Syracuse, NY -- A Syracuse judged has ruled that the state cannot make last year’s changes in the state Empire Zone program retroactive to 2008. Jessica Bassett, a spokeswoman for Gov. David Paterson, said the state has been told that state Supreme Court Judge John Cherundolo ruled recently the state could not strip businesses of their Empire Zone benefits retroactively...
Syracuse, NY -- A Syracuse judged has ruled that the state cannot make last year’s changes in the state Empire Zone program retroactive to 2008.
Jessica Bassett, a spokeswoman for Gov. David Paterson, said the state has been told that state Supreme Court Judge John Cherundolo ruled recently the state could not strip businesses of their Empire Zone benefits retroactively when businesses do not meet rules approved last year.
Among the amendments is a prohibition against businesses that reincorporate and then claim their existing employees are actually new hires to beef up the companies’ zone credits. Such companies have become known as “shirt changers” and are an example of what critics say was abuse of the program.
Five local businesses stripped of their tax benefits sued the state’s economic development office, alleging that the amendments enacted by the Legislature in 2009 did not include language allowing the state to take away the benefits retroactively to Jan. 1, 2008.
The companies that sued were James Square Associates, Mohawk Glenn Associates, Pioneer Fulton Shopping Center, Pioneer Management Group and Waterfront Associates. They said the original language of the amendments submitted to the Legislature contained the word “retroactive,” but that the bill as enacted did not. They said the earliest date the new rules could take effect was April 7, 2009. Bassett said Cherundolo agreed with the businesses.
The state anticipated such a ruling. In January, after the businesses filed their lawsuit, Paterson included language in his proposed executive budget that would clarify that the Legislature’s intent when passing the 2009 amendments was to make them retroactive to 2008.
Lawmakers have not acted on Paterson’s budget. Bassett said the governor plans to include the “clarifying” language in a budget extender bill if the Legislature has not acted on his budget by June 28.
The Empire Zone program is scheduled to sunset June 30. On Friday, Paterson sent the Legislature a bill creating a new program to replace it. The Excelsior Jobs program would provide tax credits to targeted industries such as high tech, biotech, financial services and manufacturing. He said it also would implement accountability standards and cap program spending to ensure prudent use of taxpayer dollars.
Firms in the targeted industries that create new jobs or make a substantial new investment in New York for five years would receive a tax credit of $2,500 to $5,000 for each new job, plus investment and property tax credits.
Contact Rick Moriarty at rmoriarty@syracuse.com or (315) 470-3148.