Public Hearing - February 13, 2020

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 2   ----------------------------------------------------


 4              In the Matter of the
           2020-2021 EXECUTIVE BUDGET ON

 6   ----------------------------------------------------

 7                              Hearing Room B
                                Legislative Office Building
 8                              Albany, New York

 9                              February 13, 2020
                                9:37 a.m.


12              Senator Liz Krueger
                Chair, Senate Finance Committee
                Assemblywoman Helene E. Weinstein
14              Chair, Assembly Ways & Means Committee


16              Senator Pamela Helming
                Senate Finance Committee (Acting RM)
                Assemblyman Edward P. Ra
18              Assembly Ways & Means Committee (RM)

19              Senator Anna M. Kaplan
                Chair, Senate Committee on Commerce,
20               Economic Development and Small Business

21              Assemblyman Robin Schimminger
                Chair, Assembly Committee on Economic
22               Development, Job Creation, Commerce
                 and Industry
                Senator Diane J. Savino
24              Chair, Senate Committee on Internet
                 and Technology

 1   2020-2021 Executive Budget
     Economic Development
 2   2-13-20

 3   PRESENT:    (Continued)

 4              Assemblyman Al Stirpe
                Chair, Assembly Committee on Small Business
                Senator Joseph P. Addabbo Jr.
 6              Chair, Senate Committee on Racing, Gaming
                 and Wagering
                Senator James Skoufis
 8              Chair, Senate Committee on Investigations
                 and Government Operations
                Assemblyman Kenneth Zebrowski
10              Chair, Assembly Committee on Governmental
                Senator John Liu
                Assemblyman Harvey Epstein
                Assemblyman Robert Smullen
                Assemblyman Billy Jones
                Senator Brad Hoylman
                Assemblywoman Marianne Buttenschon
                Assemblyman Christopher S. Friend
                Senator Luis R. Sepulveda
                Assemblyman Steve Stern
                Assemblyman Chris Tague
                Senator James Tedisco
                Assemblyman Brian D. Miller
                Assemblywoman Mathylde Frontus

 1   2020-2021 Executive Budget
     Economic Development
 2   2-13-20

 3   PRESENT:    (Continued)

 4              Senator George M. Borrello

 5              Assemblywoman Inez Dickens

 6              Assemblyman Robert J. Rodriguez

 7              Assemblyman Charles Barron

 8              Senator Rich Funke

 9              Assemblyman Daniel J. O'Donnell

10              Assemblywoman Alicia Hyndman

11              Senator Shelley B. Mayer

12              Assemblyman Walter T. Mosley



15                      LIST OF SPEAKERS

16                                      STATEMENT    QUESTIONS

17   Eric Gertler
     President, CEO & Commissioner
18   Empire State Development
     New York State Department of
19    Economic Development                     11         15

20   RoAnn M. Destito
21   NYS Office of General Services
     (OGS)                                     143       152
     Mara Manus
23   Executive Director
     NYS Council on the Arts                   169       173

 1   2020-2021 Executive Budget
     Economic Development
 2   2-13-20

 3                    LIST OF SPEAKERS, Continued

 4                                       STATEMENT   QUESTIONS

 5   Ilana Berger
     New York Director
 6   Hand in Hand: The Domestic
      Employers Network                     190        196
     Ryan Silva
 8   Executive Director
     New York State Economic
 9    Development Council
10   Brian Sampson
     President, Empire State
11    Chapter
     Associated Builders &
12    Contractors, Inc.                     197        209

13   John Ravitz
     Executive VP/COO
14   The Business Council of
15       -and-
     Ken Pokalsky
16   Vice President
     The Business Council of
17    New York State, Inc.                  223        235

18   Melinda Mack
     Executive Director
19   NY Association of Training
      and Employment Professionals          252         258
     Allan Gandelman
21   President
     NYS Cannabis Growers & Processors
22    Association, Inc.                     267        273

23   Randy Wolken
     President & CEO
24   Manufacturers Association of
      Central New York (MACNY)              284         288

 1   2020-2021 Executive Budget
     Economic Development
 2   2-13-20

 3                     LIST OF SPEAKERS, Continued

 4                                       STATEMENT   QUESTIONS

 5   Donald Maurice
     Outside Counsel
 6   Receivables Management Assoc.
      International, Inc.                   298
     Jonathan Teyan
 8   Chief Operating Officer
     Associated Medical Schools
 9    of New York                           303        308

10   Thomas J. O'Donnell
11   Theatrical Teamsters
      Local 817
12       -and-
     Louis Bertini
13   Eastern Region VP
     Motion Picture Editors Guild           310        317
     Peter Bauer
15   Executive Director
     Protect the Adirondacks                324
     Tom Speaker
17   Policy Advisor
     Reinvent Albany                        329
     Norma Nowak, Ph.D.
19   Executive Director
     NYS Center of Excellence in
20    Bioinformatics & Life Sciences
21   James Clements, Ph.D.
     Director of Project Management
22   Athenex
23   Stephen Keegan
24   Enhanced Pharmacodynamics              334        345

 1            CHAIRWOMAN KRUEGER:     Good morning.

 2   We're ready as we're going to be, was the

 3   answer.    This is Day 13 -- Hearing 13,

 4   sorry --

 5            CHAIRWOMAN WEINSTEIN:    Day 11, I

 6   think.

 7            CHAIRWOMAN KRUEGER:     Whatever it is.

 8   We're in a blur.

 9            (Laughter.)

10            CHAIRWOMAN KRUEGER:     But you know who

11   you are, and you'll be introducing

12   yourselves.    For example, I'll read this

13   sheet and let you know that I am Liz Krueger

14   and this is the budget hearing on economic

15   development.

16            I chair the Senate Finance Committee.

17   I'm cochair of today's budget hearing.        Today

18   is the 12th of 13 hearings conducted by the

19   joint fiscal committees of the Legislature

20   regarding the Governor's proposed budget for

21   state fiscal year 2020-2021.

22            These hearings are conducted pursuant

23   to the New York State Constitution and

24   Legislative Law.

 1         Today the Senate Finance Committee and

 2   the Assembly Ways and Means Committee will

 3   hear testimony concerning the Governor's

 4   proposed budget for the New York State

 5   Department of Economic Development,

 6   Empire State Development Corporation; the

 7   New York State Office of General Services,

 8   and the New York State Council on the Arts.

 9         Each representative of the agencies

10   will be introduced as it is their time to

11   testify.   Following each testimony, there

12   will be some time for questions from the

13   chairs of the fiscal committees and other

14   related committees based on the

15   commissioners.

16         After the final question-and-answer

17   period, there will be an opportunity for

18   members of the public to briefly express

19   their views on the proposed budget

20   discussion.

