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Where the Sun Don't Shine

Let's see how bright this SolarCity deal really is

Enough with the hype. Let’s talk facts about Gov. Andrew Cuomo’s announcement last week that the state will spend $750 million to bring SolarCity to Buffalo to build the hemisphere’s largest solar panel manufacturing plant.

For starters, this is a huge subsidy. Billy Fuccillo huge.

Local and state officials shelled out about $110 million to attract GEICO to Amherst a decade ago. They put $58 million in subsidies on the table to bring Yahoo! to Lockport five years ago. Add those two packages up and they are amount to less than a quarter of when Cuomo has committed to SolarCity.

The subsidies work out to $500,000 per job—repeat, $500,000 per job—for the 1,500 employees SolarCity has committed to hire directly. The cost drops to $250,00 per job if you include another 1,500 jobs that SolarCity is required to generate through suppliers.

Folks, that’s a huge subsidy. The GEICO package worked out to $92,000 a job, and that’s about the richest subsidy we’ve seen in Western New York, aside from the $2.1 million per job in goodies granted to Yahoo!. Which is plain obscene.

For further perspective, consider that the federal government for years put a cap of $35,000 a job on subsidy deals it was a part of.

Cuomo and Company justify investing such a huge sum in SolarCity on the grounds the plant will be a “game changer.”

Sorry, but I’m not buying.

For starters, there are 561,600 people employed in the Buffalo metropolitan job market. Adding 3,000 jobs, while a positive development, does not change the dynamics of the local economy. Those 3,000 jobs would account for one-half of 1 percent of the workforce. And folks, one-half of 1 percent does not make for a game changer.

The General Motors Engine Plant on River Road in the Town of Tonawanda employs about 1,900, more than the 1,500 that would work at the SolarCity plant. Does anyone consider the GM plant a game changer? The salvation of our local economy? Of course not.

Then there is the matter of taxes. Or rather, a lack thereof. Except for us schmucks already paying them—up the yazoo here in Western New York.

It’s not enough for taxpayers to shell out $750 million to build and equip a plant for SolarCity. The company also gets to skate on paying any substantial taxes. SolarCity won’t own the plant, so they get a pass on paying property taxes. It won’t have to pay state corporate taxes either thanks to Albany’s elimination this year of taxes on manufacturers.

But there’s more.

The companies that set up shop to supply SolarCity will be eligible to participate in Start-Up New York, another Cuomo initiated program, which allows companies and their employees to avoid paying state taxes for 10 years.

Look, if there’s a community in the nation screaming for tax relief, it’s Western New York. We’re smothered by high taxes and Cuomo’s strategy of attracting companies through tax breaks will do nothing to change that. In fact, it could make things worse by creating a demand for public services that the rest of us will have to pay for.

So, yeah, it’s good some companies are coming to town to set up shop. Better than plant closings and layoffs, for sure.

But let’s be honest, Cuomo’s strategy is akin to trickle down economics. Give big bucks to the rich guys, in this case, billionaire Elon Musk and his fellow investors, and let the communities they operate in receive some tax revenues years down the road. In this case, many years down the road.

Deals like SolarCity provide Cuomo with the kind of trophy project that politicians pine for.

But they also underscore how uncompetitive the business climate in Western New York and New York State remains. What’s more, these deals are a stark reminder that Cuomo and the rest of the Albany crowd have failed to enact reforms that would give us a fighting chance to improve our economic plight without having to ply companies with corporate welfare.

Jim Heaney is editor and executive director of Investigative Post, a nonprofit investigative reporting center focused on issues of importance to Buffalo and Western New York. Visit daily for investigations, analyses, blog posts, and the latest from Tom Toles.

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