8:55am

Wed September 14, 2011
Regional councils

Follow the money: How NYS is paying for its regional councils

As Marie Cusick reported yesterday, the governor’s regional economic development councils are the centerpiece of his administration’s efforts to jumpstart the state’s economy.

The ten regional councils have a hand in dishing out a billion dollars in state incentives. Today, we take a look at how that money will work - and where it’s coming from.

“Fifteen Miles on the Erie Canal”

As director of the New York State Canal Corporation, Brian Stratton is in charge of the Erie Canal - probably the only canal in the country you know by name.

“It’s a tremendous link,” Stratton says of the system’s marquee canal. “[It’s] not only helping to spur economic development but it also connects [us] to our state’s strong transportation heritage too.”

The former mayor of Schenectady and self-described “canal freak” says the Erie Canal is the reason why many upstate communities are where they are. From Buffalo to Waterford, Stratton says it’s more than just a symbol of New York’s storied past. 

“I see the Erie Canal - and all of our canal systems - as an economic lifeline really,” says Stratton.

And that’s not just rhetoric. The Canal Corporation actually plays a role in doling out a relatively small pot of state economic development money - mostly for parks, trails and preservation. But because of that $1.5 million in available cash, even the Canal Corporation has been roped into Governor Andrew Cuomo’s Regional Economic Development Council initiative.

In fact, the Canal Corporation is one of nine state agencies playing a role in the governor’s “grassroots” strategy to fund growth.

How big is a billion dollars? 

The idea for the councils is this: Regions come up with a plan, and put in one application per project to get perks from a variety of state agencies - and there are a lot of perks involved. In all, the governor says a billion dollars is on the table.

But let’s take a timeout right here.

We talk a lot about this “billion dollar pot of money” that the regions are competing for, but actually it’s two pots of money. There’s a small one and a big one. The small pot is money that the governor put aside specifically for the regional council projects. That pot holds $200 million - which is the money the 10 regional councils are initially fighting for. The best four plans win $40 million each. The bottom six have to split the remaining $40 million.

But there’s still a much larger pot of money out there.

This bigger pot is existing incentives that the governor cobbled together from across those nine state agencies - which is how the Canal Corporation got involved. In the end, the perks in the big pot are worth about $800 million.

So that’s where we get a billion dollars. Which sounds like a lot, but:

“New York state’s overall economy in a given year is over $1 trillion,” says Robert Ward of the Rockefeller Institute of Government. I’ll save you the trip to the calculator: that billion dollars in incentives amounts to only one-tenth-of-1-percent of our trillion dollar economy.

Ward says it’s important to be realistic about what the councils are likely to achieve. He says the impact of a billion dollars will be relatively minor, but that it’s still a good idea to get regional leaders from business, academia and government to figure out a strategic plan.

“If you don’t have an unlimited supply of money,” Ward says, “it’s a lot more important that you choose your priorities.”

Will it work?

We hear this sentiment a lot when we talk to experts about the councils: There’s reason to be optimistic, but the proof will be in the pudding.

One of those experts is Matt Ryan, the executive director of ALIGN, the Alliance for a Greater New York. His labor-backed organization produced a report on the new councils back in June.

The top line finding was that the councils are a step in the right direction. Ryan says creating one economic vision for a region versus, say, 25 is a vast improvement.

But Ryan points out that the $800 million pool of “cobbled together” money preserves old programs, and could potentially let strategies that aren’t working continue under the banner of a “new” approach. 

“Even if you’re making more coordinated and effective decisions, is the money really delivering a return on investment?” asks Ryan.

That’s not the only potential problem with the councils: Ryan says there’s also the question of what happens after this first year of the initiative.

“Can the legislature hammer something out with the executive branch that really puts our public investment behind this for the long-term?” Ryan asks. “I think that’s where the rubber’s going to hit the road.”

Add to that the competitive element - that some regions will get a big chunk of money, while others won’t. It could cause tension when legislators return to Albany in January to piece together funding that will keep the regional council framework alive.

Join the Innovation Trail, Lieutenant Governor Robert Duffy, and other guests Friday, September 16 at 1 p.m. on your local public radio station, for Innovation Conversation: Your Community, Your Call, to discuss the councils and what you want for your region's economy.  And take our survey to let us know what your priorities are for your community.