The following appeared on Friday, October 27, 2023, in the Blank Slate Media newspaper chain and on its website, theisland360.com:
Last week I read a disturbing report, “Increasing the Transparency and Accounting of Empire State Development,” issued in July by the fiscal think-tank, Reinvent Albany.
Here’s the study’s finding in a nutshell: “ESD is among the state authorities and agencies most vulnerable to corruption, pay-to-play, and political abuse.
ESD has an amorphous mission that reduces its public accountability, and the board and senior management are completely controlled by the governor and show very few signs of acting independently.
ESD, by design, engages in massive, secretive, sole-source deals totally at odds with basic principles of government spending and procurement that emphasize transparency and competitive bidding.”
Not exactly a ringing endorsement.
For those not familiar with the state’s ESD, here is a little historic background. Back in the 1990s, Gov. George Pataki consolidated a number of state agencies and public authorities under one umbrella called ESD.
These subsidiary organizations include the Department of Economic Development, the Job Development Authority, and the biggest of all, the Urban Development Corporation, a.k.a. the Empire State Development Corporation.
The UDC leviathan has more than 50 active and inactive subsidiaries and more than 40 housing project-related corporations.
Pataki publicly proclaimed that he founded this agglomeration in the name of “efficiency.”
But the reality is that it gave the governor huge power to distribute state subsidies to favored corporations. Since inception, ESD has served business interests before it served the public interests.
A governor rules ESD with an iron fist. Gov. Hochul appoints most of the board members to the various boards—many of them political cronies or contributors.
The governor also “hires and fires the person who is the combined CEO and president of the UDC; … the president, CEO and chair of the Job Development Authority, and the commissioner of the Department of Economic Development. This person also serves as an ex-officio member of the ESD board and has the ability to hire and fire ESD staff …. The board of directors cannot fire the president and CEO of UDC.”
In effect, ESD officers serve at the pleasure of the governor and, as you might guess, they follow the governor’s orders on grants, irrespective of project merits.
As for the board of directors, they act as rubber stamps. “Projects,” the Reinvent Albany report points out, “are initiated by the governor’s office and presented to the board for a perfunctory and performative vote.”
ESD keeps most of the information about projects under cover. They rarely disclose the amount of grants, cost per job, feasibility studies, or evaluations of the progress and success, or failure of projects.
The criteria for supporting a given project is not spelled out or released for public review. It also “engages in sole-source bidding, a non-competitive purchasing process that favors a particular company.”
At the end of 2021, ESD reported it had invested in 4,717 loan, grant and tax benefit projects. Taxpayer dollars expended on the programs, many of which have failed (i.e.: the “Buffalo Billion” deal with Tesla) are in the billions of dollars.
In October 2022, for example, Gov. Hochul and Senator Schumer announced to much fanfare, a deal with Micron to build four chip plants. Subsidies offered to the company total a staggering $5.5 billion.
When the state and Micron were pushed by fiscal watchdogs to explain the methodology for the grant, Reinvent Albany noted, the REMI Inc. study on the economic and fiscal impact ESD provided, “was a post-hoc rationalization for the terms already agreed to buy the aforementioned mention parties.”
As for corruption, readers may recall that two ESD programs have been the subject of federal corruption trials that convicted two of Gov. Andrew Cuomo’s former associates.
The Reinvent Albany report concluded that “the governor and legislature use ESD to oversee misguided and discredited programs and projects they manufacture and … do very little to ensure agency success and effectiveness.”
Quite a mess.
Do you think Albany will do anything about the lack of public accountability?
Don’t hold your breath.
