The justification for economic development tax credits is that although they do subsidize billionaire businesses and developers, they should eventually have net benefits for the state – that the economic activity generated will offset the loss in revenues. Yet what this bill proposes to do is exempt megaprojects that cost the state hundreds of millions of dollars from this analysis, solely on the basis of their location in government-restricted municipalities.
The net-benefits test in the Economic Recovery Act of 2020 was a key accountability feature. Without it, a project could move forward without justifying that it would benefit the state and its residents overall, whose tax dollars are functionally subsidizing the project. In particular, the project has to actually have a positive revenue impact, not just generalized economic activity. If state tax dollars are subsidizing for-profit corporations, the standard for returns to the state must be set high.
Eliminating this net-benefits test for any project undermines the basic function of the EDA to evaluate projects for their benefit to the state. If these projects are indeed so transformational and critical, it should be easy to demonstrate their economic benefits to the state. If they cannot meet that standard, then they should not qualify for tax subsidies.
One final note: the upcoming budget already anticipates a roughly $1.5 billion structural deficit, with increasing costs and uncertain revenues. If anything, this should be a time for the state to be tightening accountability to ensure that these projects truly benefit the state’s budget, not loosening the purse strings simply because certain developers have not met current requirements.
At the very least, this committee should vote to hold this bill and await the budget projections for FY2027, before potentially losing more revenue to projects with limited fiscal benefit.
