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Cuomo's Economic Development Chair Grilled In Budget Hearing

Mike Groll
Howard Zemsky of Empire State Development, during a cabinet meeting in the Red Room at the Capitol in Albany, N.Y., in 2015.

Governor Cuomo’s economic development chair was grilled by lawmakers at a budget hearing, as some of the programs are embroiled in a corruption scandal that’s led to corruption charges against several former associates of the governor.

Nine people have pleaded guilty or been indicted in connection with alleged bid rigging and other corruption charges involving some of Governor Cuomo’s economic development programs, and they face trial later this year.

The scandals come amid rising tensions between Governor Cuomo and the legislature that played out as his economic development chair, Buffalo businessman Howard Zemsky, faced intense questioning by lawmakers on both sides of the political aisle.

Legislators grilled Zemsky on the troubled tax free Start-Up New York program, which Cuomo subsumed into another economic development program in his new budget, after a report showed the program created just 408 jobs so far.

Assemblyman Robin Schimminger, a Democrat from the Buffalo area, asked why the program went through a “transmogrification” into the Excelsior business program. Assemblywoman Addie Jenne, a Democrat from Watertown, asked why Start-Up was rebranded after the Cuomo Administration spent nearly $50 million on advertising the program.

“I don’t know why we would go ahead and abandon a name that we spent so much time and money on?” Jenne said. “That concerned me.”

Assemblyman Steve McLaughlin, a Republican from Rensselaer County who is a frequent critic of Cuomo, called the Start-Up job creation numbers “pathetic” and the entire program an “epic failure.”

Zemsky sat through most of the questioning, quietly defending the programs, but his temper finally flared under scrutiny by Assemblyman Fred Thiele, an Independence Party member from Long Island, who sists with the Democrats.

Thiele says the Tax Foundation still ranks New York 49 among the 50 states for high taxes. And he needled Zemsky over the Regional Economic Development Councils, which have given out $4.6 billion over the past six years, accusing the councils of “cronyism” because many of the projects awarded benefit the board members’ business organizations.

“I’m just saying that creates the appearance of inside dealing,” Thiele said.

Zemsky protested that the charges are “unfair,” at one point banging his fist on the table.

“We have 10 amazing economic development plans,” Zemsky said, saying “it’s such a dramatic step forward, it’s indescribable.”

Zemsky, after three and a half hours of questions, faced reporters, where he was asked about the disconnect between how the Cuomo administration and state lawmakers view the success of the economic development programs.

“Some people are very political, and they want to call success failure,” said Zemsky. “I’d need a degree in psychiatry or psychology to be able to explain it.”

John Kaehny, with Reinvent Albany, a coalition of government reform groups, was scheduled to testify later in the day.  

“By Albany standards this is a real oversight hearing,” said Kaehny, who praised lawmakers for asking probing questions.

“They are edging around the big ‘emperor has no clothes’ moment, which is that the state can’t show that these programs work,” Kaehny said.

Reinvent Albany is calling for greater oversight of the economic development programs.

At the hearing, several lawmakers questioned why Zemsky and others in the Cuomo administration resist additional oversight by the state comptroller, Tom DiNapoli, to approve some of the projects, and whether the Development Council board members should be subject to greater ethical disclosure rules. Zemsky says that would only discourage business leaders and other major employers from participating.

“It’s a great way to push people out of the process,” Zemsky said.

Zemsky also criticized the state comptroller’s recent audits on economic programs, which documented flaws in the economic development programs, saying they were disappointingly negative and based on opinions rather than facts. Governor Cuomo has had a long running feud with the state comptroller. 

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.