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Start-Up New York Gets a New Name, and a Focus on Start-Ups

Start-Up New York Gets a New Name, and a Focus on Start-Ups

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And the program had a new name: the Excelsior Business Program, a rebranding that carries some irony. Instead of allowing businesses of any size to apply, the program will now be open only to what most people would define as start-ups — small companies in their formative stages — in a move aimed at encouraging the next Google or Facebook to hatch in New York State.

Currently, businesses are required to create at least one new job each year to remain in the program, which exempts companies operating in certain tax-free zones from all taxes for up to a decade; under the new proposal, the requirement would fall to creating one new job in the first five years the company is in the program.

Empire State Development, the state agency that oversees the program as well as the governor’s other economic development efforts, will be required to update the public on the initiative, as well as a related program known as Empire Jobs, once a year.

Mr. Cuomo, a Democrat, has not budged from his support for Start-Up, and the state insisted this week that the program would produce more than 4,000 new jobs over the next several years. State officials say the lower requirement for yearly job creation should allow companies to focus on growing rather than on hitting specific job targets, and argue that the companies will generate so little revenue at first that any taxes the state would pass up in exchange would be negligible.

”This program remains in place and the proposed adjustments, which are based on feedback from businesses, will help it reach its full potential,” Jason Conwall, a spokesman for Empire State Development, said in a statement. “We remain firmly committed to the model — innovative academia-business partnerships coupled with performance-based, tax-free incentives.”

The program will still require young businesses to move to tax-free zones, most of them near universities, in the hope that academic centers, with their students, research and equipment, will help seed economic growth. Under the new proposal, companies that add enough jobs during the tax-free period can qualify for even more tax benefits in later years under a sibling program called Excelsior Jobs, which officials hope will induce successful companies to stay in New York as they grow.

The proposed changes to Start-Up were first noted by the Empire Center for Public Policy, a fiscally conservative watchdog group that has repeatedly blasted the program as too lightweight to bear any comparison to the hype Mr. Cuomo showered on it.

“It was never the scale to be a really transformative program,” said E. J. McMahon, the president of the Empire Center. “The governor basically made it a lightning rod for attention and criticism.”

He said he thought the state’s faith that entrepreneurs would move to and stay in New York State seemed unrealistic. “What if they get acquired by a company from California?” he said. “They’re still pretending that they’re venture capitalists who can spot a unicorn, and unicorns will grow generally quite oblivious to whether they’re offering financing in a tax-free zone.”

Start-Up is not the only marquee economic development effort of Mr. Cuomo’s to experience a bumpy journey. Excelsior Jobs came in for a withering audit in July from the state comptroller, Thomas P. DiNapoli, whose office identified several instances in which companies had received tax credits despite not delivering on their job-creation promises.

And Mr. Cuomo’s plan to revitalize upstate New York’s economy by creating a series of high-tech hubs fell flat, at least temporarily, when several of his advisers were indicted in September in a corruption inquiry involving those projects.

Correction: January 20, 2017

An earlier version of this article, using information from a spokesman, misstated the time period over which the Excelsior Business Program intended to create more than 4,000 jobs. It is a period of three to five years, not five.

Correction: January 20, 2017

An earlier version of this article misstated how often Empire State Development was required to provide the public with updates on Start-Up New York. It was required to release annual updates, not quarterly.

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