21         I know that there's quite a bit of

22   snow in various parts of the state, so for

23   people who may have hoped to get here and

24   have not, please be assured if you submit

 1   testimony any time in the next seven days,

 2   that will be treated as testimony to the

 3   committees.   It will go up online for

 4   everyone to have a chance to look at and

 5   review.

 6         We have standard rules that we apply

 7   to all of our testifiers.   One, please play

 8   clo -- please play -- please pay -- I didn't

 9   have the coffee yet, I apologize --

10         (Laughter.)

11         CHAIRWOMAN KRUEGER:    -- close

12   attention to the time clocks, because it lets

13   you know how much time you have to speak and

14   then it will glow yellow when you're getting

15   close to the end, and then it will glow red

16   and ring, letting you know your time is up.

17         Chairpersons of relevant committees

18   have a 10-minute allotment for questions and

19   answers of the government witness.    All other

20   legislators who are members of the relevant

21   committees receive five minutes to ask

22   questions of government.

23         Except for the five minutes for

24   relevant chairs, there will be no second

 1   rounds of questioning.   Any legislator who

 2   feels the need to ask an additional follow-up

 3   question, please present themselves to Helene

 4   Weinstein if they're an Assemblymember, or

 5   myself if they're a Senator.

 6         For nongovernmental witnesses, all

 7   legislators have three minutes to ask their

 8   questions.

 9         There may be some people who want to

10   protest in some way -- occasionally, they

11   do -- this afternoon, or maybe they'll show

12   up early.    We just urge people that there are

13   successful ways to quietly protest versus

14   noisy disruptive ways to protest.   We urge

15   people to explore the quieter ways of

16   protest.    Because if not, people who work for

17   the state will actually ask you to leave.

18         I'm just going to start off by

19   introducing members of the Senate, and then

20   Helene Weinstein will introduce members of

21   the Assembly.

22         I see Senator Brad Hoylman, Senator

23   Diane Savino, Senator Joe Addabbo, Senator

24   Luis -- excuse me, I'm losing my mind --

 1   Luis Sepulveda.   I decided to blend you and

 2   John Liu into one Senator.    Senator John Liu.

 3   Senator Anna Kaplan, who's actually the chair

 4   of the two relevant committees today for

 5   Economic Development and Small Business

 6   Services.

 7         And filling in for Jim Seward, who

 8   could not be here, is Senator Pam Helming,

 9   who will introduce her members.

10         SENATOR HELMING:    Joining me today we

11   have Senator Jim Tedisco.

12         CHAIRWOMAN KRUEGER:     Great.

13         And the Assembly?

14         CHAIRWOMAN WEINSTEIN:    For the

15   Assembly we have Assemblyman Schimminger,

16   chair of the Economic Development Committee;

17   Assemblyman Stirpe, chair of our Small

18   Business Committee; Assemblyman Jones,

19   Assemblyman Rodriguez, Assemblyman Stern,

20   Assemblyman Epstein, Assemblywoman Frontus,

21   Assemblyman Barron, and Assemblywoman

22   Buttenschon.

23         Assemblyman Ra will introduce the

24   members of his conference, our ranker.

 1           ASSEMBLYMAN RA:   We're joined this

 2   morning by Assemblyman Chris Friend, ranking

 3   member on the Economic Development Committee,

 4   as well as Assemblyman Smullen, Assemblyman

 5   Tague, and Assemblyman Brian Miller.

 6           CHAIRWOMAN KRUEGER:     Thank you.

 7           And we're beginning with Eric Gertler,

 8   commissioner of the Empire State Development

 9   Corporation and the Department of Economic

10   Development.

11           Welcome.   You have 10 minutes; feel

12   free.

13           COMMISSIONER GERTLER:    Great.   Thank

14   you.

15           Good morning, Chairwoman Krueger,

16   Chairwoman Weinstein, and distinguished

17   members of the Legislature.     My name is

18   Eric Gertler, and I serve as the acting

19   commissioner of the New York State Department

20   of Economic Development and as president and

21   CEO-designate of Empire State Development,

22   ESD.

23           It is a privilege to have been

24   selected for this role, and I'm honored to

 1   appear before you today -- I might add it is

 2   my first time -- to discuss the Governor's

 3   fiscal year 2020-2021 Executive Budget,

 4   alongside ESD's chief operating officer,

 5   Kevin Younis.

 6         ESD, as the state's chief economic

 7   development agency, continues to grow

 8   New York's economy using a strategy built on

 9   four pillars:   Creating vibrant communities,

10   training our workforce, incentivizing the

11   growth of export-oriented industries, and

12   fostering innovation to create the jobs of

13   the future.

14         For our communities, this budget

15   proposes funding for a tenth round of the

16   Regional Economic Development Council -- the

17   REDCs -- initiative, the state's bottom-up

18   approach to economic growth that has

19   supported more than 8,300 projects and will

20   create or retain at least 240,000 jobs

21   statewide.

22         Additionally, the Executive Budget

23   supports a fifth round of the Downtown

24   Revitalization Initiative, enabling more

 1   communities to recreate their urban centers.

 2         ESD is also investing in people, to

 3   ensure every New Yorker has an opportunity to

 4   participate in our growth.   Beyond our

 5   continued partnership on the Workforce

 6   Development Initiative, recently completed

 7   projects like the Northland Workforce

 8   Training Center in Buffalo and the Center for

 9   Advanced Manufacturing Skills in Troy, are

10   improving regional talent pipelines.

11         Our state's diversity is also our

12   strength.   And ESD will continue to improve

13   New York's Minority and Women-Owned Business

14   Enterprise Program by reducing red tape and

15   maximizing participation.

16         During this administration, nearly

17   $16 billion in state contracts have been

18   awarded to MWBEs, more than 8,000 firms have

19   been certified, and our contract utilization

20   rate of over 29 percent is the nation's

21   highest.

22         To attract the export-oriented

23   industries of the future, the Governor's

24   budget proposes to extend the

 1   performance-based Excelsior Jobs Program

 2   under which nearly $1.4 billion in tax credit

 3   awards have secured financial commitments of

 4   almost $10 billion and the creation of

 5   roughly 82,000 jobs.

 6         The Executive Budget would also

 7   establish enhanced benefits for green economy

 8   projects to help ensure that the state's

 9   ongoing transition to carbon neutrality will

10   benefit both our economy and environment.

11         ESD also continues to grow the

12   innovation economy.    Our Division of Science,

13   Technology and Innovation -- NYSTAR --

14   supports more than 70 funded centers that

15   foster the commercialization of technology

16   and ideas.   The Executive Budget would

17   transition NYSTAR's Center of Excellence to

18   Centers for Advanced Technology framework,

19   ensuring that future designations are awarded

20   competitively and maximizing the state's

21   return on investment.   Furthermore, a newly

22   established Innovation Hub would encourage

23   greater collaboration among the centers.

