It was recently announced that Amazon’s highly anticipated HQ2 was to be split between Virginia and Long Island City (an area right outside of NYC) and I have had mixed emotions on the subject.
What is New York PAYING to get One-Half of Amazon’s Second Headquarters?
I am going to take the cliff notes from CNN since the actual NYC-Amazon offer is 32 pages,
The incentives offered for Amazon’s Long Island City campus total $1.5 billion if the company hires 25,000 people, and up to $1.7 billion if it hires 40,000 people, which mostly reflects a $48,000-per-job tax credit for every position as long as the average salary is at least $150,000.
There’s another cash grant of $325 million based on the company occupying a certain amount of office space.
Amazon said it would separately apply for another tax incentive offered to all companies that add jobs in New York’s outer boroughs, which is worth $3,000 per employee over 10 years, as well as a property tax abatement for commercial construction.
The agreement also pledges assistance in securing a helipad, with flights limited to 120 per year and limited to company executives.
Amazon pledged to create space for a tech startup incubator, artist studios, and public open space. The agreement also includes requirements for participation by minority and women-owned businesses in the construction process.
The state, the city, and Amazon pledged to kick in $5 million each for workforce development initiatives, such as technology training programs targeted at local public housing residents and high school students — which, of course, also furthers Amazon’s goal of staffing up in a tight labor market.
No ifs, ends or buts about it, that is a shit ton of money, and where is that money coming from? It certainly is not coming from New York’s surplus reserves! New York is ranked 41st in fiscal condition according to Mercatus Center,
On the basis of its solvency in five separate categories, New York ranks 41st among the US states for fiscal health. New York has between 0.71 and 1.52 times the cash needed to cover short-term obligations, well below the US average. Revenues match expenses, with an improving net position of $16 per capita. In the long run, New York’s negative net asset ratio of 0.24 points to the use of debt and unfunded obligations. Long-term liabilities are 58 percent of total assets, lower than the national average. In per capita terms, long-term liabilities are larger than the national average at $4,605. Total unfunded pension liabilities that are guaranteed to be paid are $422.44 billion, or 35 percent of state personal income. OPEB are $88.50 billion, or 7 percent of state personal income.
My Problem isn’t with Amazon, or New York – it is with the Whole System!
I refuse to fault Amazon. They put willing municipalities up against each other and they almost all tripped over themselves to give money to a company with $178,000,000 in revenue in 2017. For point of reference that is more than 45 States’ income tax receipts for 2016…and I am not sure of the referenced link’s methodology but I am pretty sure that doesn’t count the other direct taxes we are all hit with or indirect taxes we are hit with (tolls). Yet, if someone or something wants to pay for your services, office or just pure presence then more power to you!
I am also having a real tough time blaming the State of New York. The thought of getting that many high paying jobs, is just too damn inviting! All that income tax revenue has got to pay for itself, right? If not that then all those people, buying food, clothing and shelter, right? If not that then all those awesome tolls, right? Etc.
Really, I think my problem (with no solution) is that this is even a “thing.” Municipalities (whether it is at the State, City, County or Town level) bribing businesses to move or start there. I get having a friendly business climate, but this is something different, something dirtier. It isn’t like the programs that Amazon was offered, were offered to other companies – they were simply come here and I’ll give you this.
Do I think any of it will change? Nope. Just something about it all doesn’t feel right.