The following appears in the June 26-July 2, 2015 issue of the Long Island Business News:

Back in 1969, the governor and state legislature approved the Industrial Development Agency Act that permits local municipalities to create agencies that “promote, develop, encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishing industrial, manufacturing, warehousing, commercial, research and recreation facilities….”

These agencies were also empowered to issue bonded debt and to buy, own and dispose of real property and to offer financial assistance to attract, retain and expand businesses.

Today in New York there are 178 state-authorized IDAs. The total value of the 4,709 projects on IDA books is $76.8 billion.

Typically, a business applies to an IDA to support its plans to construct, expand or renovate its facility. If the plan is approved, the IDA generally receives title of the real property of the project and it becomes exempt from property taxes. (Project operators generally pay to the local municipalities PILOTS – payments in lieu of taxes – that are much lower than similar properties on the tax rolls.)

The state comptroller’s office reports that in 2013, statewide IDA-granted tax exemptions totaled $1.38 billion. That figure, according to the comptroller, “represents the estimated value of taxes that would otherwise have been collected on the properties had they not been IDA projects.” With total PILOT payments on these new projects coming in at $723 million, the net tax exemption cost the municipalities $660 million in revenues. In other words, 52.3 percent of the tax revenues were recovered.

I was not surprised to learn that in our region, Nassau County had the highest exemptions, the lowest PILOT payments and the worst projected job creation on its new IDA projects in 2013.

What does it mean? It means that Nassau’s IDA is giving away the store. It means that struggling businesses without sweetheart IDA exemptions must pay more in taxes. And it means that the politically connected get tax breaks that are not only unfair but may violate the intent of the state IDA statute.

Here are a couple of examples of dubious Nassau IDA projects that have been reported in newspapers during the past year: In August 2014, a physical fitness gym received a 20-year property tax reduction and a $2 million sales tax exemption from the Nassau County IDA even though the law specifically forbids the granting of such exemptions to retail businesses. The IDA skirted the law by concluding the gym would attract tourists from outside the county because tourist destinations can receive exemptions. The IDA used that excuse in granting tax relief to an automobile dealership in Lynbrook, claiming buyers would travel from New York City. And in April, it was reported that the IDA gave tax breaks to a Valley Stream car dealership utilizing the tourist destination exemptions “because 50 percent of its business comes from Queens.”

This kind of abuse is outrageous and should be investigated by the Nassau district attorney or the state attorney general. Here are a few questions government investigators should ask:

Do the clients of politically connected lawyers or lobbyists get special treatment from the IDA?

Are any outside professionals retained by the IDA for advice (its general counsel, for example) incentivized to get deals done regardless of the merits because they get a percentage of approved projects that close?

For decades, the agendas of Nassau’s special interests – lobbyists, consultants, lawyers, political hacks – have come before the best interests of the general public. This helps explain why Nassau County is broke and its citizenry overtaxed. But don’t expect any genuine reforms until after there are indictments or Nassau becomes insolvent.

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.

This article I wrote appeared in the New York Post on June 13, 2015.