NY Businesses Left Behind as Albany Supports Idaho’s Micron Expansion

Financial incentives wield significant influence. This explains why Micron Technology, the memory chip manufacturer based in Idaho, is planning to establish a facility near Syracuse — a region with no prior association with either the company or semiconductor production.

In 2022, state officials, aiming to revitalize Central New York’s economy, pledged $5.5 billion in cash-like incentives to Micron.

Additionally, Albany offered the company substantial assistance to navigate the hurdles and expenses typically encountered by other New York businesses.

All business owners in the state should now reflect on their own challenges, including tax obligations and regulatory hurdles, by asking: How might my circumstances differ if my venture were a politically favored project announced by the governor? What advantages could Albany provide me?

What benefits await Micron?

This is what can be termed “the Micron test.” The responses reveal how and to what degree New York complicates business operations — and highlight specific reforms that could simplify the process.

To begin with, Micron received a significant head-start on navigating SEQR (pronounced “seeker”), New York’s challenging environmental review process.

On a good day, SEQR requires developers to fund studies and navigate complex procedures to receive approvals for otherwise routine construction.

However, this process is often exploited by opponents of the projects, leading developers to seek judicial intervention to resolve delays.

Essentially, SEQR deters many developers from proposing projects in New York due to the unpredictability in approval timelines — or the possibility of denial.

Micron appears to be sidestepping that issue.

The economic development agency in Onondaga County will be orchestrating Micron’s SEQR journey and has already conducted and financed in-depth studies to expedite final approval for construction. State economic development representatives are also providing Micron with tailored support.

Once the plant is operational, Micron’s property tax obligations will be significantly reduced due to a considerable discount from county officials.

In contrast, many established New York businesses are burdened with property tax rates that exceed those levied on owner-occupied residences (i.e., voters).

Indications suggest that Micron will also benefit from a complete exemption from New York’s corporate income tax, which typically would deduct about 7% from its profits.

Here, Albany officials warrant praise for a 2014 law change that exempted larger manufacturers from the state’s corporate income tax. Unfortunately, smaller manufacturers, usually subject to the personal income tax, do not enjoy similar privileges.

Micron’s anticipated manufacturing operations expose some of the most glaring disparities between the company and other New York businesses: State officials have assured Micron it can construct a three-mile natural gas pipeline to supply the site.

Meanwhile, for years, state lawmakers have aimed to increase costs for new businesses connecting to the gas grid, while regulators have obstructed various proposed pipelines intended to deliver the necessary supply.

The restricted supply has resulted in some areas of New York City and Westchester County occasionally being unable to provide gas service at all.

In one town located about 50 miles south of the planned Micron facility, a gas hookup moratorium has been in effect for a decade, hindering new restaurants and other businesses from establishing themselves.

For larger manufacturers facing global competition, reliable access to gas is vital. When a paper plant in Essex County struggled to extend a pipeline, it resorted to a “virtual pipeline” — transporting compressed natural gas via trucks that made several hour-long trips daily.

To fulfill its remaining energy requirements, Micron is relying on discounted electricity from the state Power Authority, with initial estimates of the savings reaching approximately $3 million annually once the plant is fully operational.

While other New York companies do receive reduced electricity rates from the Power Authority’s expansive hydroelectric facilities, Micron’s discount will be by far the most substantial in terms of the electricity volume involved.

Instead of attempting to address economic challenges through high-profile ventures like Micron, New York politicians should actively examine and begin eliminating the factors that unnecessarily increase the costs of doing business in the state.

Ken Girardin is the research director at the Empire Center for Public Policy and author of its recent report “The Micron Test.”