24         Investing strategically in

 1   communities, workforce development, tradable

 2   sectors and innovation enables ESD to

 3   continue generating opportunities for

 4   New Yorkers across the state.   We look

 5   forward to working with you as our

 6   legislative partners to build on our

 7   nine-year record of sustainable, bottom-up,

 8   and regionally led economic growth.

 9         With that, I am happy to take your

10   questions.

11         CHAIRWOMAN KRUEGER:     Thank you.

12         Our first questioner will be Anna

13   Kaplan.

14         SENATOR KAPLAN:    Good morning --

15         (Microphone off.)

16         SENATOR KAPLAN:    Good morning.     Good

17   morning, Commissioner.   Thank you for coming

18   in today and testifying.

19         And can you talk a little bit about

20   the CATs and COEs, their differences, and

21   also in the budget having -- trying to

22   combine the two together and reducing their

23   funding.   And what do you propose?

24         COMMISSIONER GERTLER:     Right.   Of

 1   course.   So if we look at the Small Business

 2   Division -- and those centers are within the

 3   Small Business Division.    Of course they also

 4   work with larger companies, but primarily

 5   small businesses.    Ninety-eight percent of

 6   our businesses in the state are small

 7   businesses representing over 50 percent of

 8   our employment.

 9         And in terms of what we seek to do in

10   terms of small business, I put that into

11   three buckets.    First of all, we help small

12   businesses raise capital.    We also help small

13   businesses with the assistance they need.

14   And in the third bucket, we help businesses

15   commercialize their technology.    So within

16   that third bucket, we think about the CATs

17   and the COEs.

18         To get to the proposal, the idea is

19   that -- following the budget, the idea is to

20   competitively bid the COEs.    The reason for

21   doing that is that we want to lead to a more

22   forward-looking perspective.    We want to be

23   able to invest into the industries of the

24   future, the jobs of the future.    And what we

 1   want to do is put an emphasis on industry

 2   benefits instead of just merely the center

 3   benefits.

 4         In doing so, we want to make sure that

 5   we ensure that these new CATs, they're

 6   nimble, they're agile, and they allow for

 7   greater collaboration, especially with this

 8   new Innovation Hub.   And this Innovation Hub

 9   will allow for additional monies to be able

10   to ensure that there's greater collaboration

11   and also to -- and also to make sure that we

12   can make the right bets on the industries of

13   the future.

14         This is all in the context that we're

15   looking to maximize state resources, we're

16   looking to maximize return on investment.

17   And in terms of ROI, we want to make sure

18   that we have ability to invest into the

19   industries of the future and ensure that

20   we're creating jobs, and in that way making

21   sure that we have the highest ROI.

22         I can also address your question on

23   money, but I --

24         SENATOR KAPLAN:   Please.   Go ahead.

 1         COMMISSIONER GERTLER:    Okay.   So in

 2   doing so, because of the nature of how we

 3   look at, you know, the way this would be kind

 4   of competitively bid, we believe that there's

 5   sufficient funding under our proposal --

 6   because, you know, when you rely on that sort

 7   of collaboration, you rely on the technology

 8   that is being used in a growing technological

 9   economy, one that's often sort of

10   knowledge-based, we believe that you can run

11   the centers, you know, with the funds that

12   we've proposed.   We believe that there's

13   greater efficiencies in doing so.

14         And again, what we are trying to do is

15   ensure that we're looking to maximize state

16   resources, we're looking to get the highest

17   return on our investment that we can and

18   focusing on job creation.

19         SENATOR KAPLAN:   Thank you.

20         So I've had the pleasure of actually

21   visiting some of these Centers of Technology

22   and Centers of Excellence, and I have to say

23   they really do amazing work.   And the

24   partnership between private, state, and maybe

 1   also some of them federal, is amazing to see.

 2   And it's amazing to see the kinds of minds

 3   that it attracts, people coming from all over

 4   to use these centers.

 5            And having 15 Centers of Technology

 6   and 13 Centers of Excellence, that's a total

 7   of 28.    And last year we put in a million for

 8   each of these centers, so that brings the

 9   total to 28 million, as opposed to the

10   19.5 million that the Executive has put into

11   the budget.

12            I personally feel those centers really

13   have a great infrastructure that is already

14   there, that's making New York very

15   competitive in terms of technology, and it

16   attracts a lot of great minds to come here to

17   do the research, and also in terms of

18   products that they are able to produce.

19            You don't think that it's -- we're

20   really shooting ourselves in the foot by

21   making that even less, and to give those

22   opportunities for the private money that's

23   coming into those centers and us giving them

24   this platform, the 28 million, for the great

 1   work that they're doing?

 2         COMMISSIONER GERTLER:     So certainly in

 3   today's day and age those public/private

 4   partnerships are critical.     And, you know, I

 5   couldn't -- I couldn't agree with you more.

 6         In this case, what we're saying is

 7   that those COEs, after the budget, can

 8   competitively bid to become CATs.    So all

 9   we're indicating is that in the new format we

10   believe that there's now sufficient funds for

11   these to be operating efficiently, to have

12   the sort of return that we believe is

13   possible to ensure that we have the type of

14   growth in industry that we need.

15   Particularly in, you know, industries of the

16   future -- quantum computing, things like

17   that -- that we know that New York's economy

18   has grown tremendously because we've invested

19   in these industries of the future.

20         That's what we're looking to do.

21   We're looking to do it in a way that we can

22   ensure that we're using our resources in the

23   most efficient way possible.

24         SENATOR KAPLAN:   Thank you.

 1         Could you also address and tell us a

 2   little bit about the Entrepreneurship Centers

 3   that are throughout the state, the

 4   24 centers, how they get funded, and what are

 5   the benefits that you're seeing from those

 6   programs.

 7         COMMISSIONER GERTLER:    Sure.   Well, on

 8   a personal level, you and I had the

 9   opportunity to visit the entrepreneurial --

10   the EAC at Hofstra.

11         SENATOR KAPLAN:   Yes.

12         COMMISSIONER GERTLER:    No question

13   that, you know, small business is the

14   backbone of our economy.   There are -- and we

15   met many of these younger entrepreneurs,

16   first-time entrepreneurs trying to build

17   their businesses.

18         Those centers are important to make

19   sure that we can provide the type of

20   entrepreneurial assistance that they need.

21   We are continuing to run and fund those EACs.

22   And, you know, as I said up front, 98 percent

23   of the businesses in this state are small

24   businesses.   We want to make sure that the

 1   small businesses can thrive, you know, in

 2   this economy.    And so we'll continue to

 3   operate these EACs.

