Albany’s corruption challenges are well-documented and unfortunately the problems have ensnared both the legislative and the executive branches. In November of last year, eight people were indicted by a federal grand jury on corruption charges related to the state’s economic-development programs. One of Gov. Andrew Cuomo’s close aides was charged with accepting bribes in exchange for influencing state contracts and another was charged with rigging state bids for favored developers who also happened to be large campaign contributors to the governor. The headlines sent shockwaves at the end of last year, yet so far this session nothing has happened in Albany to prevent this exact type of crime from reoccurring.
For this reason, we need to pass the “Economic Development Transparency Act.” This legislation would establish a three-member committee to review and approve allocations that originate from lump-sum appropriations. That three-person committee would be comprised of the state comptroller, attorney general, and budget director. The idea is to provide better oversight of the executive’s economic-development programs and projects that involve billions of dollars in public funding. Currently, there is little to no oversight.
The bill would also (a) implement reforms to the budgeting process so conflicts of interest are identified; (b) prohibit appropriations when conflicts are found to exist; (c) require all appropriations to be lined out with specific details; (d) institute penalties related to late economic development or lump-sum appropriation-related reports by state agencies, including withholding salaries of those responsible; and (e) prohibit political contributions by individuals appointed to entities charged with the distribution of discretionary state funds.
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Finally, the bill authorizes an independent, third-party study of the state’s economic-development programs and to study the impact of streamlining the tax system. Such a study is long overdue. The state has moved away from broad-based qualifying economic- development programs to policies that enable the governor to subsidize various companies in the hopes that jobs are created. The programs have had mixed results and in too many cases have underperformed. START-UP NY was initially called a game changer but since its inception, the state has spent roughly $60 million ($53 million of which was spent on advertising and promotion of the program) to create 722 jobs. Lucrative tax breaks are also provided to certain industries with underwhelming results. For example, tax credits to the film industry totaled roughly $1.4 billion over two years, which cost taxpayers an estimated $42,000 per job. While there may be ancillary promotional and tourism benefits that coincide with having the film industry in New York, it is not unreasonable to ask if they are worth the price.
Most economists would say that the best way to improve the economy would be by lowering taxes and eliminating burdensome regulations. When business owners are able to keep more of their money, they often reinvest it in their businesses, which in turn results in higher employment. However, if the state is going to continue to approach economic development by subsidizing various favored businesses, at the very least, accountability, oversight, and transparency need to be part of the program.
William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.