Making Economic Development Work for You
This morning, our conference announced new legislation designed to bring transparency to New York’s many economic development programs.
The legislation, Assembly Bill 10531, is the first legislative response to recent investigations into state-administered economic development programs.
Elements of the legislation includes:
Stronger Oversight of Taxpayer-Funded Programs
The proposal would create a three-member board to review and approve funding originating from lump sum appropriations worth $1 million or more. The board would be made up of the comptroller, attorney general, and director of the Division of Budget. The board would also be required to review the top qualifying entities for projects to ensure there are no conflicts of interest. This would provide greater oversight of appropriations and install greater checks and balances on how discretionary money is distributed, and help ensure projects benefit all taxpayers and communities.
The measures would also implement reforms to the lump sum appropriation budgeting process so conflicts of interest are identified, appropriations are prohibited when such conflicts exist, and require all appropriations to be lined out with specific details provided.
Penalties for Missing Report Deadlines
Just as legislators’ salaries are withheld when the April 1 budget deadline is missed, this proposal would hold the salaries of the governor and appropriate agency commissioners and deputy commissioners when economic development reports fail to meet reporting deadlines. Taxpayers and businesses are routinely fined or penalized for missing deadlines imposed by the state. Yet under the current administration, information on publically-funded programs is consistently withheld, and mandated reporting deadlines are frequently missed. Penalizing officials who fail to meet these requirements would accelerate the flow of information to the public.
Independent Review of Economic-Development Programs and Tax Code
Along with a need for dramatic reforms is an independent assessment of current programs and what improvements must be made. Tax credits have long been relied upon to incentivize job creation and economic development; however the current tax credit system creates winners and losers. The Minority Conference proposes a third-party study to look at the Personal Income Tax and Corporate Franchise Tax rates to determine the best alternatives for reducing the PIT and CFT rates and create a more fair tax system.
In addition, A.10531 directs the state comptroller to identify a third-party — with preference going to an entity not currently doing business with the state — to conduct a comprehensive audit of all economic development programs. As the scale and scope of the state’s current efforts continues to expand significantly, it is imperative that the level of accountability improves.
Prohibit Political Contributions to Appointing Authorities
The pay-to-play nature of state government has gone unaddressed for too long. Immediate steps must be taken to remove potential conflicts of interests from state-administered programs. For example, appointed members of the Regional Economic Development Councils can help develop proposals, apply for grant money, play a role in the selection process, and donate to political campaigns. This system creates an atmosphere where big donors may not only receive appointments, but potentially grant funding.
The Minority Conference will prohibit individuals and their families serving as appointees who distribute discretionary state funds from making political donations to the appointing authority.
In addition to his remarks at the onset of the press conference, Republican Leader Brian Kolb also released a statement,
“Officials in Albany need to wake up and realize they are not spending their own money. Investigations are expanding, subpoenas are flying, and concerns are mounting about how economic development funds are administered. As elected representatives it is our job to be responsible stewards of taxpayer dollars, but somewhere along the way, people have forgotten that. Right now, the state is conducting its own investigation into problems with its own economic development programs — is there any more evidence that the system needs to be changed?”
In addition to his remarks this morning, Assemblyman Oaks, the Ranking Minority Member of the Assembly Committee on Ways and Means, released the following statement,
“There needs to be significantly more transparency and accountability in the way New York State hands out economic development funding. In just this year’s budget, there is an estimated $2.6 billion controlled by the governor. Passing this legislation would give stronger oversight of all economic development programs, complete an audit of current programs, review our tax structure, attack political influence in economic development funding, and assure timeliness of economic development reports. We need to make sure taxpayer dollars are being invested wisely to help create jobs and career paths, and cultivate the business growth that New York desperately needs.”
Assemblyman Ray Walter, Ranking Minority Member of the Assembly Committee on Economic Development also released a statement,
“In order to gain back the trust of New Yorkers, who have endured far too much corruption and abuse, the Legislature must make every effort to make sure future spending is done fairly and with integrity. Taxpayer money is not collected so crooked pols can buy influence. Our conference is recommending important accountability and transparency measures that protect hard-working taxpayers and will ensure vital resources end up where they are needed. Economic development programs only work when they are administered equitably.”
We were able to catch up with several of our members to discuss the need for this legislation and greater oversight of New York’s economic development programs.