 4           SENATOR KAPLAN:   Okay.   I agree with

 5   you.    I think those centers really do amazing

 6   work, helping people who couldn't really do

 7   this on their own, and developing these small

 8   businesses and helping some of those small

 9   businesses really flourishing and growing,

10   which helps in fact to grow the economy

11   within the communities that they're in and

12   adding into more of our economy and also our

13   workforce.

14           Do you think the $75,000 help that

15   they get, funding that they get, is

16   sufficient?    Or do you think we can possibly

17   add a little bit to their funding for the

18   great work that they do?

19           COMMISSIONER GERTLER:     You know, I

20   think -- when we look at it, we think it's

21   sufficient to be able to provide the types of

22   assistance and resources that these companies

23   need.

24           I mean, sometimes it's just helping

 1   with a thought, an idea; sometimes it's more.

 2   But on the whole, we do believe that we have

 3   sufficient funds for these centers.

 4         SENATOR KAPLAN:    I have to say those

 5   programs are really amazing, some of the

 6   stories that I heard throughout the state,

 7   from Buffalo all the way to Brookhaven.       And

 8   it was just really great to see how these

 9   centers help, especially minorities and

10   women-owned businesses, to pick up and really

11   start their businesses, come up with the idea

12   and a plan and follow through.

13         Thank you.

14         COMMISSIONER GERTLER:      Thank you.

15         CHAIRWOMAN KRUEGER:     Thank you.

16         Assembly.

17         CHAIRWOMAN WEINSTEIN:    We've been

18   joined by Assemblyman O'Donnell.

19         And we go to Assemblyman Schimminger,

20   chair of Economic Development.

21         ASSEMBLYMAN SCHIMMINGER:     Thank you

22   very much, Chair Weinstein.

23         And welcome to your first budget

24   hearing, Commissioner.

 1            COMMISSIONER GERTLER:   Thank you, sir.

 2            ASSEMBLYMAN SCHIMMINGER:   It may be my

 3   last, but your first.

 4            I wanted to ask questions in three

 5   areas.    First, the RiverBend SolarCity-Tesla

 6   project; secondly, the "database of deals";

 7   and thirdly, the very important area of the

 8   centers of Excellence and the CATs.

 9            At this hearing last year there was a

10   lot of talk about the Amazon project.     The

11   hearing was just prior to Valentine's Day,

12   and Amazon sent our state quite a valentine

13   on Valentine's Day saying that they weren't

14   interested.    But that project was a

15   performance-based project, it really was.

16   The Excelsior tax credits, performance-based.

17   Assistance and construction was based upon

18   the construction occurring, okay?     That

19   project had a lot of pluses to it.

20            Many years ago in our state this

21   administration did a project called the

22   RiverBend project in Buffalo, attracting some

23   solar power-related companies.      One became

24   the next, the next became the next.     And

 1   finally SolarCity, owned by Tesla, occupies

 2   this space, which was built and equipped by

 3   the state to the tune of anywhere -- the

 4   numbers vary anywhere from $750 million in

 5   expense to $950 million in expense.    Almost a

 6   billion dollars to build a facility, lease it

 7   for them for a dollar a year, okay.

 8         There are certain commitments in terms

 9   of jobs to be created, 1460 jobs by the

10   middle of April next year -- next month.

11   Time flies.   And there's a penalty if they

12   don't do that.   That's the only

13   performance-based aspect of this RiverBend

14   project.   The penalty is a 41.2 million

15   penalty recurring year to year to year that

16   they are short of their obligations.

17         Last year at this hearing I asked

18   Commissioner Zemsky -- because many times

19   with these clawbacks, the agency figures out

20   a way to -- well, maybe there was some

21   extenuating circumstance, an extenuating

22   circumstance.    Zemsky was very clear in his

23   answer to my question.   When I asked "Will

24   you enforce this clawback?" he said "Yes."

 1   Okay?

 2           So, Commissioner, my first question to

 3   you is, will you enforce this clawback?     And

 4   talk to us about how you're going to

 5   calculate the 1460 jobs.

 6           COMMISSIONER GERTLER:   Well, thank

 7   you, sir.

 8           Let me give you some context first

 9   about RiverBend, although I know you're very

10   well familiar with the history.   I had an

11   opportunity to go to the RiverBend facility

12   last week, did a tour.   I was pleased to see

13   the facility hustling and bustling, and

14   really excited when someone told me that that

15   used to be a steel factory many years ago.

16           And so to see a facility that is

17   focusing on the importance of the green

18   economy, which is an industry of the

19   future -- a critical priority for our agency,

20   a critical priority for the Governor, a

21   critical priority for the Legislature -- was,

22   you know, exciting to see.

23           There are, as you point out, very

24   strict job requirements.   Last year there

 1   were 500 that were -- as a requirement; they

 2   surpassed that.    There was also an investment

 3   that needed to be done as well of

 4   $130 million.    This year, as you rightly

 5   point out, on April 30th they need to reach

 6   1460 jobs.    They also need to make an

 7   investment of $472 million cumulative

 8   investment.

 9         I can tell you -- and I was pleased to

10   see -- they are, from all accounts, looking

11   to do a lot of hiring.   They have done a lot

12   of hiring.    Their quarterly report indicated

13   that they've done a lot of hiring.    They've

14   hired individuals from some of the training

15   centers in and around Buffalo, which is

16   exciting to see that the whole ecosystem is

17   working, that it's playing an anchor role in

18   terms of hiring, you know, young individuals

19   to be part of that.    And as you know, it's

20   also expanding its production lines.      So

21   there is a lot going on.

22         All that being said, I certainly

23   understand that I'm in a role where I need to

24   protect state resources.   There was a lot of

 1   money that has been devoted towards that.      We

 2   are in the business of jobs.     I want to, you

 3   know -- I certainly like, as an agency, us

 4   focusing on growing jobs.   But at the same

 5   time, I've read that provision, and I

 6   certainly know that there is a penalty

 7   clause.   And if by April 30th they do not,

 8   they do not reach those 1460 jobs, then as

 9   you point out, and as my predecessor has

10   said, we're going to have to look to enforce

11   that penalty.

12          ASSEMBLYMAN SCHIMMINGER:    And how will

13   you verify -- let's say that on April

14   whatever it is, mid-April, the 15th, or

15   April 30th --

16          COMMISSIONER GERTLER:     April 30th,

17   sir.

18          ASSEMBLYMAN SCHIMMINGER:     -- April

19   30th, they say "We have 1460."    You going to

20   believe them?   You going to verify it?   You

21   going to talk to the Tax Department, Labor

22   Department?   How do you know that they

23   actually have 1460?

24          COMMISSIONER GERTLER:   Well, certainly

 1   there's a number of different ways that we

 2   can do so.   You know, ultimately from the

 3   Department of Labor we can verify that.

 4         Our team -- and I will assure you that

 5   the ESD team is focused on making sure that

 6   they do that hiring.   And, you know, we will

 7   have to perform our duty to make sure that

 8   they reach that 1460 number.


