Time to Reform New York’s Economic-Development Efforts

The 2017 legislative session is underway in Albany. In lieu of a traditional State of the State address to the legislature, Governor Andrew Cuomo made six speeches across the state that outlined his policy priorities for 2017. 

Some of the major policies that he said he would be advocating for are: (1) free college tuition, (2) expanding the child-care tax credit, and (3) making various “social justice” reforms. In addition, to these proposals, the governor wants to continue his policy of spending government money in hopes of spurring economic development in upstate New York. For example, Cuomo wants to spend $650 million to establish a life science industry in New York and another $500 million in economic-development aid to Buffalo.

 The use of government money to encourage economic development has had mixed results in the state. During the George Pataki years, the state had the Empire Zone program that provided various tax breaks to companies that created jobs in economically depressed areas of upstate New York. The advantage of the program was that it was broad-based, in that any business could qualify for the incentives, if the company met certain criteria. Unfortunately, that too was the program’s problem. Many businesses for which the program was not designed — such as law and accounting firms — could exploit loopholes and obtain tax breaks.

 Under Governor Cuomo, the state has moved away from broad-based qualifying economic-development programs to a policy of the state — namely, the governor — simply choosing to subsidize various companies in the hope that they will create jobs. Usually, this subsidization is labeled as an “investment” or as a “public/private partnership.” Unfortunately, like the Empire Zone programs, to date, this method has also had mixed results. Recently it has been reported that major economic-development projects such as the Nanocenter in Utica, the photonics facility in Rochester, and the Central New York Film Hub are struggling to come to fruition despite obtaining huge amounts of government subsidies.

 I believe that to get broad-based economic growth in upstate New York, the state needs to improve its business climate. The way to do that is to lower taxes and cut needless regulation — basically, get government out to the way. Sadly, the political will to accomplish these changes does not exist in Albany. Thus, we have become reliant on government economic-development programs in the hope that they will make a difference. If this is the way the state is going to continue to approach economic development, at the very least, accountability, meaningful oversight, and transparency need to be added to the program. In addition, an annual cost/benefit analysis should be done on the whole economic-development program as well as each project receiving funding. 

Considering the recent criminal indictments involving state officials and private developers in connection with economic-development projects, there is no better time for the state legislature and the governor to implement reform. Indeed, it should be of the highest priority.            

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.