Subsidy Sheet: NY Legislature restores Comptroller contract review, creates surprise $10B tax break for chip fabs

June 10, 2022

The Legislature finally restored some of the Comptroller’s powers to review state contracts, ten years after Governor Cuomo’s first budget removed them. We thank the sponsors, Senator Reichlin-Melnick and Assemblymember Zebrowski, their staffs, and all of the organizations and unions who helped get S6809-A/A7925-A through on the last day of session. Now, Governor Hochul needs to sign this common-sense bill without delay or watering it down with chapter amendments.

The push for this bill began seven years ago after the Buffalo Billion bid-rigging scandals of 2015. The public was angry that a billion dollars in state contracts were steered to major political donors to then-Governor Cuomo – some of whom were arrested and convicted of bid-rigging by federal prosecutors. Most of the bill that just passed was part of the Comptroller’s Procurement Integrity Act in 2017, legislation we strongly supported that passed the Senate, but not the Assembly. After the new bill becomes law, we would like to see the Comptroller’s contract oversight powers fully restored as the Assembly proposed in its 2022 budget proposal.

More good news – the Legislature also:

Passed a Ramos/Solages bill to bring more transparency to the Community Advisory Committees that are part of Empire State Development’s economic development process.
Passed a Comrie/Paulin bill reversing changes to the Public Authorities Control Board pushed through by Cuomo in 2019.
Did not renew the 421-a program, which will expire on June 15th. We agree with affordable housing experts who see it as a $1.7 billion a year giveaway to NYC real estate.
Passed a Breslin/Bronson bill requiring state agencies to do a cost comparison before entering into contracts.

Unfortunately, despite robust support from labor unions, watchdogs, and public policy groups, the Assembly did not pass Senator Gianaris and Assemblymember Dinowitz’s bill to fully end the state’s Opportunity Zone tax break. If the legislature does not act soon, this Trump handout to the wealthy could cost New York $420 million a year.

For more, check out our post-session statement.

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In a move that can only be described as Albany at its worst, the Legislature, at the governor’s behest, passed a last-minute bill providing up to $10 billion in state subsidies to “green” chip fabs in New York State(Times Union). It is the largest industry-specific subsidy in NY history.

State officials say the state subsidy will help NY land a chunk of the federal government’s recent $52 billion in subsidies for semiconductor manufacturers. Under the state bill, “green” chip fabs will become eligible for New York Excelsior subsidies, which provide tax credits for jobs created in New York state.

There are serious problems with the state’s “Green” CHIPS legislation:

The “green” qualification probably applies to all new chips and chip fabs. Chip makers are always reducing energy consumption when building a new generation of fabs and chips.
Manufacturers will be able to “roll over” their unused credits to subsequent years. Current Excelsior recipients cannot do so.
Jobs at chip fabs get by far the biggest government subsidies. The 2011 GlobalFoundries subsidy cost NY taxpayers $1 million per job.
The state subsidy will be provided even if the federal government does not subsidize fabs in NY. Related, there is no guarantee or strong reason to believe state subsidies will be reimbursed by the federal government.

I worry that if we continue this pattern … We’re only going to get economic development in the context of the biggest … megadeals in the hopes of drawing people into New York State as opposed to focusing on what is already here, who is already here, and what they are trying to do, and investing in them.

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The Daily News reports that Governor Hochul pushes ahead with the Penn Station redesign (good) and the secretive, bad-math financing deal with Vornado (bad).

Reinvent Albany executive director John Kaehny told NY1 that the project’s financing scheme remains unclear, could deprive the city of property tax revenue, and may amount to a giveaway to Vornado, the primary developer:

“The new Penn Station and building it and paying for it? Great, let’s do it. Let’s pretend that the only way to pay for that is via this complex, extremely secretive deal with Vornado? Boo on that.

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Other stories you might have missed:

At Boondoggle, our friend Pat Garofalo also writes about the “Green” CHIPS subsidy and other states’ giveaways. The New York Times also reports on the powerful interests pushing for the subsidies.
The Commercial Observer covered the State Senate’s passage of the bill ending NY’s Opportunity Zone tax break.
A new OZ property in Raleigh, North Carolina has a “skylounge” and a “demonstration kitchen,” with rents $1,000 more than the average across the city (WRAL [dot] com). Reminder: This NC project can, under the program, cause NY to lose tax revenue.
Two op-eds in City Limits:
- Opportunity Zones are “a windfall for wealthy investors,” says Albany Law School professor Edward De Barbieri.
- 421-a is “an indefensible anachronism—an expensive and socially unjust subsidy for luxury developers that feeds the fires of our housing crisis,” say John Choe and Marty Rowland.
NY Deputy Comptroller Tina Kim talks about the state’s workforce development efforts, or lack thereof (Capitol Pressroom).
Governor Hochul took no notes in conversations with NFL Commissioner Roger Goodell prior to the $1.1 billion Buffalo Bills stadium subsidy (Times Union).

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If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany. Please send questions and tips to tom [at] reinventalbany [dot] org. We look forward to hearing from you!