Magazine article American Banker

New York State Sen. Smith Criticizes Cuomo's 'Opportunity Zone' Proposal

Magazine article American Banker

New York State Sen. Smith Criticizes Cuomo's 'Opportunity Zone' Proposal

Article excerpt

New York State Sen. Smith Criticizes Cuomo's "Opportunity Zone' Proposal

New York Gov. Mario M. Cuomo's proposed "opportunity zone' legislation, which would assist economically distressed areas of the state, has been criticized sharply by state Sen. William Smith, R-Steuben, chairman of the Senate Majority Task Force on Business Retention and Expansion.

Comparing it with a plan sponsored by Sen. Tarky Lombardi, R-Onondaga, Sen. Smith called Gov. Cuomo's proposal "a halfhearted attempt that will not even reach the most economically distressed areas of the state.'

He added, "The governor's bill offers assistance to too few areas, provides the wrong incentives for new businesses, and establishes too rigid state control over local programs.'

In its analysis, the Senate task force complained that the governor's program did not contain enough incentives for entrepreneurs and that the tax incentives, such as the proposed credit against the corporate franchise tax, focused primarily on existing profitable businesses that might seek new locations.

The state Senate proposal, however, according to Sen. Smith, contains both benefits for existing businesses and assistance to entrepreneurs with fledgling operations through the creation of the Enterprise Zone Capital Corp., which would be empowered to take equity positions in new businesses.

"The key to the problem,' said Mr. Smith, "is the fact that most new businesses do not have a state tax liability in their first few years of operation, since they are typically not making a profit.' Consequently, the senator said, incentives that provide assistance by reducing existing tax liabilities only for profitable companies provide no real help to an entrepreneur seeking to start up a business.

The analysis also complained that the eligibility requirements in the governor's bill were too limiting, with the proposed designation of no more than 14 zones across the state, and cited unemployment and economic growth data showing a need for more than 60 zones. …

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