Study Calls for Big Changes At Empire State Development
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A new state-commissioned study is recommending a major administrative overhaul for New York’s primary economic development agency, Empire State Development, calling it far too decentralized and lacking in strategic vision to promote a thriving statewide business climate.
The study, released by consultant A.T. Kearney Inc. yesterday, comes at a time when the state is re-evaluating numerous aspects of its economic development programs.
In one such review, part of an apparent attempt to gain positive results from a much criticized Empire State Development job-creation program, the Spitzer administration is preparing to send letters to more than 3,000 companies pointing out that they have not met their job creation targets, Assemblyman Richard Brodsky, a Democrat of Westchester, told The New York Sun yesterday.
A spokesman for Empire State Development confirmed the state was writing the letters but said the list of businesses is not yet final. The letters are expected to go out shortly.
Empire State Development is an umbrella organization for an array of secondary agencies that manage programs on tourism, brownfield cleanup, small business assistance, and scientific research. The Empire State Development Corporation, a subsidiary, administers large commercial and residential development projects that include the rebuilding of the World Trade Center.
The state has also pledged to cut the amount of subsidies issued throughout the state, overhaul rules for power plant creation, and reform a cleanup program aimed at brownfields. Governor Spitzer has promised a more equal approach between upstate areas and the New York City region, appointing separate economic development chairmen.
But the new report suggests an even more radical reorganization of Empire State Development, including a new concentration on promoting “innovate” industries such as nanotechnology and bioscience, a strong centralized leadership structure, and a rebranding that includes a name change. Much of the study’s criticism is focused on programs aimed at revitalizing the upstate economy, which has been losing jobs and population in recent decades as it struggles to adjust to a post-industrial landscape.
Chief among those is the Empire Zone program, a costly endeavor that has offered a wide array of often lucrative subsidies for job creation. The program is the subject of the letters to be sent out by the Spitzer administration.
Mr. Brodsky said action on the program has been needed for years. “It’s a small step in the right direction,” he said. “The program is a complete failure, it’s costing literally billions of dollars for no good economic result.”
New York State lost 380,000 manufacturing jobs between 1990 and 2005. While growing sectors such as education and professional services created enough jobs to make up for the decline, the study notes that those jobs were primarily in “public and publicly-subsidized private sectors,” particularly upstate.
The result is a bifurcated statewide economy in which a thriving downstate metropolis subsidizes jobs in the less prosperous upstate economy, the CEO of the Partnership for New York City, Kathryn Wylde, said.
“The rest of the state is where they’ve lost half a million people, and they basically haven’t moved from the industrial economy to the modern age,” Ms. Wylde said. “We are subsidizing an economy that’s not generating private sector jobs anymore.”
Detailing structural reasons for the state’s failure to create adequate job growth, the report pointed to Empire State Development’s scattered network of loosely connected subsidiaries that each are “diminished and suboptimized through missed opportunity, uneven leadership, questionable metrics, and limited accountability.”
A more powerful and centralized system of leadership would better be positioned to promote the various, often unconnected programs that operate throughout the expansive agency, the report concluded.