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Groups Question Value Of N.Y.'s Economic Development Programs

Mike Groll
Work continues at the high-tech manufacturing facility at the RiverBend site that will house SolarCity in Buffalo, N.Y.

The scandal over Governor 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 Governor 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 Governor Cuomo. Those named include Cuomo’s former closest aide, a lobbyist close to the Cuomo family, and the head of SUNY Polytechnic, Alain Kaloyeros, who has now been suspended from his job, as well as two real estate developers.

The Commission’s David Freidful says 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 says. “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 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 half a billion dollars through the Excelsior program. It ceased operations after just one year, costing the public around $2,000 for each of the 143 jobs that were temporarily created. The SolarCity project in Buffalo has received nearly three quarters of a billion dollars in public monies, 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 for Public Policy, has long been skeptical of the state’s SolarCity arrangement, which is now one of the focuses of the federal corruption case. SolarCity is now merging with Tesla. McMahon calls it “egregious corporate welfare.”

“If Tesla-SolarCity 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 says there might even be some positive fallout from the scandal, if the attention on the criminal charges cause New Yorkers to look more closely at SolarCity 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?’”

Governor 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 September 23.

Citizens Budget Commission’s Freidful says 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 admits they are not as exciting or attention grabbing for politicians as ribbon cutting ceremonies.

Karen has covered state government and politics for New York State Public Radio, a network of 10 New York and Connecticut stations, since 1990. She is also a regular contributor to the statewide public television program about New York State government, New York Now. She appears on the reporter’s roundtable segment, and interviews newsmakers.
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