As was addressed over the past few weeks in this column, it is apparent that most Industrial Development Agencies throughout New York - and similarly devised entities throughout the United States – have serious flaws. Despite all the good that IDAs do, such as initiation of growth in the private sector, they offer a smorgasbord of problems. These problems include, but are not limited to, job theft (employment moving between regions), a security blanket effect for politicians (they cover-up a region’s political-economic ills), empowerment of capitalism’s dark side (broken promises by new/growing firms) and, worse of all, undertaxation (taking the act of tax abating to huge levels).

In the bigger picture of constitutionality the federal government could save the day and squash IDAs and other economic development functions throughout the nation. When our government was created one of its four sole responsibilities consisted of the regulation of interstate trade. Therefore, the federal government could suspend all such functions based upon inequality of trade whereby one state steals from another by creating unfair advantages. Though realistic in intent, it is unrealistic in application. The federal government has become so much larger than intended that interstate trade is the least of its worries and is no longer an item of focus. And, were such legislation to even be addressed by the congressional mainstream, a great many of the politicians would lose a lot of "friends" back home.

Looking at this from another point of view, one cannot suspend IDAs because under certain circumstances they may be a necessary evil. Most states don’t have localized IDAs and lean heavily on their state economic development agencies in regards to tax giveaways. New York is not like them and far and away leads all other states with 115 IDAs. Each one in and of itself may be necessary to keep money flowing and people working in this state, because, right off the bat, businesses that compete across state and national borders suffer a 2% to 4% revenue loss (depending on industry) by operating in over-taxed, over-regulated NY. So, theoretically, tax abatements here may be a means to equalize the playing field for firms whose primary sales/services are not encapsulated by NY’s borders.

All this being said, we can’t eliminate IDAs, but we can make them better. When one looks at the issue in earnest, the root cause of all IDA ills is a lack of accountability. Although IDAs are directly involved in the political spectrum by deciding who pays what taxes and who doesn’t, they are not directly accountable to the politicos and, ultimately, the citizens. But, this disconnect can be changed and easily so. All it takes is a little bit of solid legislation.

Various bills have been floating around in Albany in recent years calling for the reform and betterment of IDAs. Among them was a robust 2006 bill introduced by Senator George Maziarz and others. The bill was a behemoth by Albany’s standards, many pages in length, because it essentially replaced or reinforced key components of the existing IDA law. The bill started right at the nuts and bolts, demanding that IDAs conduct and release very thorough reports that would detail the impact of every desired abatement or subsidy on the community. From there, the bill would have empowered the community at large by giving local taxing jurisdictions veto power over proposed tax breaks. It also called for "clawbacks", which are tax/assistance repayments from businesses that fail to live up to their promises. In all of the above, the taxpayers – citizens and other businesses alike – were given well-deserved preference over the single business looking for a break.

Unfortunately, this bill was not given the time of day by the majority of the legislature in the last session. Maziarz and his peers are reintroducing it in 2007 and this year, with IDAs suddenly the topic du jour, it may receive the analysis and support it deserves.

In closing to this series, the discussion about IDAs should not end here. Even with a month of my analysis coupled with many months of analysis by people from all walks of life in regards to the current IDA controversy in Niagara County there are no definitive answers to any countless number of questions.

Are IDAs good? Are IDAs bad? Do they promote growth? Do they inhibit growth? The answer to all of those questions is "yes". Under such a strange circumstance, one cannot help but be mystified by IDAs and how they affect every one of us.