Exodus

27 May

While Tom Golisano changes his domicile from New York to Florida in a press-released, “pay attention to me” fit of pique, we should be far more concerned about the case of the Bell family’s escape of New York taxation for the warmer climes and lower taxes of Florida.

Golisano didn’t move Paychex and his other business concerns to Florida, after all. Just himself and his stuff. The Bells, on the other hand, are really picking up everything and getting out of dodge.

It would be easy to just end the whole story there – high taxes, the Bells are leaving town the end.

But there’s more to it than that. A lot more.

It’s no secret that different regions and states compete against each other for business and development. Florida has loads of ways to incentivize a move, and New York has fewer arrows in its business development quiver. Particularly when it comes to small mom & pop operations as compared with, say, Geicos and Yahoos.

So while I sympathize with the fact that the Bells file their taxes in such a way that they will be hard-hit by the increase on the marginal income tax rate for high earners in New York State, and Florida has no income tax at all, the story for me is that the absolutely worthless business development entities we are unfortunate enough to have here failed.

While BERC is busy running a destined-to-fail restaurant owned by a political friend of a friend, we have myriad other entities that trip over themselves and couldn’t find their asses with their elbows. BNE, the Partnership, multiple IDAs, etc. It’s all an incomprehensible hodgepodge of groups and associations that will continue to feed you the line that more is better.

Their plight also drew two very different reactions from local economic development officials. In Erie County, the Bells said, help or even encouragement was, at best, lacking. In Nassau County, a rural spot north of Jacksonville, Fla., officials leapt into action to entice the Bells southward — and in interviews were extremely knowledgeable about the Bells and their company and what they say will be their growing future in Florida.

Last fall, the family had no thoughts of fleeing. After buying out another company, the business was looking to relocate somewhere in Erie County.

and

Last year, the family, which will say only that the company’s sales total several million dollars a year, was looking for sites in the Buffalo area. They contacted the Erie County Industrial Development Agency. It didn’t go well.

“Essentially, they couldn’t care less about us. We only had 20 jobs, and it wasn’t important to them,” said 22-year-old Nathaniel Bell. And agency officials said they could not do anything about the big state income tax increase.

Alfred Culliton, the development agency’s chief financial officer, said his agency gave Science First all the help it requested. While the agency is not a real estate operation, two of his senior officials, he said, worked with the company in trying to find buildings for its relocation. He said the company never sought any financial assistance, such as low-interest loans, from the agency.

“I don’t know why they would say we were not eager to help small businesses,” Culliton said. He said the firm wasn’t able to find the real estate it wanted locally. “That brings the question into mind of how realistic were their expectations,” he said, noting that no rent subsidy programs are available for companies like Science First and that available space is charged at market rates.

They never sought, but were they offered? I mean, should available incentives for a business looking to stay in a high-tax area be hidden, only to be revealed when specifically requested? That seems counterintuitive.

Yes, taxes are too high, and it’s mostly thanks to Albany. It’s hardly a partisan issue, incidentally, as the Republicans and Democrats are equally tone-deaf and inept when it comes to reforming the state, or reducing taxes or spending. Scoff at Paterson all you want, but do so while reminding yourself of Governor Pataki, who ran the place for about 12 years.

On top of all of that, consider the fact that there are too many turf-protecting entities passing themselves off around here as business development groups. They pretty much suck, and they’re pretty much failures. There’s poor-to-know concerted, coordinated effort to attract or keep jobs or businesses here.

“Taxes taxes taxes” is a convenient mantra, but hardly the complete picture.

22 Responses to “Exodus”

  1. Terry May 27, 2009 at 7:21 am #

    For fuck’s sake, who cares about this crap? UNITED plays at 2:30 Eastern time on ESPN! Hoist a pint in anticipated victory…..

  2. Keller May 27, 2009 at 7:41 am #

    “graduate student’, ‘jumbo shrimp’, ‘New York Republican’

    Maybe a Conservative overhaul is indeed what New York needs…no more left-leaning Republicans or entitlement driven Democrats. Too many idle hands in the pockets of the working = failure.