10   Database of deals.   The history on this is

11   that we in the Legislature attempted to get

12   this into the budget for a number of years, a

13   statute that would clearly delineate what a

14   database of deals would look like.

15         At the end of the day, last year in

16   the budget, there was simply a half a million

17   dollars put into the budget with a sentence

18   or two saying that there shall be created a

19   database of deals.   Your agency has proceeded

20   to do that, or proceeded along that path.

21         My greatest interest is in the

22   framework that is used.   If I were creating a

23   database of deals, I would create the

24   framework and then plug in the data, let the

 1   data -- let the chips fall where they may.

 2   The idea is objectivity and transparency.

 3         You've got a company that's now doing

 4   this work.   What process are they using?    Are

 5   they first building the framework, sans the

 6   data, or are they building a framework around

 7   the data so that maybe things will look good?

 8   What approach are they taking?

 9         COMMISSIONER GERTLER:    Well, let me

10   give you a little bit of progress on that

11   end, although I know that you are aware of

12   some of the progress.

13         So first of all, $500,000, our board

14   approved the monies for that project.    We've

15   hired the contractor, the IT contractor.      It

16   was an MWBE company who is working towards

17   creating and completing that database.    The

18   goal is to have that completed by the end of

19   this year.

20         And as you point out, it's critically

21   important that that database is searchable,

22   that it is transparent, that it reflects a

23   number of the data points that the

24   Legislature has wanted.   And simply making

 1   sure, most important, you know, funder,

 2   recipient, monies, location, benefits to

 3   community, you know, jobs et cetera -- so all

 4   of that is important.

 5         To do so, you need to create that

 6   framework to be able to put the data in.    You

 7   need to know what are the fields that you

 8   need to build towards before you put, you

 9   know, the data in.   So they're in the process

10   of doing that work now.

11         You know, this is, you know, important

12   for the agency.   We want to make sure that

13   our deals are searchable and transparent.

14   Certainly in our annual report each year we

15   disclose all of those deals, they all become

16   public.   But with a database that is

17   searchable, it just makes it that much easier

18   so that the public, the Legislature,

19   legislators, can have easy access to see all

20   the information that you want.

21         ASSEMBLYMAN SCHIMMINGER:    I think it

22   was Ben Franklin who said leave well enough

23   alone, sometimes, when something is working.

24         Our Centers of Excellence and CATs,

 1   they're working, they're a budget bargain,

 2   historically flat appropriations.      They do a

 3   lot with less.    I'm a little mystified why

 4   we're going to reform these two programs.

 5   But maybe you can summarize an answer in the

 6   next four seconds --

 7            COMMISSIONER GERTLER:    You know,

 8   times --

 9            ASSEMBLYMAN SCHIMMINGER:     -- two

10   seconds -- one second?

11            COMMISSIONER GERTLER:    Times -- times

12   change.

13            (Laughter.)

14            CHAIRWOMAN KRUEGER:     You're going to

15   get asked that question again, don't worry.

16            (Laughter.)

17            ASSEMBLYMAN SCHIMMINGER:    And again

18   and again and again.

19            (Laughter.)

20            CHAIRWOMAN KRUEGER:     Senator Joe

21   Addabbo.

22            SENATOR ADDABBO:   Commissioner, good

23   morning.    Thank you so much for your time

24   today.

 1            COMMISSIONER GERTLER:   Good morning,

 2   Senator.

 3            SENATOR ADDABBO:   We appreciate it.

 4            I chair the Racing, Gaming and

 5   Wagering Committee, and projected for 2020 is

 6   $4 billion for our state in terms of

 7   receipts, which is roughly a $300 million

 8   increase from last year.    I know that of that

 9   $4 billion, it is estimated the localities

10   will get 211 million, to localities, which is

11   also an increase from the prior year, about a

12   140 million increase from last year.

13            So the gaming industry is a great

14   economic generator for our state, as we even

15   look this year to other potential avenues,

16   initiatives, like mobile sports betting.     I

17   guess my question is, your interaction, your

18   department's interaction with the Gaming

19   Commission, do you have regular conversations

20   on how maybe possibly to improve gaming

21   revenues and its distribution throughout the

22   state?

23            COMMISSIONER GERTLER:   Thank you, sir.

24            So I'm going to let our COO,

 1   Kevin Younis, shed light on this.   Thank you.

 2         ESD COO YOUNIS:    That's actually a

 3   pretty easy one.   The answer is we don't have

 4   significant interaction with them on a

 5   regular basis.   We were --

 6         CHAIRWOMAN KRUEGER:     Would you talk

 7   into the microphone, Kevin?

 8         ESD COO YOUNIS:    We don't have

 9   significant -- we recognize the value of the

10   industry, and certainly the Governor was

11   supportive of bringing those casinos and

12   other opportunities to New York, but not

13   regularly.

14         SENATOR ADDABBO:    You know, again,

15   given that the potential is there not only to

16   realize what we are currently realizing, but

17   certainly to increase that, to maximize the

18   potential for revenue -- which in turn is

19   educational funding and, again, Aid to

20   Localities -- I encourage your department, as

21   you are acting commissioner, to reach out to

22   maybe Rob Williams and talk to the Gaming

23   Commission about how to better maximize,

24   again, that revenue and again, in turn,

 1   benefit our residents.

 2          As we go through, again, ideas about

 3   how to expand credibly, in a very methodical

 4   and very analytical way, how to expand the

 5   gaming revenues that our state could realize.

 6   So I appreciate the efforts.

 7          COMMISSIONER GERTLER:     Duly noted,

 8   sir.

 9          SENATOR ADDABBO:   Thank you very much.

10          Thank you, Madam Chair.

11          CHAIRWOMAN KRUEGER:     Thank you.

12          Assembly.

13          CHAIRWOMAN WEINSTEIN:    We go to

14   Assemblyman Stirpe.

15          ASSEMBLYMAN STIRPE:     Good morning.

16          COMMISSIONER GERTLER:    Good morning,

17   sir.

18          ASSEMBLYMAN STIRPE:     Let's go back to

19   the Centers of Excellence and CATs.    In your

20   statement you said that you were combining

21   them and making them compete for grants

22   because you wanted them to focus on relevant

23   technologies or, you know, things of the

24   future with good jobs.

 1         But aren't all the Centers of

 2   Excellence already -- their missions are

 3   identified with future technologies?   I mean,

 4   you have optoelectronic systems, you have

 5   indoor environmental stuff, you have

 6   alternative energy, healthy water.    I mean,

 7   all these things I think are pretty

 8   important, and they're going to be things we

 9   still need to do in the future, so why are we

10   changing this?

11         COMMISSIONER GERTLER:    So I guess I'll

12   be a little bit repetitive, and I apologize.

