Economic councils' tracking on state aid is deficient, report says

Gov. Andrew M. Cuomo's Regional Economic Development Councils are doing a poor job of accounting for how millions of dollars in state business aid is being used, an independent fiscal watchdog said Monday.

In a 24-page report, the Citizens Budget Commission said the 10 development councils are not employing consistent and universal criteria to determine whether developers, local governments and not-for-profit groups are creating jobs and making investments in return for help from New York State.

The councils are made up of local business executives, union leaders and university presidents who solicit, judge and recommend funding applications to state agencies, which then make the final decision on who gets aid. Nearly $3 billion in state tax credits and grants have been given out in the past four years.

The Manhattan-based nonprofit commission, established in 1932, said the councils and their administrator, Empire State Development, must remedy the "widespread lack of reporting on project outcomes" which has "limited the state's ability to track performance at both the regional and project levels."

The budget commission also said it found "a weak link between performance and funding, and high costs per job created or retained."

Empire State Development spokesman Jason Conwall defended the councils, saying they had "brought unprecedented transparency and accountability to an economic development process that previously lacked both." Cuomo has criticized the old process as politicized and overly influenced by state legislators.

Conwall said Monday, "the success of the REDC model is undeniable," with aid going to more than 3,100 projects across the state that together are projected to create and retain more than 150,000 jobs.

The commission's report comes in advance of the Dec. 10 ceremony where Cuomo will announce the 2015 aid awards.

He created the councils in 2011, saying state aid would be more effective because local people would be involved in the decision-making.

The Long Island council has secured $326.2 million so far for 347 projects.

The budget commission criticized the lack of information provided by some councils about big projects receiving state help. It looked at 385 "priority projects" funded in 2012, 66 of them in Nassau and Suffolk counties.

The Long Island council scored poorly in reporting on the progress made toward completion of each project, its total cost and related jobs.

"The lack of reporting makes it difficult to decide where funds are being used effectively," the commission said, referring to all 10 councils. "Most of the jobs created cost tens of thousands of dollars per job."

The commission also questioned whether the state's most impoverished regions were receiving sufficient help from Albany. It noted Long Island had been a big winner in three out of four years despite having a stronger economy than some upstate regions. The commission said "no clear relationship yet emerges between the amount of the award and a region's economic performance."

Still, the commission acknowledged that Empire State Development had instituted new reporting requirements this year that could boost accountability in the future. The commission said the changes showed "ESD recognizes the past level of reporting was insufficient." The agency disagreed.