Our governor Andrew Cuomo seems to be cruising to easy re-election next year, but that doesn't stop him from going on a record-breaking binge of crony capitalism. Can we even keep track of all the handouts to non-needy businesspeople? Well, let's start a list:
Regional Economic Development Councils. On December 11, the governor announced grants of $715.9 million of state taxpayer funds as this year's installment for these regional councils. Here is the press release. How are the state government geniuses able to out-guess the market as to which will be the successful businesses?
[A]s part of the Round III process, a Strategic Implementation Assessment Team composed of state agency commissioners traveled to every region of the state to view progress on projects that have received state funding, assess the regions’ strategic plan implementation, and review priority projects endorsed by the regions in their 2013 applications.
Clearly the investment bankers at Goldman Sachs are no match for the acumen of this assessment team. This is an annual program, so expect roughly the same amount of handouts again next year and every subsequent year.
To put the $715 million in perspective, it is more than 1% of annual state tax revenues (that are projected at about $69 billion for 2014), and about 0.8% of the state-funded portion of the entire state budget.
START-UP NY. Then there is the big program of tax exemptions for so-called "start up" businesses. This one is advertised all over the airwaves at night. Off-budget of course, so there's no way to get a handle on how much it costs. You don't have to start up from scratch -- "adding jobs" will do the trick. The exemptions apply to business taxes, property taxes, sales taxes, and even the personal income taxes of employees. You are a successful long-time New York business just struggling to keep going in this high tax environment? Too bad, you don't qualify.
NY-Sun Initiative. No politically correct program of crony capitalism would be complete without massive handouts for wealth-destroying renewable energy projects. Crain's New York Business reports today that New York is "finally" giving a push to solar energy after years of lagging the lights of Vermont and Massachusetts.
NYSERDA said that as of the end of this year and several rounds of awards, 299 megawatts of solar power had been brought online or were in development through NY-Sun. A total of $126 million for 184 projects was awarded this year, the authority said.
Where does the money come from? "Mostly through assessments on utilities." In other words, through jacking up your electric bill to get the same energy that would be available elsewhere for less. Today we had barely 7 hours of sunlight and even that was totally obscured by heavy overcast and rain. Well, it's a good thing that we had a full back-up fleet of fossil fuel energy projects in place.
Fracking? Here's something the private sector is eager to do with no need for subsidy or tax break. In other words, it would create rather than destroy wealth. But in New York, that is forbidden.
The bottom line is that for a few billion taxpayer dollars a year we create a dependent class of government crony business people who destroy wealth but can be counted on to give back in political contributions to their paymasters in Albany. Meanwhile the upstate areas that get all these grants and exemptions continue their long-term economic decline.