13         But, you know, the -- in today's

14   economic world, things by virtue of

15   technology, by virtue of globalization -- you

16   know, the world is changing.   You know, in

17   wanting to maximize our state dollars and

18   putting the benefit not just on the center

19   but more on industry to ensure that we're

20   creating more jobs but also being able to

21   ensure more collaboration -- which is really,

22   you know, what is needed today as these

23   industries become more knowledge-based

24   focused, to ensure that there's a lot more

 1   collaboration -- that is why we're looking at

 2   doing that.

 3         With this structure, with the

 4   Innovation Hub to allow for greater

 5   innovation, to allow for the dollars to be

 6   put to make, you know, better ROI on these

 7   industries, you know, it's really at a time

 8   when we're looking at, you know, how is the

 9   world changing and how do we maximize our

10   dollars.

11         What I might do is I might have Kevin

12   add to what I'm saying since, you know, I

13   want to make sure that you sort of understand

14   sort of the differences that we see in terms

15   of investing and placing greater emphasis on

16   the industry benefits, on collaboration, on

17   making sure that these centers -- which are

18   vitally important, which support, you know,

19   public-private partnerships, to ensure that

20   we see the collaboration and the ROI that we

21   seek in today's world.

22         ESD COO YOUNIS:    Thanks, Eric.

23         Assemblyman, I think, as Eric said,

24   the point of the changes primarily focus on

 1   one competition, so that the centers are all

 2   competing for designation.    And we think

 3   competition is always good.

 4         Currently the COEs are lined out in

 5   the budget annually.   So that that's one

 6   thing, to put all of the centers into one

 7   system -- to Eric's point about changing

 8   technology, when we rebid the CATs, typically

 9   we do a review of the technology.    So for

10   example, today we don't have any centers in

11   quantum computing.   That would be something,

12   you know, that we'd need to focus on.

13         I guess one other thing is the

14   $1.5 million for the hub is really, as Eric

15   said, is about bringing the centers together

16   to focus on a problem.

17         So currently the centers are

18   relatively isolated.   They all do great work,

19   the Centers of Excellence, CATs.    But

20   bringing together to focus on, say, for

21   example, smart cities, multiple technology

22   nodes that multiple centers should be

23   contributing to.

24         ASSEMBLYMAN STIRPE:     All right, before

 1   I run out of the time --

 2         ESD COO YOUNIS:    Sorry.

 3         ASSEMBLYMAN STIRPE:      I mean, let me

 4   just state, you know, $26.7 million for all

 5   the CATs and all the Centers of Excellence --

 6   between 2017-2019, they have helped created

 7   or retain 9,816 jobs.    They have created

 8   related economic impacts of $2.57 billion.

 9   Their annual return on investment is anywhere

10   between 25 to 1 and 45 to 1.    I don't know

11   any other economic development program the

12   state has that has that kind of return on

13   investment.

14         And still I can't understand why we

15   would change how they're working.    Because, I

16   mean, they're working extremely well with

17   just, you know, a little bit of money.      I

18   mean, the smart thing to do, if anybody in

19   the private sector was doing this, would be

20   to double the investment in that and get an

21   even bigger return.

22         CHAIRWOMAN KRUEGER:      Thank you.

23         Senator Helming.

24         SENATOR HELMING:     Thank you,

 1   Senator Krueger.

 2         Commissioner, thank you for being here

 3   this morning.

 4         COMMISSIONER GERTLER:    Thank you.

 5         SENATOR HELMING:   I represent an area

 6   in upstate New York, and I just want to talk

 7   for a moment about small businesses and their

 8   struggles in upstate.   I was reading a report

 9   by the Empire Center last night -- it was

10   published in January of this year.   It stated

11   that since the recession has ended, upstate

12   New York has gained private-sector jobs at

13   one-third the national rate and less than

14   one-quarter of the downstate rate.

15         During the same period, only three

16   states in our nation -- Connecticut,

17   West Virginia, and Wyoming -- have lower

18   private job creation rates than the upstate

19   region.

20         As you know and I think most people on

21   this panel know, upstate businesses and

22   communities face many, many challenges.

23   Business owners, including so many farmers,

24   have talked with me and shared with me their

 1   concerns about New York State's high taxes,

 2   high energy costs, onerous and duplicative

 3   regulations -- and I've seen this myself, the

 4   inconsistent interpretation of rules by

 5   regulators, long wait periods for permits,

 6   and even you mentioned the MWBE program.     Try

 7   and get a certification or a recertification

 8   processed in a timely manner.   It's just not

 9   happening.

10           Community leaders, elected officials

11   that I talk with, they're frustrated by the

12   inadequate infrastructure that limits their

13   ability to attract new businesses and for

14   existing companies in their communities to

15   grow.   Funding for our local roads and

16   bridges falls far too short, and the same is

17   true for upgrades or expansions of public

18   water and public sewer systems that

19   businesses need.   And of course we're all too

20   familiar with the lack of broadband services

21   throughout many areas of our state.

22           Commissioner, in your presentation you

23   mentioned workforce developments and the

24   important pipeline that's created to help us

 1   address the workforce shortage.    I don't

 2   think I'm going to have time to ask a

 3   question about it; I will later on with some

 4   of the other folks who will be here.

 5            But I'm concerned about, in the

 6   Executive's budget, he talks about changes to

 7   our BOCES program, which creates a wonderful

 8   pipeline of skilled workers primarily focused

 9   on trades.    It's a great opportunity for our

10   youth.    But I'm going to reserve that for

11   later.

12            I want to return for a moment to the

13   Centers of Excellence.    I understand

14   everything you've said.    I understand that

15   when the Executive proposed this

16   consolidation, he's reducing the funding for

17   the centers by almost $4 million.   I've been

18   able to see the excellent, excellent work

19   that the Centers of Excellence do, up close

20   and personal, through the Center of

21   Excellence for Food and Agriculture, which is

22   located right around the corner from my

23   district office.

24            If the reason for the proposed

 1   consolidation is to better focus on centers

 2   with the highest performance, does the

 3   Executive Budget also propose the elimination

 4   of START-UP NY or any of the other economic

 5   development programs that have drastically

 6   underperformed on their job creation goals?

 7   Or does this budget really only target the

 8   Centers of Excellence?

 9         COMMISSIONER GERTLER:     Thank you,

10   Senator.    A lot to address.

11         Let me start off with your comment

12   about upstate New York and the investments

13   that this Governor has been making.   I

14   think -- you know, I think the Governor has

15   made more investments in upstate New York

16   than almost any other governor.   And, you

17   know, we've seen this and we've seen the --

18   you know, the fruits of that investment in

19   many different ways, and certainly through

20   the REDC program, where we've had a bottom-up

21   approach.    So really an opportunity to listen

22   to the regions, to help us determine what is

23   best for those regions.

