Questions The State Senate Should Be Asking About Economic Development Subsidies

New York State government provides about $4B a year in various forms of subsidies to business. Unfortunately, there is little evidence that these subsidies are a worthwhile way to spend tax payer dollars compared to traditional investment in public infrastructure, investments in government efficiency, paying down debt or across the board tax cuts — investments which benefit all of the public, instead of a select few.  Despite this, Governor Cuomo’s budget proposes $1B in new business giveaways and the re-appropriation of billions more. Additionally, unlike in New York City, there are no restriction on political contributions from people and businesses receiving subsidies from the State, or otherwise “Doing Business” with the state. Not only that, campaign contributors are not required to reveal who their employer is. Given the enormous amount of money at stake, the huge number of subsidies, and the diverse ways that subsidies are provided, we have serious concerns about the risk of corruption.

Here are some of the questions we think state senators should be asking the Cuomo administration at today’s hearing.

Transparency

1. How much exactly is the state providing in subsidies from all sources, including state controlled non-profits like SUNY RF and Fort Schuyler / Fuller Road?
2. Why isn’t there a single database of state subsidies to businesses which makes it clear how much a business is getting from all sources, and links to a contract?
3. Does ESD provide all data in a machine readable, downloadable format? ( The Governor and Port Authority publish machine readable budgets and open data.)
4. Are the actual owners of subsidized businesses published anywhere?
5. Are contracts, deliverables and clawback provisions for all subsidies published online? Where?
6. Are land sales, purchases and transfers from all state subsidy providers published online anywhere?

Budgetary Fairness — increases for business subsidies versus 2% cap for everything else

1. What is the average year over year percentage change to business subsidies since  Governor Cuomo took office?
2. Are business subsidies kept to a 2% rate of annual increase like other state programs? Why not?
3. Can you explain on-budget and off-budget subsidies?

Corruption and Conflict of Interest

1. How does the public know that businesses are getting subsidies based on merit instead of  based on campaign contributions or political support?
2. Does the Cuomo administration support requiring political contributors to disclose what business they own or employs them? (NYC requires this.)
3. Does the Cuomo administration support restricting political contributions from people and businesses receiving business subsidies? (NYC requires this.)
4. Does the state know who is profiting from business subsidy deals?
5. Do law firms representing state authorities like the Power Authority also represent businesses receiving subsidies from the Power Authority?
6. What does the ESD do to ensure that law firms and lobbyists are not working both sides of a business subsidy deal?

Governance and Accountability

1. Should all subsidies go through ESD? Why or why not?
2. What is the reasoning behind using non-profit groups controlled by the state to deliver so many subsidies?
3. Do you think it creates confusion and a lack of transparency and accountability to have so many state entities providing subsidies?
4. What role does the ESD play in ensuring subsidies delivered by SUNY RF, SUNY Poly and Ft. Schuyler make sense and are fully accountable?
5. How much authority should the Comptroller have to approve and audit subsidy contracts?

ESD Board Activity and Transparency

1. Have there been efforts by ESD to expand its board to include a more diverse set of leaders that includes more women and people of color and can help lead efforts to targeted at helping the unemployed and working poor?
2. Can you explain the ESD subcommittees and their expectations, how often they meet, etc.
3. Are copies of board minutes available (The sites archives seems to not have been updated:  https://www.esd.ny.gov/AboutUs/ESDBoardArchives.html)
4. Are board meetings open to the public?

Public Notification and Engagement

1. Is the ESD public hearing process consistent? (NYCEDC posts hearing notices 30 days before hearings, applications and cost/benefit analyses 12 days in advance of a hearing, and legal notices 10 days in advance.)
2. Does ESD hold public hearings before it votes on projects? ( It did not with the Kingsbridge Armory in the Bronx. There, the ESD board voted on the project 12/17/2015 but held a hearing in the Bronx on 1/17/2016).
3. How many days in advance is the public hearing information on a project posted on the ESD website?
4. When are details such as the General Project Plan, cost benefit analysis, copy of application, etc. made available to the public and where on the agency’s website can it be found?
5. How does ESD  inform impacted communities and elected officials about proposed projects and public hearings? What information is offered to them?
6. Does ESD offer translation services at hearings or provide hearing materials in other languages where the majority of the community may speak English as a second language?

Evidence for Efficacy of Business Subsidies

1. What evidence does ESD have that subsidizing businesses is a better way to spend public funds than rebuilding public water systems, roads, bridges and rail systems?
2. When does the ESD make its cost/benefit cost analysis public?
3. What research and analysis does ESD undertake to assess what types of subsidy deals produce a better return on public dollars? Where are these analysis published? (If this analysis is not undertaken, how does ESD know it is not wasting public funds?)
4. What does ESD consider a reasonable amount of public funds to spend to create one new job year of private sector employment?
5. What does ESD consider a reasonable amount of public funds to spend to retain an existing job?
6. What measurement does ESD use to measure success?