the business no longer receives its corporate welfare.

Accountability is not rocket science, but it seems to be to IDAs and the businesses that abuse them. In a perfect world, these businesses should be fully-burdened taxpaying entities because they failed to play by the rules. But, instead their evils remain intact. Unless IDAs start playing hardball these businesses will continue to abuse the towns, cities, and taxpayers that helped them, never returning the wonderful favors bestowed upon them.