Blair Horner: Albany Makes Things Worse

Jun 26, 2017

As the scheduled 2017 legislative session wrapped up, commentators noted that Governor Cuomo and the legislative leadership failed to address the seemingly unending corruption scandals that have plagued both the legislative and executive branches.

And those commentators are correct, nothing happened despite the convictions of the two top legislative leaders, many rank-and-file lawmakers, and top associates of the governor himself.

But, it’s worse than it appears.

While true that no significant reform was passed, at the behest of the governor, the public’s accountability of important economic development programs actually was made worse.  Yup, worse.

Here’s the backstory: The Start-Up NY program was initiated by Governor Cuomo in 2013 to give tax breaks to new businesses that locate in tax-free areas near college campuses.  The governor said the goal was to encourage the next Google or Facebook to launch in New York and to “supercharge” the economy.  Specific disclosure requirements on Start-Up’s performance were part of the original law.  Those reports showed that the job creating record of the Start-Up program had been underwhelming.  That simple fact has led to criticisms of the governor and his economic development strategies.

What should be done?  A close reading of the final 2017-18 state budget identified that the law had been changed in the secretive budget process – eliminating the reporting requirements for Start-Up!  The solution to bad results is, apparently, to stop reporting them.

When confronted with this change, the Cuomo Administration said it was a mistake.  But that claim turned out to be false.

The governor’s proposed budget had eliminated that reporting requirement.  The state Assembly added it back in during budget talks, but it was eliminated again in the final budget.

Still, the Administration claimed that it was a mistake.

If true, then the period after the budget passed in early April and the wrap up of the session would have seen that mistake corrected – unless the Administration was deliberately misleading the public.

In an effort to correct that “mistake,” legislation was introduced in both the Assembly and Senate to add back the reporting requirement.  But that bill was killed.

As a result, things have gotten worse; the public will get less information on the performance of spending hundreds of millions of taxpayer dollars on economic development.  Reporting is now weakened in an area that has been identified by federal prosecutors as especially susceptible to corruption: the way in which it doles out economic benefits.

The Start-Up program is relatively small compared to the governor’s other economic development programs—which also are in great need of transparency and oversight.

Reformers had been pushing for corruption-fighting measures during the budget and continued after it was approved.  Specifically, they were calling for reforms that would have restored the Comptroller’s independent oversight powers to review contracts before they are finalized, corralled unaccountable, state controlled not-for-profits, and created a “Database of Deals” to post information on spending of billions of dollars in state business subsidies.

None of these reforms were approved, not even the restoration of the Comptroller’s oversight powers.  It is, after all, the constitutionally-mandated job of the separately elected Comptroller to monitor the books of state government.  Yet the governor has spearheaded the effort to pull back those powers.  During the period the governor has been diminishing the Comptroller’s oversight role, the scandals alleged by federal prosecutors occurred.  A reasonable response would have been to restore those powers, but that didn’t happen.

Instead, in 2017 the governor – with the approval of the legislative leaders – weakened the public reporting requirements of Start Up.  His staff then falsely told the public it was a mistake.  And then the legislation to fix that mistake was killed.

New York has been rocked by recent “pay-to-play” scandals tied to the state’s economic development programs.  The lack of transparency and accountability has led to federal prosecution of several high-ranking officials and prominent business leaders.  Removing the requirements could encourage other unscrupulous officials to incite more scandals.

New Yorkers must demand an end to corruption and broader government transparency, not to allow it to get worse.

Blair Horner is executive director of the New York Public Interest Research Group.

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