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Solving the “Upstate problem”

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CANTON — It’s an upstate problem, so it is an upstate initiative.

That is the way Gov. Andrew M. Cuomo described his newly announced Tax-Free NY program on which he is looking to pass enabling legislation with only five weeks left in session.

“This is one of the most exciting proposals that we have come up with in two and a half years,” Gov. Cuomo said in a teleconference Thursday. “We have about five weeks left on the legislative session and I want to get their attention on this proposal this session.”

The initiative aims to transform SUNY and private college campuses and communities across the state into tax-free zones to attract startups, venture capital, business and investments from around the world.

Tax-Free NY would make all SUNY campuses outside of New York City and designated private colleges north of Westchester tax-free with up to 200,000 square feet surrounding the campus included in the tax-free community.

Under Tax-Free NY, 3 million square feet of commercial space will be available at New York’s private universities, and 20 strategic state assets also will be designated as tax-free.

If a new business is located on a SUNY campus in an eligible unused space, that means it already is not taxed because it is state land, the governor said.

“That is why we can say no property taxes, because SUNY is going to pay property tax already, and if that business is already located on the campus, then you are right where you are today, campus facilities and campus land,” Gov. Cuomo said.

If it is off campus on land not owned by SUNY, then it is going to be private land and it would pay property taxes or SUNY would have to work out a payment in lieu of taxes with the locality.

With businesses already in the community, the governor said he is working to grandfather them into this initiative.

“We are going to the Legislature about it and my instinct about it is to grandfather in businesses on campuses that are already in process,” he said. “We are working that through with the Legislature. In truth, I don’t know where it is going to turn out with the Legislature.”

Private universities such as Clarkson in Potsdam and St. Lawrence in Canton can put in an application as well, Gov. Cuomo said, with a pool of 3 million square feet of commercial space available.

The reputation of New York as one of the highest-taxed states must be addressed, he said.

“I don’t know which is worse now, our reputation or the reality of the situation, but it is bad,” the governor said. “And the way we have been addressing it is by changing the facts and changing the reality.”

Mr. Cuomo said taxes today are lower for New Yorkers than they were when he came into office two and a half years ago, with a tax rate that he said is the lowest it has been in 60 years.

“So we brought taxes down and second, we have been working on regional growth, public/private sector partnerships coming from institutions of higher education, which is where the new jobs are being created in this state, in this country, on this planet,” he said.

The approach has been working and the anecdotal success is everywhere across the state, he said, with the lowest unemployment number, 7.8 percent, since 2009.

But the truth is the economy, especially in upstate New York, has been slow for decades, and Mr. Cuomo said the painful truth is that the state has been trying to make up for a lot of lost time.

“And in a region of the country, when we are talking about upstate New York, that has lagged for decades,” he said.

The proposal of a 100 percent tax-free zone includes sales tax, corporate tax and income tax, for a period of 10 years, with income being totally tax free for the first five years, after which a cap of $200,000 a year from years six to 10 would be put into place. Anything above $200,000 would be taxed.

“About 75 percent of the new high-tech jobs we create we lose within the first year,” Mr. Cuomo said. “That is our problem and this would go right at that.”

But getting the proposal through the Legislature could be difficult. Of the eligible areas, 55 are in upstate New York and the Hudson Valley, with four in New York City and four in Long Island.

With the disproportion in the population and Legislature between the New York City region and the rest of the state, Mr. Cuomo said, the question is going to be raised by the predominant downstate Senate and Assembly members, “What’s in it for me?”

The governor said upstate New York has long suffered because it has not had the political clout of the more populous downstate region.

“This initiative is trying to make up for the last 20 to 30 years,” he said, and that is why most of it goes upstate.

“This is an upstate problem and I am not ashamed to say it,” he said. “I think saying it and being honest about it is going to be essential here if we’re going to politically get it passed, because if they do it the old-fashioned way, there is not enough votes, and that is what we are going to be confronting.”

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