As we’ve so painfully discovered over the past few months, industrial development agencies do much more harm than good. It was "our" IDA that took the act of taxation without representation to the extreme and gave one corporate entity - AES’s Somerset facility – unprecedented preferential treatment that included a behemoth Payment In Lieu Of Taxes (PILOT) granted without the standard obligations of required job growth and investment. This odd deal that was purposely and deviously devised in contrary to the norm was also ironed-out in near-secrecy and its end results will be detrimental to all of Niagara County’s taxpayers…citizens and corporations alike.

As was made so readily apparent here, IDAs tend to abuse their power to offer tax cuts. Realize, though, that the problem is so much deeper than the symptoms allude to. In the bigger picture of all things governed this power is improperly granted in the first place: It truly is taxation without representation. A board of individuals is appointed (typically upon cronyism) by elected officials who then sever their ability to regulate taxation by granting to this board the ability to say who receives tax cuts and how big these tax cuts should be. The powers afforded by the legal structure of IDAs gives them an ability to do as they see fit with absolutely no accountability to the governments who empowered them or to all of the taxpayers affected by their decisions. When all is said and done, it’s these unfortunate taxpayers who then have to shoulder an unwelcome and unfair burden when properties come off the tax rolls because the IDAs allow it.

This ability to (un)tax at will is just one example of what’s wrong with IDAs. Their problems are many and far reaching. Two of the biggest flaws of IDAs are their negative impact on tax bases due to job flows and their ability to mask what’s wrong with local and state governments.

It has been a normal occurrence over the past couple of decades to watch companies and jobs flow from one state to another. They move from depressed places like New York to areas that they consider Lands of Promise, such as "business-friendly" states like South Carolina or Texas. In the past, most companies typically never would have made such moves, but they do so quite often now thanks to the pervasiveness of IDA’s and economic development agencies. These IDA’s are now anywhere and everywhere as each locality, even towns themselves, seem to have one. With a cornucopia of taxpayer-funded giveaways (which can fund a move) and less-taxed or tax-free properties available at their disposal, the IDAs bait the profit-hungry companies into their lands. Therefore, any "victories" claimed by an IDA are errant boasts, for they typically cause a huge loss in taxes and jobs someplace else, maybe some state far away, or maybe even in the neighboring municipality. Somebody someplace is getting hurt by an IDA.

These competitive packages offered by IDAs also do a favor for the governments who empowered them. The packages end up being band-aids, having the subliminal ability to mask what’s wrong with government (namely high taxes) and eliminate political accountability.

New York’s economic development circles perfectly exemplify this effect. We are the highest taxed state in the nation yet still have decent amounts of new development in certain locales because IDA packages take away – at least for that company - the competitive disadvantage that New York has. If IDA packages were not offered, New York’s tragic business environment would be made apparent and development would not occur here. This psychological tool shows why IDA’s tend to remain so popular with many politicians: it offers them a crutch that can save face and allow them to continue with their lack of fiscal prudence and high spending habits.

In the end, it’s easy to see that IDAs are more of a drain on an economy than they are economic saviors. This truth is best exemplified locally by the AES giveaway, which in the whole scheme of things represents only the tip of the dirty IDA iceberg. Sadly, it’s this sort of iceberg that may one day sink the veritable Titanic known as the US economy.