Since Gov. Andrew Cuomo took office in January 2011, he has invested billions of taxpayers’ dollars into business ventures and so-called job-creating projects.
Regrettably, most of those investments have been flops.
Remember Start-Up NY? Cuomo spent over $50 million on television and radio commercials to promote that program, which grants ten years of no taxes to approved technology companies that locate in zones near state and city university campuses.
The return on the $50 million investment was awful. Between 2013 and 2016 only 408 had been created at a cost of $122,549 per position. (The dismal results may explain why we have not heard much of Start-Up NY in recent years.)
But that’s not the only failed program.
An investigative report released in June 2017 by the Gannett newspaper chain revealed that $13 billion in tax incentives, granted by state and local job programs during Cuomo’s tenure in office, had seriously underperformed and lacked transparency on how that money had been spent.
The report noted, for example, that Cuomo’s Regional Economic Councils had pledged $4.4 billion to 530 projects between 2011 and 2017, but few had job creation targets, and there were potential conflicts of interest.
It gets worse.
In August, the office of State Comptroller Thomas DiNapoli released an oversight audit of select high-technology projects funded by New York’s Empire State Development Corporation to determine if taxpayer money “is effectively spent and is producing the intended results.”
Formerly known as the Urban Development Corporation, EDC is the primary state agency responsible for coordinating, monitoring and funding the billions of dollars of investments in private companies that are expected to create jobs and spur economic growth in financially depressed parts of New York.
The audit, which covered the period Jan. 1, 2013 through April 30, 2019, focused on a number of expensive high-profile projects, including the “Buffalo Billion” initiative.
The auditors concluded:
• Initial project assessments lacked sufficient detail, such as reviews of the financial viability of beneficiary companies and cost-benefit analyses to assess the overall benefits of the projects, to justify the use of state funds.
• There is a lack of consistent and rigorous performance and evaluation standards for measuring whether programs and projects attain their intended goals.
• Public progress reports provide limited and conflicting information on high-tech projects’ progress, making it difficult to determine their current statuses.
And despite the billions expended, the projects have not created the promised number of new jobs.
The largest state investment (I use that term loosely) was $995 million in the four “Buffalo Billion” high-tech projects: the RiverBend Tesla project, the Buffalo IT Hut (IBM), the Medical Innovation and Commercialization Hub, and the Buffalo Institute for Genomics.
The biggest piece of change, $791 million, went to the RiverBend Tesla project, which—surprise, surprise—is not meeting expectations.
EDC’s own benchmark for such projects is $30 in benefits for every $1 spent. As for the RiverBend project, EDC expects the economic benefit per $1.00 spent will be a paltry $0.54.
How pathetic is that?
The audit points out that when the RiverBend project was expanded in 2014, the governor boasted 5,000 jobs would be created.
As those job numbers failed to materialize, however, the state agreements with RiverBend were amended to adjust the employment targets. The amendments reduced “the number of jobs required to be located at the RiverBend facility, as well as making it unclear what and where the remaining jobs will be.”
In other words, Cuomo’s “Buffalo Billion” investment, which he boasted would “create thousands of jobs and spur investments in new investment and economic activity” in Western New York has stalled.
In fact, despite the state’s investment of $995 million, Western New York experienced between 2011 and 2017 a 2.1 percent decline in advanced manufacturing jobs and a 2.6 percent decline in Life Sciences jobs.
How sad is that?
Time and again New York politicians have squandered taxpayer money in dubious corporate investments.
When will Albany pols learn that their job is not to be stock pickers, but to reduce taxes and regulations to attract private investors willing to risk their money to spur job creating economic activity in the Empire State?