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Accountability and transparency concerns regarding the state’s $400 million nanotech subsidy deal

October 4, 2011

A rendering of the ongoing expansion at the SUNY College of Nanoscale Science and Engineering.

Senator Greg Ball, a Republican from Putnam County, isn’t so happy about the state’s recent decision to invest $400 million in a consortium of tech companies building a $4.4 billion nanotech facility in Albany. The subsidy package includes $250 million from ESDC, $100 million in cheap power from NYPA, and energy efficiency credits from NYSERDA. Governor Cuomo said in a press release that the $400 million will go to the SUNY College for Nanoscale Science Engineering, not to any of the private companies.

Ball has previously criticized IBM for taking subsidies in return for promising not to cut jobs, and then reneging, and he also thinks that the state should be investing in small businesses, not corporate giants. As he explains:

IBM has already received hundreds of millions of dollars from New York taxpayers. Not even a few years back, we found out IBM was cashing checks from taxpayers while simultaneously patenting a new technology specifically designed to outsource our jobs in America. Now, as small businesses everywhere are shutting their doors, we are going to reward these global giants with an even larger giveaway of corporate welfare, without asking the tough questions?

It is the new and small businesses, those creating over 70% of the jobs, that we must help if we truly want to turn this economy around. This $400 million could have been divided into 1,600 or more small business loans, spreading opportunity to new businesses and entrepreneurs statewide. In fact, a portion could have immediately went to fix bridges, roads and crumbling infrastructure, putting thousands of New Yorkers back to work, now that would have helped Main Street!

According to Senator Ball’s press release, he’ll be holding a press conference in Peekskill on Thursday to call on Governor Cuomo to “demand real answers from these corporate giants.”

One solution could be to make sure that the subsidy deal includes sufficient clawbacks—contract provisions that require the subsidies to be repaid (or clawed back) if the companies don’t follow through with their job creation or investment promises. This could be difficult, however, if none of the subsidies are going directly to the tech companies.

The project agreements that detail the subsidies should also be made public and posted on the websites of the public authorities involved in the deal. But whether that will actually happen is questionable, since the authorities may consider these agreements “proprietary” and therefore exempt them from the disclosure and reporting requirements of the Public Authorities Accountability Act of 2005 and the Public Authorities Reform Act of 2009. It may take some prompting from the Authorities Budget Office or a Freedom of Information Law request to get more transparency about the details of the subsidy package.

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