Governor’s Mismanaged Economic-Development Spending Needs Oversight

Over the last several years, New York Gov. Andrew Cuomo has made big promises to the people regarding his many economic-development programs. However, they have cost taxpayers billions of dollars and cost the state billions in potential tax revenue. The governor’s signature programs like START UP-NY, the Regional Economic Development Council awards, the Upstate Revitalization Initiative (also nicknamed the “Hunger Games), and several others have failed to stimulate our economy and have been marred by corruption scandals. 

With the state facing a $4 billion deficit it must be especially mindful of how and where public funds are being spent. Can New York continue to invest in these programs without measurable benchmarks of success and without tracking every dollar to its final end? We need greater transparency and accountability in all state spending, but in particular, we need immediate oversight of these economic-development programs before another dollar is spent.

The governor’s START-UP NY program has cost New York $323 million to operate and another $53 million in revenue. As of 2016, companies benefiting from START UP-NY reported $3.9 million in personal income-tax exemptions and another 

$2.1 million in other exemptions. The state spent an additional $53 million to advertise the program nationally. This bloated program so far has only created an underwhelming 1,135 jobs, when it was targeting 30,000 jobs. Adherence to even the most modest of program reporting requirements on START UP-NY was a failure. The jobs report came out three months past its legal deadline — just before the July 4th holiday in 2016, seemingly done so to bury the fact that the program was not able to meet its job-growth objectives. I support stronger reporting requirements with penalties on both the governor and senior officials responsible for when a report is late.

There has been extensive corruption in the state’s other economic-development projects like Buffalo Billion and SUNY Polytechnic Institute, which can be seen in the federal trial against the governor’s former aide Joseph Percoco and the charges filed against Alain E. Kaloyeros, former SUNY Poly president. The troubles faced by these particular economic-development projects pushed by the governor almost certainly ended up costing Nano Utica the placement of technology chip maker ams AG, which had planned on investing $2 billion in the plant and creating 1,000 new jobs. This despite the efforts of those local officials who tried saving the project. It is easy to see why a company may be turned off to continue doing business with the state when some of the key players are being arrested for corruption and the aftermath caused delays which made locating to the site no longer ideal.

Lastly, while I am supportive of careful and transparent investment in economic development, I believe we must see more clarity over how the grants are chosen for Regional Economic Development Council awards. The process allows the governor to keep the public in the dark until he sees fit to announce his awards. The program has cost $5.5 billion over its lifetime, and the governor proposes another $150 million for an eighth round of awards. 

So what can be done about all of this? I sponsor legislation calling for economic-development transparency and oversight (A.5657-A). It would require review and approval for lump-sum allocations of $1 million or more by an Advisory Committee made up of the state comptroller, attorney general, and director of the Division of the Budget. It would also prohibit the issuance of any lump sums to those with any conflicts of interest, study impacts of streamlining tax code and economic-development programs, create penalties for late economic-development reports or reports related to lump-sum appropriating by state agencies, and prohibit political contributions by those appointed to entities tasked with distribution of discretionary state funds.

As a member of the Assembly Committee on Economic Development, I have been encouraging my colleagues to stand up to the governor’s mismanaged economic-development programs that are costing us billions of dollars without the promised return in jobs. These programs are filled with waste, overlap, and corruption. For these programs to remain in place, we must insist on measures of transparency and reporting to see if New Yorkers are indeed receiving a return on their investment.                          

Marc W. Butler (R,C,I, Ref–Newport) is a New York State Assemblyman for the 118th District, which encompasses parts of Oneida, Herkimer, and St. Lawrence counties, as well as all of Hamilton and Fulton counties. Contact him at butlerm@nyassembly.gov