‘Start-Up New York’ ads are shameless self-promotion – By George J. Marlin

The following appears in the June 12-18, 2015 issue of the Long Island Business News:

When Gov. Mario Cuomo resided in the governor’s mansion (1983-1994) he was criticized by good government groups for shamelessly spending millions on advertising promoting New York and himself. These groups rightfully complained that the ad campaign did little to create jobs and was merely a way for the governor to hype himself without dipping into his campaign treasure chest.

Gov. George Pataki, in his successful 1994 campaign against Cuomo, condemned that media practice and solemnly pledged he would never permit such wasteful spending. However, like so many of his campaign promises, it was soon violated.

Pataki spent tens of millions of dollars appearing on “I Love New York” commercials. An audit by the state comptroller’s office, released in January 2002, confirmed that in 2001 alone the administration expended $55 million to boost Pataki.

Not to be outdone, Gov. Andrew Cuomo, during his first term in office, OK’d a record-breaking $211 million advertising contract to promote economic development and tourism.

The Empire State Development Corp. – an agency under the thumb of the governor – hired BBDO USA for $50 million in December 2011. The contract was amended four times for a total of $211 million, with $36.5 million spent on storm recovery assistance in reaction to Hurricane Sandy. ESDC had the discretion to spend the remaining $175 million to advertise Start-Up New York, tourism, Taste New York and Masterbrand. The largest chunk of money was expended during a gubernatorial election cycle. No doubt: a coincidence.

An audit of the program released by state Comptroller Tom DiNapoli in May reveals that the $211 million spent on the ad campaign was a waste of taxpayer dollars because it had no tangible results.

“When government spends hundreds of millions of taxpayer dollars to send a message that New York is a place to visit and open for business, it should have clear objectives and show the public actual results,” DiNapoli said. “ESDC’s attempts to measure the results of this advertising campaign were weak at best, leaving real questions about whether the results justify the cost.”

It’s been known for some months that Start-Up New York, a tax-free incentive program for business ventures affiliated with state college campuses that commenced in October 2013, had only generated 78 jobs by the end of 2014. However, the DiNapoli report does give the public more data on the project – most of it distressing.

Between October 2013 and October 2014, ESDC received 18,203 applications to join the very limited tax-free Start-Up New York program, but only 10 percent were eligible and, out of that pool, only 41 actually enrolled. Although those businesses hope to create 1,750 jobs in the next five years, people should not start rushing to fill out job applications. Similar state programs in the past (for example, tax-free Empire Enterprise Zones) have never come close to achieving employment projections.

While ESDC boasted its marketing efforts were a success, it was unable to provide any analysis to prove its claims. Worse yet, the organization could not explain why it spent more money on advertising Start-Up New York “even as applications fell from a peak of 5,300 in January 2014 to about 500 in June 2014.”

Targeted tax-free incentive programs generally fail – and it appears this latest version will not be an exception. Big Brother-type government bureaucrats should be the last persons to dictate where entrepreneurs should locate and risk their investment dollars. Instead of squandering $211 million on ads, a statewide tax break for struggling small businesses of that amount would have had a greater impact.

Genuine incentives – tax cuts and regulatory reforms – create lasting middle-class jobs. That’s the model employed in Texas and explains why it is rated the No. 1 state for best business environment.

Cuomo’s small-ball incentives explain why New York places 49th.

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