Hochul pressed on subsidy reform

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New York doles out more subsidy dollars than almost any state in the nation and one of its more noteworthy programs was marred by corruption.

The problems have been evident for years, and especially since Investigative Post exposed bid-rigging in the Buffalo Billion program in 2014 that eventually sent one of Gov. Andrew Cuomo’s top economic development officials, along with a major campaign contributor, to federal prison.

So what have state officials done to promote transparency and accountability?

Not much, according to a coalition of 18 good government groups whose philosophies span the political spectrum.

In a letter earlier this week, the groups, which include Reinvent Albany, Common Cause, Good Jobs First and Empire Center for Public Policy, encouraged Gov. Kathy Hochul and the majority and minority leaders of the Senate and Assembly to enact reforms intended to promote smarter use of state subsidies.

“Since the massive 2015 Buffalo Billion bid-rigging scandal … New York state has not passed legislation improving the transparency and accountability of the state’s $5 billion in annual business subsidies or $100 billion-plus in procurement contracts,” the reform advocates noted in their March 22 letter. 

In an interview with Investigative Post, John Kaehny, executive director of Reinvent Albany, said Senate and Assembly leaders are already onboard with the reforms. 

“This is teed up to pass, all the governor has to do is say ‘yes,’ “ Kaehny said.

The groups called for approval of four “basic transparency measures” to help “restore public trust in state government.” 

One of those measures involves creation of a Database of Deals, which would provide the public with more detailed information online about subsidies. 

While the Empire State Development Corp. created a Database of Economic Incentives last year, critics say it offers limited information. They also note the current database is not mandated under state law, creating uncertainties about its future.  

The proposed Database of Deals would list all subsidies received by a corporation, including the type of subsidy, jobs created or retained, and the cost per job. Advocates note that similar systems are in place in New York City, as well as Florida, Maryland and Indiana.

Both the state Senate and Assembly budget proposals included provisions for the creation of a Database of Deals. On Thursday, state Assemblywoman Monica Wallace, D-Lancaster, who co-sponsored legislation that would create the database, called on Hochul to include it in the final state budget. 

“New York state spends billions of state taxpayer dollars each year to attract businesses and create jobs,” Wallace said in a press release. “However, it is nearly impossible to track that money and thus it is difficult to determine how much public money different private entities are receiving. 

“This lack of transparency also makes it impossible to assess whether the public investment of taxpayer dollars is having the economic development impact intended.” 

The proposal would cover state subsidies, but not those provided by local governments and their economic development agencies.

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In addition to the Database of Deals, good government advocates called on state officials to: 

• Restore the state comptroller’s pre-audit authority In 2011 and 2012, the state removed the comptroller’s authority to review contracts for the State University of New York system and its construction funds, and the SUNY Research Foundation and its affiliates. Since the Buffalo Billion scandal, Reinvent Albany and other good government groups have advocated for restoring the comptroller’s ability to examine large state contracts before they are approved. 
• Eliminate the possible use of non-disclosure agreements for economic development deals. Non-disclosure agreements, commonly known as NDAs, have been used on large deals in other states. While advocates note that New York has negotiated large deals without using NDAs, they are still permissible under state law. Given Albany’s history of “pay-to-play scandals,” advocates argued in their letter should lawmakers should do away with NDAs to “allay public concerns about corruption and influence peddling.” 

“Non-disclosure agreements are simply undemocratic and violate the basic principle that elected officials and their appointees serve the public and not the businesses seeking handouts from the taxpayer,” advocates said. 

“Likewise, it is wrong and contrary to fundamental notions of accountability and transparency for government officials to use NDAs to hide the costs of business subsidies from the public that is paying for those subsidies.” 

• Create a unified economic development budget. This measure would establish a standardized statewide tax incentive application process with a uniform definition of jobs. It would also require companies seeking incentives to report the number of jobs they expect to create, the types of jobs involved, and wages to be paid. The unified budget would be updated annually. 

Kaehny, of Reinvent Albany, said the Cuomo administration did little to reform the state’s economic development programs, aside from improving the procurement policies and procedures of the Empire State Development Corp.

Speaking of the reform package in front of Hochul, he said, “the Legislature is ready to play ball and it’s on the governor.

“She can take New York from being awful to one of the better states when it comes to business subsidy transparency.”

Mark Scheer