Local and state government officials are learning that factors such as skilled labor, strong infrastructure and good schools provide more incentive than tax subsidies for businesses to start up or relocate to New York, according to a Cornell University report by graduate researchers delivered today (May 29) to state legislators in Albany, N.Y.

"Many recognize and accept the evidence that tax abatement subsidies to individual firms do not significantly impact firm decisions to relocate or expand," according to the report. Those jurisdictions "know that tax losses can starve states and communities of the resources needed to provide the services that underpin a strong economy." The Economic Development Alternatives Project report, "What are Our Alternatives? Economic Development Initiatives for Long Term Growth in New York State," will be presented May 29 at 8:30 a.m., at the Legislative Office Building in Room 717, the Assembly Higher Education Committee room.

State Assemblyman Martin A. Luster (D-Ithaca) invited the researchers to present their results to the New York State Assembly and Senate. Their report will be published this fall by Cornell's Community and Rural Development Institute (CaRDI).

The Economic Development Alternatives Project is a Cornell graduate level seminar in state economic development policy in the City and Regional Planning Department. The project team, all Cornell graduate students, include: Martha Armstrong, Antonio Casal, Thomas Clavel, Todd Cornett, David Dornisch, Ann Marie Griffin, Jill Lemke, Valerie Rutstein and Yaver Sayyed. Armstrong, Sayyed and Rutstein will present the report.

Richard Rising, director of planning and economic development for Geneva, N.Y, will join Susan Christopherson, Cornell associate professor of city and regional planning, to present their comments on the report to state lawmakers.

Knowing that local and state officials face a serious dilemma in economic development, the research team sought out and evaluated local strategies, which could be implemented throughout the state.

First, the team suggests a comprehensive evaluation and investment in the state's infrastructure. The report says that such investment not only increases the capital base, but stimulates private capital investment, increases direct employment, improves productivity and stabilizes the local economy.

"New York State can no longer afford indiscriminate infrastructure spending. A state level economic development policy can provide a framework for prioritizing investments," according to the report.

Next, the state needs to focus on developing the small and medium-size business sector, the report advises. Smaller firms draw on entrepreneurial talent and technical skills. In fact, clusters of interdependent smaller firms are more likely to circulate money and have a multiplier effect in the local economy and are less likely to leave the area for lower-wage regions, the report indicates.

The research team suggests that local economic development agencies can use revolving loan funds, business incubators and technical assistance programs to meet these needs.

Examples include:

• The Erie County, N.Y., Industrial Development Agency. In seven years, Erie County's loan fund has resulted in the creation of 7,000 jobs.
• The Geneva, N.Y., Industrial Incubator, which has provided the crucial start-up infrastructure for smaller businesses.
• The Farming Alternatives Program at Cornell, which supports upstate New York's agricultural industry by providing technical and marketing assistance to regional associations of farmers.

Improving workforce skills is a third alternative development strategy. The report notes that training programs, coupled with economic development, tend to be fragmented. With private and public collaboration in workforce preparation, both employers and workers can benefit, the researchers said.

The report cites the South Bronx Overall Development Corporation (SOBRO) as an example of how building workforce skills can foster economic self-sufficiency. Since 1993, SOBRO has assisted 10 businesses and created more than 102 jobs in one of the state's most economically depressed areas. The financial and technical assistance SOBRO provides to local companies enables them to expand and stabilize.

Researchers emphasized that cooperation to develop efficient economic programs may be a wise political course. They also suggested that using conventional economic development and government agencies could achieve new ends. The report also suggested that state leadership could streamline the organization and transfer of information. Finally, these strategies could bring broad, improved social and economic diversity to the state, the researchers conclude.

"The strategies described [here] address different aspects of the economic development problem but they have some important premises in common -- premises which differentiate them from the competitive smokestack -- chasing strategies which have dominated economic development policy," the report concludes.