Butler: Governorís Mismanaged Economic Development Spending Must Have Oversight
Over the last several years the governor 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 governorís signature programs like START UP-NY, the Regional Economic Development Council awards, ďHunger GamesĒ or as it is officially known the Upstate Revitalization Initiative, 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 the 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 even spent.
The governorís 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 out of the 30,000 target. Adherence to even the most modest of program reporting requirements on the 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 also been extensive corruption in the stateís other economic development projects like Buffalo Billion and SUNY Poly, which can be seen in the federal trial against the governorís 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, despite the efforts of those locally 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, 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), which would require review and approval for lump sum allocations $1 million or more by an Advisory Committee made up of the Comptroller, the Attorney General and the 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 which are 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 governorís mismanaged economic development programs which 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 from their investment.
I welcome input on this or any other legislative topic. Constituents are urged to contact me by emailing me at email@example.com or by calling my district office at 315-866-1632.