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State to spend $25 million more on ads despite critical audit

The Billy Joel classic "New York State of

The Billy Joel classic "New York State of Mind" and the man himself were part of a 2014 New York State tourism summer ad campaign. The ad included many shots of Long Island. Credit: YouTube

State economic development officials Monday approved spending an additional $25 million on business and tourism commercials despite an independent audit that found they produced no measurable benefits.

The board of directors of Empire State Development unanimously approved the increase, bringing total spending authorized for "Open for Business" ads to $261.5 million. The ads tout Start-Up NY tax-free zones for expanding companies, other business-aid programs and "I Love NY" tourism destinations.

The money will go to the Manhattan-based advertising agency BBDO to purchase more airtime on television and other media.

Previously, the Empire State Development board had approved $236.5 million in spending; $206 million has been used so far, a spokesman said.

The campaign began in 2012 with $50 million. Most of the funds come from the sale of low-cost electricity generated by the state Power Authority.

Before Monday's vote, ESD president Howard Zemsky blasted critics of the ads, including state Comptroller Thomas DiNapoli.

"We should be careful not to fall victim to some of the criticisms, which I think are very shortsighted," said Zemsky, who was appointed by Gov. Andrew M. Cuomo in January. "I think the spending, the branding of the state, will pay and is paying big dividends."

A study commissioned by ESD, the state's primary business-aid agency, found the commercials are reversing negative perceptions about New York among business executives from other states. In polls last year, 51 percent said New York is a good place to do business, up from 2013's 23 percent.

A week ago, DiNapoli released an audit showing "no tangible results" from the ads in 2012, 2013 and most of last year.

He said $45.1 million was spent to promote Start-Up NY between October 2013 and October 2014, with just 41 companies enrolling in the program.

Together, they pledged to create 1,750 jobs over five years in return for not paying state and local taxes for up to 10 years. The ad spending equals more than $25,000 per job, DiNapoli said.

He also questioned why Start-Up NY ad expenditures increased as the number of monthly inquiries from businesses fell between January and June 2014.

DiNapoli's audit focused on Start-Up NY because ESD did not provide sufficient data about its other programs. A DiNapoli spokesman declined to comment Monday.

The additional money is part of $90 million included in the 2015-16 state budget adopted by the state legislature on April 1.

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