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Politics and Government

Groups question value of NY state's economic development programs

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The scandal over Gov. Andrew Cuomo’s economic development programs has led to more scrutiny of whether the projects are the best way to improve the state’s economy, and some watchdog groups are asking questions.

Citizens Budget Commission has been scrutinizing state and city budgets and fiscal policies in New York since the Great Depression. The commission completed its report on Cuomo’s $8.6 billion worth of economic development programs just before U.S. Attorney Preet Bharara issued criminal complaints against nine people, several of them close to Cuomo.

Those named include Cuomo’s former closest aide, a lobbyist close to the Cuomo family, SUNY Polytechnic Institute head Alain Kaloyeros — who has now been suspended from his job — and two real estate developers.

The commission’s David Freidful said the report, titled “Increasing Without Evidence,” finds little data to support the exponential growth of the programs under Cuomo.

“Our main concern is whether we should be spending money on these things to begin with,” Freidful said. “Is that really the best use of state resources?”

The report finds some programs are better than others and don’t leave taxpayers on the hook as much if a venture goes bust.

It compares two factories. One, the Muller Quaker plant in Batavia, was required to put up $200 million of its own funds and received about a half-million dollars through the Excelsior program. It ceased operations after just one year, costing the public about $2,000 for each of the 143 jobs that were temporarily created.

The Solar City project in Buffalo has received nearly $750 million in public money, and the company, owned by Elon Musk, did not have to make any investment. The Budget Commission calculates that the projected 5,000 jobs at the end of 10 years will cost taxpayers much more — $20,000 per job — if the factory opens and keeps on its projected job creation schedule.

E.J. McMahon, with the fiscal watchdog group the Empire Center, has long been skeptical of the state’s Solar City arrangement, which is now one of the focuses of the federal corruption case. Solar City is now merging with Tesla.

McMahon calls it “egregious corporate welfare.”

“If Tesla-Solar City goes bust or fails, we own the world’s largest empty solar panel factory,” McMahon said. “It’s not good for anything else; it’s not even good as a warehouse.”

McMahon said there might be some positive fallout from the scandal if the attention on the criminal charges causes New Yorkers to look more closely at Solar City and other publicly funded economic development projects.

“I would hope the public would ask, ‘Hey, wait a minute, now that I’m paying attention to this, why are you spending $750 million of our money?’” McMahon said. “ ‘To build a factory for a billionaire?’ ”

Cuomo is vigorously defending the Buffalo Billion and its related projects, saying some of the benefits can’t be measured, and it is “transforming Buffalo fundamentally.”

“(It’s) taking cynicism and turning it into hope, taking pessimism and turning it into optimism,” Cuomo said on Sept. 23.

Freidful said there are better ways, though, to promote economic development, including “functional and reliable infrastructure,” an educated workforce, public safety and lower taxes.

“All these things build to a stronger economy,” Freidful said.

But he said they are not as exciting or attention-grabbing for politicians as ribbon-cutting ceremonies.