    Buffalo has BERC, Empire Redevelopment Zones and other bureaucracies (read people who know little about real business but a lot about how to tell people to run them within a system of failure). Florida has, less taxes, a warmer climate and a sales team recruiting good companies. Which system do you think will grow…which system will shrink?

    Anectdote: My company went through an expansion in 2006-07 and we had 17 customer support openings posted in our Utah headquarters. $15-$17 an hour with benefits and stock options…they had trouble filling them…it took months. I suggested we move our customer service operations to Buffalo…which brought laughter from our President. ‘Do you know how expensive it is to do business in New York?’ he said.

    Say ‘Hi to Rush’ Bell family.

  3. Chris Smith May 27, 2009 at 8:06 am #

    On some levels, the existing entities don’t really want to grow the business community. It would shift the balance of power in some ways from those who have money and influence to a wider base, it’s inherently destabilizing. So, I tend to think the existing business community is somewhat responsible in maintaining the status quo.

    It’s kinda like the abortion argument, so many people are in the employ of fighting for change that no one really wants it to end, lest their primary means of income go away. So, they fight for just enough change to demonstrate progress without actually accomplishing their stated end.

    Thus, the BNP/BNE.

  4. pirate's code May 27, 2009 at 8:37 am #

    @chris smith — I don’t believe the business community doesn’t want the business community to grow, rather they tend to continually (and myopically) look past small, incremental growth opportunities — the Bell family — in search of the next silver bullet. And, at the agencies ostensibly charged with faciliting growth, too many it seems continue to believe that we are a heavy manufacturing, blue collar town and that’s all we ever can be. That, and auto parts stores.

    There is evidence to the contrary — Lakeside Commerce park, the medical corridor — but I think too many squint their eyes and look to the past, and spend too much time trying to re-create it.

  5. indabuff May 27, 2009 at 8:52 am #

    Geek is spot on…same goes for the poverty issue…it is big business…there is a lot of money on many different levels involved in propping up a dying region.

  6. jen May 27, 2009 at 9:04 am #

    I agree with Geek BNP/BNE are the problem. How long have these people been in power that run those agencies? What have they done? Isn’t there some way to get new blood in?

  7. Jon Splett May 27, 2009 at 9:20 am #

    @Terry

    Cristano Ronaldo is a flopping little bitch and United lost it’s soul the day Eric Cantona left.

    I hope Barca kicks the shit out of them.

    But it’s nice to see someone else knows what the top priority today is.

  8. Keller May 27, 2009 at 9:28 am #

    It would be nice if the Buffalo News could research some stats on Buffalo business development relative to the South Dakota entity that was considered by the Bells.

  9. Terry May 27, 2009 at 9:48 am #

    @ Jon Splett—– all we need to make the day perfect is some hoolliganism…

  10. hank May 27, 2009 at 10:15 am #

    ‘Do you know how expensive it is to do business in New York?’

    That’s the crux of the issue.

    Save Coal—Last business out of WNY turn off the lights—the Hydro power gets sold outside the area.

  11. Prodigal-Son May 27, 2009 at 10:35 am #

    I agree with Pirate’s Code that the issue is first an identity problem. How often do you hear that Buffalo is a blue-collar town. Steel workers and GM and Ford. In fact, we area white collar town. We employ far more people in Financial Services, Medical fields, our univeristies and tourism. To be fair, the BNP/BNE has pushed their chips to the center for UB and the Med Campus. But our tax system is broke, and the only fix is the patchwork of distracted, corrupt or incompetant IDA’s, BERC’s, etc.

    If we fixed the system for everyone, we would more efficiently grow overall. When the federal government wants to encourage something (like energy efficiency), they give out a flat $1500 tax rebate to fix your windows. But if NY wants to encourage business, I have to find an IDA to talk to, apply, spend gobs of $$$ on plans and designs, and hope the corrupt board approves it.

    Want to encourage business – slash corporate taxes to 2% across the board. Everyonbe benefits. No sales tax in the City of Buffalo. Evveryone benefits. $10K tax break for every job you create in 2009. Everyone benefits. Fix the system.

  12. peter scott May 27, 2009 at 11:29 am #

    go Barca!

    since my Arsenal didn’t show up in the semi’s…

  13. Chris from OP May 27, 2009 at 12:11 pm #

    Cut taxes!

