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Ending corporate welfare as we know it

The most over-the-top reaction to Gov. Paterson's proposed budget -- which is saying a lot, as reading the paper conjures up images of a kindergarten class on a bad day -- comes from Andrew Rudnick.

The proposal to change the Empire Zone program is unethical -- unethical! -- says the $337,000-a-year president of the Buffalo Niagara Partnership.

"What he's proposed is very stark," Rudnick said in yesterday's Buffalo News. "That's ethically wrong, bad business practice, and sends a terrible message to anyone considering a future investment in New York state."

No, Andrew, the Partnership accepting $50,000 from the New York Power Authority in 2005 and then coming up small as the community tried wrestle money out of the authority during negotiations to extend NYPA's control over the Niagara Power Project could be challenged on ethical grounds.

So could the downtown business community's hijacking of the Empire Zone program, intended to promote investment and job creation in impoverished and blighted sections of the nation's third-poorest city, to fatten their bottom lines.

But Paterson's efforts to introduce accountability into the program? Or revoking benefits to companies that fail to deliver jobs as promised? Or insisting the big business share the pain of the state's fiscal crisis?

I call that "about time."

For the past six years, I have spent most of my reporting time investigating economic develop programs in Western New York. One word constantly comes to mind: Squandered.

We've used industrial development agency subsidies to underwrite everything from dollar stores in North Buffalo to doctor offices in Amherst to upscale groceries in Clarence.

Federal block grant money aimed at combating poverty has ended up in the pockets of developers with unbankable projects.

Low-cost power that can help build a new economy is instead used to prop up fading industries.

And Empire Zone benefits have flowed to companies that are a cross between Who's Who in Corporate Buffalo and Fortune magazine's list of the richest Americans.

Warren Buffett's had two companies getting benefits, Geico and The Buffalo News.

Tom Golisano's hockey team and arena are getting them.

But enough about the billionaires. On to the multi-multi-millionaires.

There's Bob Rich and company, Jeremy Jacobs and his Delaware North, and M&T Bank headed by Bob Wilmers, the big business enchilada in town who the governor has installed to run the Empire State Development Corp., the state's top economic development agency.

And don't forget about Cellino and Barnes. Yup, lawyers are getting Empire Zone subsides, too. How do you think they can afford their TV commercials?

You add up all these gimmes from the assorted subsidy programs and it comes to $300 million, maybe $400 million a year.

Tell me, anyone see anything approaching a half-billion-dollars a year of economic growth?

I didn't think so.

The reason why is that the subsidies come without strings attached. Oh yeah, there's accountability -- sometimes -- but only in theory.

Investigation after investigation, study after study has shown that many to most companies fail to deliver the promised jobs and investment. The attitude is: "Oh, well, they tried."

The Empire Zone program alone is costing the state more than $600 million a year. Paterson wants to cut the drain on the budget by half. But the suits at the public trough are screaming, saying, in effect, the program is an untouchable entitlement.

"Who is going to locate a business or make a big capital investment in upstate New York without incentives?" asked Jordan Levy, chairman of the Erie Canal Harbor Development Corp.

Maybe a capitalist, Comrade Levy.

Bill Clinton reformed welfare as we know it in 1996.

David Paterson is trying to reform corporate welfare as we know it in 2008.

You go, guv.

 

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Subsidies
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