Gov. Andrew Cuomo’s economic development programs have been the subject of two federal corruption trials that ended with convictions for two of Cuomo’s former associates.
But some say problems with the $9 billion programs go beyond corruption and that the structure of the programs is flawed.
Cuomo’s former closest aide, Joe Percoco, in March was convicted of bribery. On July 12, Alain Kaloyeros — the former president of SUNY Polytechnic Institute and the former architect of the governor’s biggest economic development deals, including the Buffalo Billion — was found guilty of bid-rigging.
Groups on both the left and the right of the political spectrum say the problem with the state’s economic development deals go beyond the corruption cases.
“It’s almost incidental. It’s a predictable result of a bad policy,” said E.J. McMahon with the Empire Center, a fiscally conservative budget watchdog group.
McMahon said during Cuomo’s tenure, the state has built, equipped and owned $1 billion worth of facilities, including the Solar City factory in Buffalo and a film industry hub near Syracuse. Solar City employs about 20 percent of the 3,000 employees initially projected. And the film center, which stood empty for years, was sold to Onondaga County for a dollar.
But McMahon said even if they were successful, it’s the wrong business for the state to be in.
“This is, in classic terms, almost Marxist,” McMahon said. “This is the state owning the means of production. It’s corporate welfare on steroids.”
McMahon said manufacturers already get tax breaks that are built into state law. He said the state’s resources are better spent on infrastructure, and New York should leave ventures that are more speculative to the corporations.
“What roads could you build, what bridges could you build?” McMahon said. “With the money you are spending on factories for private corporations.”
Greg Biryla is with the New York chapter of the National Federation of Independent Businesses. He said the state has resorted to building factories and offering programs like Start-Up NY, which offers 10 years of tax subsidies to new companies, because the state’s business climate is so poor.
“We have myriad taxes and regulations,” Biryla said. “We spend $9 billion in economic development essentially because it’s so hard to attract employers organically.”
Biryla said if taxes and regulations were significantly cut, businesses would have a better chance of growing.
“If you want honest-to-God job growth, fix our tax burden,” he said. “Businesses that are delivering services and goods that the market demands will succeed.”
Ron Deutsch with the union-funded Fiscal Policy Institute agrees that the state should not be in the business of building factories for private businesses. He said if the “mega-deals” can’t be stopped, then the governor and Legislature should at least make them more transparent.
He said they could create a public database that reveals which companies receive funding and the true costs of the projects.
“The contracts and the negotiations and whatnot are shrouded in secrecy when you compare it to something like a nonprofit contract,” Deutsch said.
He said nonprofits have to show far more documentation in exchange for state funding than did the business deals that led to the corruption convictions.
The state Senate passed some transparency measures before the legislative session ended in June, but they stalled in the Assembly.
Despite the corruption convictions, Cuomo continues to promote his economic development programs. Earlier this month, he announced $10 million in downtown revitalization grants for the Mohawk Valley city of Rome.
“The tide is turned, and the tide is now going with us,” Cuomo told a gathering of local elected officials on July 2. “This state today, 8 million private sector jobs, more jobs than have ever existed in the history of the state of New York.”
Cuomo also continues to tout economic successes in Buffalo, saying that city has turned around.
Jason Conwall is a spokesman for the Empire State Development agency, which now oversees the SUNY Polytechnic economic development projects as well as hundreds of other smaller efforts.
He said in a statement that it’s “disheartening” that the negative “rhetoric” about the programs is too narrowly focused on a few big projects. And he accused critics of deliberately trying to “mislead” the public.
Conwall said the Regional Economic Development Councils, which are led by local leaders, have 6,000 different projects that are already completed or on track for completion. And he said the state is spending big on infrastructure, with $12 billion committed or planned for projects, like upgrading many of the state’s airports and train stations.