Legislators protest distribution of $700 million in business aid

Last month's negotiations for a new state budget showcased the continuing disagreement between Gov. Andrew M. Cuomo and the State Legislature over how to award more than $700 million in business aid each year.

The legislature's majority conferences, for the second year in a row, recommended taking away $150 million from the Regional Economic Development Councils, which Cuomo created in 2011. The councils are a key vehicle for distributing economic development dollars. The governor eventually persuaded lawmakers to include the capital grants in the 2014-15 budget.

But Assembly Democrats and the State Senate's governing coalition of Republicans and independent Democrats succeeded in drawing attention to their concerns.

EYE ON LOCAL LEVEL

"Legislators are upset by the fact that the governor has basically taken away their ability to provide member items at the local level," said Ron Deutsch, executive director of the union-backed advocacy group New Yorkers for Fiscal Fairness.

Legislative member items and capital grants are pots of money that were included in state budgets for years before the regional councils. Individual senators and Assembly members could use the funds to back -- in an ad hoc fashion -- expanding businesses, charities, fire departments and other community institutions.

During the Great Recession, then-Gov. David A. Paterson forbid new money for the pots because of a fiscal crisis, and scandals involving at least eight lawmakers who enriched themselves with the funds. Cuomo has balked at resuming the old aid distribution system, which critics call "pork" and supporters label "community projects."

Four lawmakers, who requested anonymity Wednesday, saying they didn't want to anger the powerful governor, alleged the regional councils had usurped the prerogative of senators and Assembly members to help constituents.

However, the lawmakers said their misgivings went beyond member items.

The councils shouldn't distribute funding because a state law didn't establish them and council members, unlike lawmakers, aren't required to disclose business activities and sources of income to prevent conflicts of interest, the lawmakers said. They cited examples of councils recommending aid for businesses or universities with ties to council members.

CITING JOBS, OVERSIGHT

Cuomo administration officials Wednesday called the regional councils a vast improvement over legislative member items and capital grants, because state funds are now given out based on five-year job creation plans developed by each of the 10 councils.

"For years the legislative member-item process directed millions of taxpayer dollars based on the interests of politicians, not New Yorkers -- with no oversight over who was receiving the money and no accountability for how it was spent," said Jason Conwall, a spokesman for Empire State Development, which oversees the councils.

The councils, he said, are "giving local stakeholders and business leaders of each region the ability to guide state investments from the bottom up, while adding public input and transparency to a process that formerly took place in secrecy."

Council members, appointed by Cuomo, come from business, education and labor. Hundreds of other community leaders serve on working groups that vet, but do not vote on, funding recommendations.

CURB ON CONFLICTS

The officials also said council members must disclose, in writing, potential conflicts of interest. They do not participate in deliberations about projects with which they have ties. Council members also aren't paid.

Statewide, Conwall said, the 10 regional councils have retained and created about 120,000 jobs by allocating more than $700 million a year in aid.

Sen. Jack Martins (R-Mineola) praised the Long Island council for securing $244.3 million in three statewide competitions, but he said final decisions on which projects receive money should be made on Long Island, not in Albany.

Projects are judged on a 100-point scale with the regional councils awarding up to 20 points; the state agencies that provide the funds, 80.

"Certain projects may not meet a criteria that is set in Albany but may actually be very important to a region . . . We need to be able to meet local needs," said Martins, chairman of the Senate's commerce, economic development and small business committee. (He serves on the local council but cannot vote on projects.)

His counterpart in the Assembly, Robin Schimminger (D-Buffalo), wasn't immediately available yesterday, while a spokesman for the lower chamber's majority declined to comment.

Critics of how governments dole out business aid were generally supportive of the regional councils. The Alliance for a Greater New York is lobbying for improvements, but spokeswoman Kristi Barnes said the councils "are a good step in the right direction."