24         And if we look across some of the

 1   statistics and certainly some of the

 2   statistics that I look at, unemployment is

 3   low across the board --

 4         SENATOR HELMING:     Commissioner, I

 5   don't want to be rude and interrupt.    We have

 6   less than a minute.

 7         If you can answer the question on

 8   whether or not the Executive Budget proposes

 9   the elimination of START-UP NY or, like I

10   said, any other economic development programs

11   that are underperforming, I'd appreciate it.

12         COMMISSIONER GERTLER:    So with respect

13   to -- with respect to START-UP NY, we have

14   seen successes with START-UP NY, certainly in

15   the Buffalo area.

16         At a time when you need sort of that

17   confluence of private sector and public

18   partnership, we've seen many different

19   businesses grow on the campuses in Buffalo.

20         We value START-UP NY as a tool in our

21   toolbox to help ensure that we help create

22   additional job growth.    So I think from our

23   standpoint, and certainly many of the

24   businesses we've seen up in the north -- I'm

 1   just using, you know, that region -- we've

 2   seen successes there.

 3         SENATOR HELMING:    Thank you.

 4         CHAIRWOMAN KRUEGER:      Thank you.

 5         Assembly.

 6         CHAIRWOMAN WEINSTEIN:      We go to

 7   Assemblyman Jones.

 8         ASSEMBLYMAN JONES:      Good morning,

 9   Commissioner, and thank you for being here.

10         I have a couple of questions for you,

11   so I'm going to let it rip here.     I want to

12   touch back on broadband and where are we with

13   that program.

14         Broadband is extremely important to

15   all of our state, but in the North Country

16   where I am from, we have a lack of access to

17   broadband.   And every year I come here and I

18   ask this question and we say we're 98, we're

19   99.5 percent covered.   And a lot of that

20   coverage comes from satellite technology, in

21   my area especially, and that's just not

22   acceptable to my residents.

23         I want to ask where we are with the

24   broadband rollout.   I've worked very closely

 1   with your office, with the Broadband Office.

 2   I appreciate their work.   But I want to know

 3   where we are with that.

 4         And I also serve on the Upstate

 5   Cellular Task Force that the Governor put

 6   together, with some of my colleagues from

 7   upstate.   I am pleased that the Governor had

 8   mentioned upstate cellular and coverage

 9   during his budget presentation and his State

10   of the State.   But in going through the

11   budget itself, I did not really see any

12   specifics there related to helping us get

13   cellular service.   We all know that broadband

14   and cellular service is extremely important

15   to our economy.

16         And one other point I have to make, I

17   have to get back on MWBE, the requirements.

18   I am okay with the requirements, but over and

19   over and over again I have businesses coming

20   to me that say they can't get certified, they

21   can't get recertified.    It's almost an insult

22   to them what that office is asking of them.

23   The investigators often tell them, over and

24   over again, they need more documents, they

 1   need more of this, they need more of that.

 2         People come to me, I know they're

 3   women-owned businesses, I know they're

 4   minority-owned businesses.    How can we

 5   convince that office that they are, so they

 6   can get certified and recertified?    That is

 7   actually hurting the economy where I am from,

 8   because they can't meet the standards on

 9   state contracts, they have to go other places

10   in the state or, even worse, out of state to

11   meet those requirements.

12         So please, we need some help in that

13   area, we really do.    There's not a week that

14   goes by that I don't have minority- or

15   women-owned business that say they can't get

16   certified or recertified.    We just really

17   need to follow up on that.

18         But if you could touch on those in the

19   limited time that we have.

20         COMMISSIONER GERTLER:     Okay, sir.    Let

21   me take it in order:   Broadband, Cellular

22   Task Force, then MWBE.

23         ASSEMBLYMAN JONES:     I know it's a lot,

24   I apologize.   But it's important to my

 1   residents.

 2          COMMISSIONER GERTLER:    I'll try and

 3   get through it, sir.   And of course always

 4   happy to talk to you afterward.

 5          With respect to broadband, we

 6   certainly understand, the Governor

 7   understands that broadband is critical as far

 8   as the infrastructure.    Accessibility today

 9   is critical.    You know, if you look at where

10   the state was before this program, 30 percent

11   did not have access to broadband -- upstate,

12   65 percent.    So those numbers were, you know,

13   unacceptable.    We realize that.

14          We have been working to improve that

15   now.   We have completed 98 percent of

16   broadband accessibility.

17          But -- and I think you may know

18   this -- I actually earlier in my career

19   worked as an attorney in the broadband area.

20   Laying fiber, the infrastructure fiber, is

21   extremely expensive.   And in some areas, in

22   rural areas, it's cost-prohibitive.    But we

23   still need to make sure that people have

24   access to broadband.   Through fiber, that's

 1   often 100 megabits.    On satellite,

 2   25 megabits, you know, is certainly extremely

 3   helpful in making sure that individuals get

 4   accessibility.

 5            And so we're trying to be creative to

 6   ensure that people have that access.     We

 7   can't always do fiber.   The ROI is just

 8   prohibitive.    And that's why in certain areas

 9   we've turned to satellite functionality.      And

10   by the way, there are other advantages to

11   having, you know, satellite always on and so

12   on.

13            Let me move quickly to Cellular Task

14   Force.    The Governor has also focused on the

15   need for cellular coverage.    For a whole host

16   of reasons, we get it.   You know, the

17   connectivity on cellular is critical.

18   There's safety reasons why you want people to

19   be able to be in touch with their loved ones.

20            Same thing in the cellular business,

21   there are patches where for a variety of

22   different reasons the ROI does not make

23   sense.    What we're looking to do to help that

24   process is we're easing the permitting, we're

 1   easing the regulatory part, we're easing a

 2   whole bunch of different efforts that don't

 3   necessarily require the monies to help to

 4   ensure that coverage is present.

 5          CHAIRWOMAN WEINSTEIN:     Thank you.

 6          Senate?

 7          ASSEMBLYMAN JONES:     Okay.   Please look

 8   into the MWBE requirements.    It's very

 9   important.

10          COMMISSIONER GERTLER:     I'm happy to

11   discuss that with you, sir.

12          ASSEMBLYMAN JONES:    Thank you, sir.

13          CHAIRWOMAN KRUEGER:     Thank you.

14          Senator John Liu.

15          SENATOR LIU:    (Pause for mic.)     Thank

16   you.   I've got it.   It takes five seconds.

17   Thank you, Madam Chair.

18          Welcome, Commissioner.    It was great

19   to walk over the Brooklyn Bridge with you

20   last month against hate and antisemitism.

21   And congratulations.

22          COMMISSIONER GERTLER:     Thank you, sir.

23          SENATOR LIU:    And I'll just give you

24   advance condolences, if you ever feel the

 1   need to accept condolences on your new

 2   position.

