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NY needs to rein in business giveaways
October 27, 2017

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We appreciate that regional rather than Albany officials screen the projects New York's Regional Economic Development Councils put up for state funding. Still, though, it's not a democratic process - the North Country council's members are not elected. Therefore, it's important for local people to second-guess their decisions.

First, some positives: We appreciate that the REDC process, started under Gov. Andrew Cuomo, only awards funds after each project is done and its jobs are created. We also know it takes a lot of effort and scrutiny to get a grant; one has to work hard for what is often called "free money."

We also know most of the REDC's $750 million annual giveaway is not new money; $530 million of it was previously distributed by state agencies, lawmakers and governors. We agree that the REDC process is better - but still deeply flawed.

While it takes lawmakers' political pork largely out of the equation, it creates pork barrels all over the state. The REDC process is rife with conflict of interest since council members are among those submitting projects. Also, the process offers far more tax money to private business, which opens the door to crony corruption and acclimates business people to relying on government rather than their own fundraising potential.

Furthermore, there is plenty of reason to doubt whether New York's economic development efforts really work. A USA Today Network investigation, published in June, confirmed what many suspected: New York taxpayers don't get much bang for their buck from all these giveaways, especially upstate.

We already knew the state is wasting our money in its giveaways to the film industry, but state records show that the annual $420 million breaks down to $42,000 per job, and almost all in New York City and the surrounding area. Is "Saturday Night Live" really going to start saying "Live from Atlanta ..." without subsidies?

Regarding the REDCs, the reporters wrote, "New York's 10 regional councils have designated more than $4.4 billion to 5,300 projects since they were launched in 2011. But the money is largely void of benchmarks and job-creation goals, limiting the public's ability to objectively determine whether the dollars have been well spent."

Also, "The investments also have yet to turn the tide of upstate, which is suffering from population losses and a declining workforce."

Yes, unemployment has dropped statewide since Cuomo was elected in 2010, but that's also a national trend as the U.S. slowly recovered from the 2008 recession. Also, a report issued this week by the Federal Reserve Bank of New York said recovery has stalled upstate.

"[O]nce the jobs recovery began in 2010, employment in upstate New York started to grow again, though at a pace well below the nation's," the report said. "The result of this slow but steady recovery was that by mid-2015, upstate New York had gained back all of the jobs that were lost during the Great Recession - a milestone the region had failed to reach at all during the prior few business cycles. Troublingly, though, job growth in the region stalled shortly after crossing this milestone. Indeed, only a handful of jobs have been added to the area's total employment count since early 2016."

The study showed that the areas losing the most jobs lately include Buffalo, where the state has spent the "Buffalo Billion" for economic development, now tarnished by corruption allegations.

"Not all the news is bad," the report said. The bleeding has stopped in Utica and Binghamton, and "job growth has accelerated in Ithaca and remained fairly steady in Albany, Syracuse, and Glens Falls."

Still, it's hard to see how state economic development spending has saved upstate, especially considering how much New Yorkers have been taxed to pay for it.

It gives us skepticism about a public-private "Gateway to the Adirondacks" complex Cuomo wants to build on the site of the long-defunct Frontier Town theme park in the tiny hamlet of North Hudson, at I-87 Exit 29. The state allocated $13 million for it in this year's budget.

In the end, New York simply spends too much on this economic development, with too little accountability and oversight. It should end film subsidies outright, sharply rein in the REDC process and give the money back to the taxpayers.

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