Tax-Free New York

The sorry state of upstate New York’s economy has defied the well-intentioned efforts of governors, legislatures and entrepreneurs for more than a generation. Some hoped that state spending—sadly, in the form of prison construction—would spur new development. Others have been waiting for the holy grail of casino gambling.

Now, Gov. Andrew Cuomo has come up with a creative and potentially game-changing partnership between the public and private sectors. Mr. Cuomo recently announced the creation of tax-free zones for businesses that set up shop on the campuses of the vast State University of New York system. In addition, the zones would be extended to private university and college campuses north of Westchester County. Qualifying businesses would be exempt from sales tax, property tax and state income tax for the first 10 years of operation.

The program is not designed for every business on every campus, and that’s a good thing. Colleges and universities are, after all, institutions of higher education, not tax havens. The state would demand a match between a prospective business and the academic mission of a given campus. College and universities with a strong arts program—for example, the SUNY College in Purchase—would seek to attract businesses with a similar mission.

The program also would not apply to retail chain stores and food outlets on campus.

The campus zones would open vast opportunities for business startups looking to tap into the college market, including the towns and cities near the campuses. The state university system operates dozens of colleges in addition to the better-known university centers in Buffalo, Albany, Binghamton and Stony Brook. Many of the colleges upstate are already centers of intellectual and social life in their communities. Mr. Cuomo’s proposal will make them economic centers as well.

Upstate New York has been a rolling economic disaster for far too long. Mr. Cuomo’s plan is not a cure-all, but it is an ingenious step in the right direction. Perhaps the best endorsement of the plan was the typically knee-jerk reaction of the Civil Service Employees Union, one of the state’s biggest public employee unions. Its leaders rejected the idea out of hand, dubbing it an example of something it calls “Cuomonomics.” The plan, the union said, was yet another example of the governor’s emphasis on catering to the super-wealthy.

With enemies like that, Mr. Cuomo clearly is doing something right.