ALBANY – The Cuomo administration’s economic development czar found himself Wednesday defending how the state spends hundreds of millions of dollars annually on job creation efforts when he went before a skeptical group of Republican and Democratic lawmakers.
“Why we call success failure is a mystery to me,’’ Howard Zemsky told lawmakers.
Zemsky, a Buffalo businessman who heads Governor Andrew M. Cuomo’s Empire State Development agency, heard criticism about transparency of grant awards and re-branding of the state’s Start-Up NY program after taxpayers spent $53 million promoting its name and benefits.
But Cuomo’s proposal to add another $500 million to the Buffalo Billion program barely came up. Cuomo recently told The Buffalo News that he stood only a 50-50 chance of getting approval for a new round of funding for the Buffalo Billion, which has featured a number of high-profile developments in Western New York but is also a subject of a criminal prosecution by U.S. Attorney Preet Bharara.
Most of the discussion over the Buffalo Billion II, as it is known, came from a couple of Western New York lawmakers who praised the idea of more money coming to the region.
It wasn’t all so easy for Zemsky on other economic development proposals.
"I’m concerned about a lack of transparency,’’ Sen. Phil Boyle, a Suffolk County Republican, complained to Zemsky about 10 regional councils – composed mostly of academic officials and business executives – that have helped the Cuomo administration decide how to spend $4.6 billion the past five years on various projects. He noted Zemsky’s agency denied him access to voting records for specific project ideas by the councils’ members.
Lawmakers want more of a direct role in how those funds are spent and want the council members to publicly disclose their personal finances, just as thousands of people connected to the state must do each year.
Zemsky said the council members sign a code of conduct, are trained in ethics matters and recuse themselves in the scoring of projects with which they are associated.
“They’re doing, I think, a tremendous service,’’ Zemsky told Boyle.
Later, talking to reporters, he said the issue is “a distraction” from the program's successes.
And he told one lawmaker that the councils, instead of criticism, should get “a really well-deserved pat on the back from everyone.’’
Boyle, in response, said the public does not know about potential conflicts because they are exempt from state disclosure rules.
“I don’t care if they’re volunteers. We still need to know,’’ he said.
Zemsky said the regional council approach has created or retained 210,000 jobs. Under later questioning by one lawmaker, he said 20 percent of those jobs fall into the “creation” category.
When Assemblyman Fred Thiele, a Long Island Democrat, claimed the regional councils had engaged in “cronyism” in recommending projects for funding, Zemsky dismissed the idea as “so unfair.’’
Next up for Zemsky came Start-Up NY, which Cuomo had called a “transformational” program when okayed in 2013. It gives companies that locate in certain zones tax-free benefits for 10 years. In a report last year, the program created slightly over 400 jobs. This year, Cuomo has proposed rebranding it as the Excelsior Business program that Zemsky said is more narrowly focused on “earlier stage, pre-income, in development, R&D-related companies.’’
But lawmakers questioned why the state had so heavily promoted Start-Up NY with ads across New York and the nation. Assemblyman Robin Schimminger, a Kenmore Democrat who heads the Assembly economic development committee, openly worried that Cuomo wants to create “pretty vanilla” job reporting requirements – used to gauge its effectiveness – of the new Excelsior program.
Zemsky said the Excelsior idea is a “simplification” of the Start-Up NY effort.
“It’s a re-set,’’ he said, and he dismissed criticism by one Republican saying, “I realize it doesn’t have the instant gratification you demand.’’
“You can spin it however you want, but the program was an epic failure," responded Assemblyman Steve McLaughlin, a Rensselaer County Republican.
Zemsky earlier said the program had helped change some attitudes about New York.
“We had developed for 40 years a pretty lousy reputation in and out of the state as a place to do business,’’ he said.
Other issues lawmakers queried Zemsky about included tourism signs erected along the Thruway that the federal government has said have illegal designs, minority- and women-owned business contracts, and efforts by lawmakers to restore oversight by state Comptroller Thomas DiNapoli over state university-led economic projects.
Zemsky bristled when Sen. Liz Krueger of Manhattan referenced “all of the criticism of corruption scandals” involving economic development.
"When you say 'all of the allegations,' " Zemsky responded, he noted there have been 5,000 various economic development projects and that the corruption scandal relates to "a very, very small few and none of them related to ESD."
Cuomo tapped Zemsky’s agency to directly lead the programs after prosecutors brought charges against contracts that had been OK'd by entities tied to the SUNY Polytechnic Institute in Albany.
In his testimony, Zemsky said a $200 million pot of “strategic funds” is also being proposed to address “outstanding obligations” that had been made to private entities in projects administered by SUNY before the corruption scandal hit last year.