“Transaction database” for state enterprise subsidy accountability included in both legislative budget resolutions

Governor Hochul speaks on economic development (photo: Darren McGee/Office of Governor Kathy Hochul)

In their individual budget resolutions passed this week, both houses of the state legislature included a “transaction database,” a public registry of grants to state businesses that would shed light on billions of dollars government incentives for business.

The legislation, which has been around for years but has not been passed, would require the state to publish a searchable database of state grants for economic development projects that would document the recipient company, the benefits of the status received and the number of jobs hired and created.

Proponents of the proposal, including lawmakers and transparency advocates, say the tool would allow government and the public to assess the effectiveness of about $5 billion in annual business and economic development incentives and could track the total flow of state money to businesses across the state.

Passing the Senate and State Assembly budget resolutions does little more than show significant legislative support for the proposal. To become law, it would have to survive final state budget negotiations, which are currently taking place between Governor Kathy Hochul and legislative leaders before the start of April 1 of the state’s next fiscal year. Alternatively, the bill could be passed at any time by both houses of the legislature.

Hochul hasn’t taken a public stance on a deal database, nor has it listed it in his $216 billion executive budget or his state-of-the-state policy platform, both published in January.

Calls for a database of economic development agreements and state grants have grown over the years amid related corruption scandals, high-profile failures, evidence of pay-to-play policy and general questions about the need for and effectiveness of these tax breaks and other incentives favored by former Governor Andrew Cuomo.

“The public wants to know how their money is being spent and we believe this database of agreement legislation will go a long way to ensuring that we can capture exactly what is going on, especially in economic development projects,” said State Senator Leroy Comrie, a Queens Democrat who sponsored the bill.

The legislation “will help the public see which businesses are receiving state grants, how much they are receiving, and whether those grants are creating jobs, as intended,” Assembly Patron Monica Wallace said in an email. urging lawmakers to support its inclusion in the final adopted budget.

Economic development grants can take many forms, from government grants and loans to tax benefits to assistance with public services. They may be administered by a series of state agencies where reporting on them is decentralized and often incomplete. One of the largest, the New York State Film Tax Credit Program, provides $420 million a year in tax breaks to companies that produce films in New York.

Opaque and inexplicable grants have helped prop up billionaires and political insiders. Tech mogul Elon Musk received more than $950 million in state incentives to open a dramatically overpriced solar panel factory in upstate New York that created few jobs before to be absorbed by Musk’s Tesla company. Another economic development project, Cuomo’s billion-dollar “Buffalo Billion” nanotech initiative, has incubated one of the biggest bid-rigging scandals in recent US history. state and ended with the imprisonment of close Cuomo allies.

Like his predecessor, Hochul continued to tout state incentives for major economic development projects, like the “Finger Lakes Forward” initiative that includes a pledged $500 million public investment to “incentivize private businesses to invest well over $2.5 billion” to revitalize the region and create “up to 8,200 new jobs”.

As part of the effort, Hochul announced Wednesday that a French yogurt and dessert company, La Fermière, “will establish its U.S. production operations in New York State” and pledged to build a new large production plant in Batavia. The company, the governor’s office said in a news release, “plans to create up to 135 new jobs in the area.” The press release did not specify what kinds of incentives the company received from the state.

In January, the state Senate held a long-awaited public hearing on state business subsidies after calls from advocates for greater oversight.

Wording in the new single-chamber legislative budgets, passed on Monday, includes detailed definitions of grant categories and employment commitments, allowing for cost-effective comparisons between projects. Because it would be a centralized system – housed in the Empire State Development Corporation (ESD), where most of the state’s economic development dollars flow – it would be easier to see the total number of dollars of state taxes going to individual businesses.

After related scandals and significant pressure, including the threat of transaction database legislation, the ESD began voluntarily reporting certain corporate subsidies under Cuomo in its Economic Incentives Database, but it does not cover as many grants and there are no penalties or sanctions for failure. to report information.

“Putting it into law gives it a lot more teeth and also subjects it to legislature oversight, which is crucial,” said John Kaehny, executive director of good government group Reinvent Albany, which pushed lawmakers to pass the database. offers for years.

“The database of agreements we hope will become one of the fundamental means by which the legislature and the governor measure the success or failure of different types of grants,” Kaehny said. “Currently, the state database is simply too incomplete to be a useful analytical tool.

The database of offers would still contain gaps. It would not cover local government grants, worth an additional $5 billion a year. And individual recipients could always hide behind limited liability companies to hide the total state grants they receive.

“It would still be a huge, huge step forward,” Kaehny said.

The database is not done. Both the Senate and State Assembly included some form of it in their single-chamber budgets in 2017 and 2019, but the proposals were scaled back during budget negotiations with Cuomo, who used corporate grants from prolifically and often with little supervision.

Hochul banked her first term as governor on a burgeoning reputation for intra-governmental cooperation and transparency, but did not say whether she supported the legislation.

“Governor Hochul’s Executive Budget includes bold moves to seize this unique opportunity to invest in our future, and we look forward to continuing to work with the Legislature to finalize a budget that serves all New Yorkers,” Avi wrote. Small. , a spokesperson for Hochul, in an email to Gotham Gazette.

Comrie was optimistic that he could go under Hochul. “The new administration is more cooperative and committed to making government more transparent,” he told Gotham Gazette.

“I’m getting very positive feedback from all the members we talk to about this because it does more to ensure the taxpayer funds that are allocated are allocated fairly and equitably,” said Comrie, a Democrat representing a predominantly black district in Queens. .

Part of that means being better able to track taxpayer dollars going to minority and women-owned businesses, he noted.

Senate Majority Leader Andrea Stewart-Cousins ​​and Assembly Speaker Carl Heastie did not respond to requests for comment. All three Albany leaders — Hochul, Stewart-Cousins ​​and Heastie — are Democrats.

For the first time, the database of Senate and Assembly deal proposals uses much the same language. This means the bills will not have to be reconciled later and indicates broad agreement among legislative leaders as they begin negotiations with the Hochul administration.

The agreements database has more support this time around in the Legislative Assembly, in part because it no longer includes grants from local governments, according to Kaehny.

“It was done very deliberately to simplify the policy, basically,” he said, adding that supporters wanted to see it extended to localities in the future.

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