  14. STEEL May 27, 2009 at 12:18 pm #

    Until the local press and TV harps on this kind of thing relentlessly every day nothing will change

  15. STEEL May 27, 2009 at 12:22 pm #

    By the way it does irk me quite a bit when Florida come hat in hand looking for disaster relief from the rest of the country for each hurricane. Couldn’t they institute a minimal income tax to pay for the ficken destruction caused by predictable weather patterns that everyone knows about and expect. I mean come on!

  16. pirate's code May 27, 2009 at 2:49 pm #

    @ jen — “I agree with Geek BNP/BNE are the problem. How long have these people been in power that run those agencies? What have they done? Isn’t there some way to get new blood in?”

    First, are the BNP/BNE the problem, a symptom of a problem, or an ill-fated solution to a problem? Not to defend either, but the BNP is a chamber of commerce with a fancier name — not a development agency. They have a legislative platform that they lobby for, but I suspect most of their members join for the health insurance programs.

    I’ve never been sure exactly what the BNE is…funded by both govt. and the private sector, making it neither fish nor fowl. It’s job, I think, is to try to attract investment, jobs, companies to the region. It has no real incentive programs of its own to offer, so I guess we can think of it is a marketing group. I don’t believe they’ve been all that successful, but they are swimming up the same stream as anyone else trying to get something done in NYS.

    So, throw the leadership of both groups out if it makes you feel better,. But that doesn’t solve the more fundamental problem of a region undecided on what it wants to be going forward and the daunting task of attracting business investment into a high cost locale with myriad official development agencies that compete rather than cooperate. Lipstick on a pig?

  17. Starbuck May 27, 2009 at 6:30 pm #

    On some levels, the existing entities don’t really want to grow the business community. It would shift the balance of power in some ways from those who have money and influence to a wider base, it’s inherently destabilizing.

    Chris, that’s an interesting theory but sounds to me like giving “them” too much credit.

    Also, wouldn’t that sort of desire to keep power and influence be present in similar amounts across the nation’s business communities?

    Or is it yet another level of “just Buffalo’s bad luck”?

    – highest snowfall of any city its size

    – being in NY state and so highly unionized, regulated, taxed

    – its business community having a disproportionately high desire to keep out new businesses

    But who knows, I suppose anything’s possible. At the moment, I can’t think of a way something like that could be objectively assessed. If it is a significant factor, I wonder how have Nashville, Raleigh, Austin, etc. managed to better avoid that problem?

  18. hank May 27, 2009 at 8:18 pm #

    being in NY state and so highly unionized, regulated, taxed

    the biggest mouthful said in once sentence in quite some time.

    In NC you have to find a truck driver or a telephone company worker to find a card carrying Union member. Farmers aren’t unionized. Very few Construction workers are unionized. Even huge jobs like the Hearst Tower and massive downtown rebuilding are supervised by large contractors like RJ Griffin and utilize dozens of non union subcontractors.

    That’s why Raleigh/Durham/Charlotte/Asheville now has flocks of Construction cranes, and they’re extinct in Buffalo.

    Ah, you’ll never learn. If you’re going to “cling” to something, better be it a gun and a bible than a Union.

  19. Know it all May 27, 2009 at 10:36 pm #

    non union contractor=scab

  20. jen May 28, 2009 at 9:30 am #

    @ pirate’s code – what you say makes sense, I am familiar with similar agencies in other cities I have lived in (basically glorified marketing groups with little power to actually change things.) So I guess we’ll just carry on..Same as it ever was…

  21. pirate's code May 28, 2009 at 9:46 am #

    @ jen — My clarification was not intended as a sign of give-up. If we want to throw da’ bums out, we might better start with the bushel of govt. and quasi-govt. agencies that are spending our dollars with little or no impact. The litany of BERC, BUDG, HUD, CDC types and their clones across the region are spending many millions on development of one sort or another, with no discernible plan, oversight or accountability.

    Think of the BNP and BNE as cars without wheels — capable of making a lot of noise, but never really goes anywhere.

  22. jen May 28, 2009 at 9:51 am #

    @pirate’s code – good point.

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