Gov. Hochul this week announced a deal with the National Football League and the Pegulas, the owners of the Buffalo Bills, to spend more than $1 billion in public funds on a new NFL stadium. But that’s just the tip of the proverbial iceberg when it comes to the Hochul administration’s love of spending taxpayer funds on corporate subsidies.
In fact, in addition to the stadium, her administration has proposed billions in new spending at the Empire State Development Corp. — the state’s chief economic development agency. That doesn’t include the $5 billion that county Industrial Development Agencies spend on corporate subsidies each year.
Put it all together and that’s billions in state money transferred from public taxpayers to private corporations every single year to sustain a model of economic development that a significant amount of research and real-world experience, in New York and all across the country, has shown to be a miserable failure. Indeed, the administration’s nominee to run the ESDC, Hope Knight, couldn’t even answer basic questions about economic development program effectiveness or job quality during a hearing earlier this year.
The state can and must do much better.
Our organizations and several partners last week released “The Dirtiest Dozen,” a report outlining 12 of the worst corporate subsidy deals New York has made over the last decade. Among them: a deal with Plug Power, which received $4 million from the state per job created; the so-called “Buffalo Billion,” which created a slew of corruption convictions instead of jobs; the Central New York film hub, which was built with $15 million in public money and sold for a single dollar; Amazon receiving hundreds of millions of dollars to run local New York businesses into the ground; and the pharmaceutical manufacturer Medline claiming it needed public money to build a new facility, yet when that money was denied, going ahead and building anyway, basically admitting its ask was a sham.
These episodes are disturbing individually, but when put together reveal the width and breadth of the problems inherent in the way the state has been doing economic development. And there’s so much secrecy and sleight of hand built into the system — with deals covered by nondisclosure agreements and negotiated behind closed doors with little public input, and many of the players involved having significant conflicts of interest — that we’re surely missing some of the worst abuses.
Tellingly, one of the best ways to determine whether a state will increase its corporate subsidy spending in a given year is not to look at any economic indicator, but simply to see if the incumbent governor is running for re-election. The Hochul administration is attempting to build political power and reward political allies, not create a sustainable economic foundation for the state’s residents.
Not only has Hochul proposed doubling down on failure to boost her own political fortunes, but her administration seems utterly unwilling to embrace any reforms of current economic development programs. The distinct impression is that the administration thinks a system that has repeatedly failed to live up to its promises other than to campaign donors and billionaires is fine as it is.
Fortunately, the Legislature is not standing idly by. Both the state Senate and Assembly included key reforms in their respective budgets, including mandating the creation of a database of deals that will allow anyone to examine a subsidy arrangement and whether it’s creating the promised jobs, as well as allowing the state comptroller to audit economic development deals, a power which was removed by the Cuomo administration. Other proposed reforms in the Legislature include banning non-disclosure agreements in corporate subsidy deals and preventing corporations like Amazon from receiving subsidies to build out their warehouse networks.
But transparency, ultimately, will only get the state so far. Ample research has shown that investing in people — workers, families, students, children — is a far better use of public funds than bribing corporations to locate facilities in a particular place. The state should reprogram money currently being spent on wasteful corporate subsidies and sports stadium boondoggles and spend it instead on education, children, the workforce and the infrastructure that supports local businesses. Invest in the people who make New York great and economic prosperity will follow.
Garofalo is director of state and local policy at the American Economic Liberties Project. Kink is executive director of the Strong Economy for All coalition.
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