Governor Cuomo Should Veto 3 Economic Development Bills
2019 Economic Development Scorecard
Three bills to create new economic development programs or expand existing programs passed both houses during the 2019 legislative session. The Governor should veto all three bills.
A2946/S1087 would expand the Empire State Economic Development Fund by adding a new small business crime prevention assistance program. The program would provide grants, loans, loan guarantees, and interest subsidies to small businesses, municipalities, or nonprofits to pay for installation of security equipment and lighting among other crime prevention measures. The Empire State Economic Development Fund disbursed about $25 million in fiscal year 2019. There is very little information available on the projects funded and no data are reported on outcomes.1
A8007/S5716 would expand the Beginning Farmers NY Fund by adding grant tiers to fund smaller projects and broadening eligibility. The Beginning Farmers Fund, also called the New York State New Farmers Grant Fund, supports farmers in the first ten years of ownership interest in a farm operation with grants of $15,000 to $50,000 to expand or diversify agricultural production or increase sustainable production practices. In 2017 the Fund gave out 24 grants totaling about $840,000. While recipients and project descriptions are reported, there are no data reported on outcomes.2
A4312/S1192 would increase the size of grants that can be given through the Entrepreneurship Assistance Centers (EAC) program from $75,000 to $175,000, reduce the program’s reporting from quarterly to annual, reduce the required evaluation from annual to biennial, and push back the deadline for the first required evaluation until 2021. EACs provide counseling, training, and technical assistance to new or aspiring entrepreneurs. The total cost of the program in fiscal year 2018 was about $2 million. The existing annual report on the EAC program provides some data on outcomes, but without comprehensive reporting across other economic development programs, it is difficult to know if the businesses the EACs support receive subsidies from other sources.3
Economic development efforts, including spending and tax expenditures, cost New York State more than $4 billion in 2018.4 These three programs are typical of most state economic development investments, for which there is insufficient accountability and transparency to determine effectiveness. Significant reforms should be made before any programs or benefits are added or expanded, so that investment decisions can be informed by a full picture of costs and results.5
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- Empire State Development, “Empire State Development Quarterly Status Report: 4th Quarter Fiscal Year 2018-19” (April 24, 2019), https://esd.ny.gov/sites/default/files/ESD-Quarterly-Status-Report-2018-19-Fourth-Quarter.pdf, and first quarter 2019 through third quarter 2019 editions, https://esd.ny.gov/esd-media-center/reports/eap-report-2017-18.
- Empire State Development, “2017 Awardees New York State New Farmers Grant Fund Program,” https://esd.ny.gov/sites/default/files/New-Farmers-GF-Previous-Awardees.pdf.
- Empire State Development, “Entrepreneurial Assistance Program: 2017-18 Annual Report to Governor Andrew Cuomo and the New York State Legislature” (January 28, 2019), https://esd.ny.gov/sites/default/files/17-18_EAP_Annual_Report.pdf.
- Riley Edwards, 10 Billion Reasons to Rethink Economic Development in New York (Citizens Budget Commission, February 11, 2019), https://cbcny.org/research/10-billion-reasons-rethink-economic-development-new-york.
- See Riley Edwards, A Blueprint for Economic Development Reform (Citizens Budget Commission, March 13, 2017), https://cbcny.org/research/blueprint-economic-development-reform.