 3         COMMISSIONER GERTLER:     (Laughing.)

 4         SENATOR LIU:     You testified that the

 5   program will have $1.4 billion in tax credit

 6   awards.     That's -- is that part of this

 7   year's budget, $1.4 billion?

 8         COMMISSIONER GERTLER:     The -- you're

 9   saying with respect to the -- with respect to

10   the tax credits?

11         SENATOR LIU:     Excelsior, yup.

12         COMMISSIONER GERTLER:     So the

13   reference was to the amount of tax credits

14   that have been provided in the past.     I'm

15   just going to make sure.

16         But, you know, on an annual basis,

17   those tax credits are really -- look at it as

18   being fiscally neutral.    I mean, you know,

19   they're investments into businesses, into

20   jobs, and have a positive ROI, so.

21         SENATOR LIU:     Okay.   But they're

22   actually expenditures, right?    Even though

23   you're not actually writing any checks, it's

24   just $1.4 billion less revenue coming in.

 1         COMMISSIONER GERTLER:     Well --

 2         SENATOR LIU:     I understand you're

 3   arguing that it's because of $10 billion of

 4   financial -- securing financial commitments

 5   of $10 billion.

 6         COMMISSIONER GERTLER:     Correct.

 7         SENATOR LIU:     But it's still costing

 8   $1.4 billion.

 9         COMMISSIONER GERTLER:     So, you know,

10   we look at it from a different perspective.

11   You know, we look at it that those have been

12   leveraged.   It's creating revenue that

13   wouldn't otherwise have existed without those

14   tax credits.

15         So, you know, it's a net plus by

16   providing those tax credits.

17         SENATOR LIU:     Yeah.   I mean, if I was

18   a small business person and I wanted to

19   generate -- I wanted to open up a business in

20   the State of New York and potentially

21   generate, you know -- I'll be aggressive

22   here, generate a million dollars in taxes for

23   the State of New York, would I be able to get

24   $140,000 back?    Because that's basically what

 1   you're saying here:    $10 billion of revenue

 2   that would not be generated, presumably, if

 3   you didn't provide the $1.4 billion of tax

 4   credits.

 5         So my question is, well, what if I

 6   just wanted to generate $1 million?    Can I

 7   get a 14 percent discount on my taxes?

 8         COMMISSIONER GERTLER:     Well, you know,

 9   with due respect, we just look at it

10   differently.   That small business may not be

11   in the State of New York, you would not have

12   those dollars --

13         SENATOR LIU:     I know but I'm saying I

14   will --

15         COMMISSIONER GERTLER:     -- those jobs

16   would not necessarily have been created.

17         SENATOR LIU:     I'm coming to Empire

18   State Development Corporation and saying,

19   Hey, I want to open up a business, and I

20   guarantee you X number of jobs, $1 million of

21   tax revenues a year.   Can I get a 14 percent

22   discount?

23         Sir, the answer is no, the state would

24   never do that.   Yet it would do so for very

 1   large companies, obviously, like Amazon and

 2   other companies that the state thinks will

 3   create a lot of jobs.

 4            I will tell you -- Assemblymember

 5   Schminger {sic} asked you about the -- I'm

 6   sorry.    I'm sorry for brutalizing your name.

 7   Schimminger.


 9   Schwarzenegger.

10            (Laughter.)

11            SENATOR LIU:   Assemblyman Schimminger

12   asked you about the Tesla plant.      And by all

13   indications, they're not going to make it.

14   In fact, they've been cutting jobs.

15            So I would definitely join

16   Assemblymember Schimminger in asking your

17   team to be ready to clawback that money,

18   because they're not going to make it.     I'll

19   make you a -- how much you want to make a

20   dollar bet that they're not going to make it.

21            All right.    So anyway -- I can't

22   believe how quickly five minutes goes.        I

23   want to say that -- and I join some of my

24   colleagues in saying that the Centers for

 1   Advanced Technology and the Centers of

 2   Excellence, they are really good investments.

 3   I mean, that's where we should be putting

 4   money -- not in tax breaks for specific

 5   companies, but building our development

 6   infrastructure.    And to cut that when we're

 7   trying to create even more jobs, that's just

 8   penny-wise, pound-foolish.

 9         But there's even a bigger problem.

10   Many of these centers are located on SUNY

11   campuses.    What do you think you need to --

12   at these SUNY campuses to make these centers

13   actually work?    Yes, you need private-sector

14   partners, but at the end of the day, they're

15   located in universities because that's where

16   our talent, that is where our intellectual

17   talent is.   And I'm talking about not only

18   the faculty, but students.

19         And yet we don't invest in SUNY and

20   CUNY nearly enough.   We're missing the forest

21   for the trees when we're just looking at

22   developing these centers -- which we should

23   do more of -- but making it less and less

24   accessible to the students of this state.

 1   The state is paying less and less of the

 2   operating costs of our SUNY and CUNY campuses

 3   and having the students shoulder more of it.

 4            Madam Chair, thank you for your

 5   indulgence.    But please, I know you're

 6   committed to economic development and

 7   creating jobs, you said so yourself, jobs in

 8   this state.    We need to invest in education.

 9   Thank you.

10            CHAIRWOMAN KRUEGER:     Thank you.

11            Assembly.

12            CHAIRWOMAN WEINSTEIN:    Assemblyman

13   Stern.

14            ASSEMBLYMAN STERN:    Thank you,

15   Madam Chair.

16            Good morning, Commissioner.

17            I wanted to focus on the definition of

18   public works to include construction projects

19   that receive an amount of public funds and/or

20   public benefits.     I wanted to focus a couple

21   of questions this morning particularly on

22   clarity and definitions and procedural

23   requirements going forward which could

24   potentially have an impact on my home region

 1   of Long Island when it comes to attracting

 2   and maintaining jobs, and have an adverse

 3   impact on economic development particularly

 4   when it comes to the creation of workforce

 5   housing.

 6         And I'm going to make three points.

 7   I'll ask the three points in the interest of

 8   time, and perhaps then get your response.

 9         First, IDA incentives don't directly

10   offset construction costs.   They offset the

11   real property tax costs, purchase of

12   materials, the mortgage recording costs for

13   purchase of property.

14         The question is if the value of an IDA

15   incentive is included in the numerator for

16   purposes of the 30 percent formula, are the

17   property costs, materials purchased and all

18   the property taxes paid during the life of

19   the abatement going to be included in the

20   denominator?   Is there going to be that

21   offset in the formula?

22         And I would ask that we consider not

23   just construction costs but total project

24   costs when it comes to plugging in those

 1   numbers.

 2           My second point is many IDA incentives

 3   are provided to mixed-use development and/or

 4   adaptive reuse projects across all of

 5   New York State.   They provide much-needed

 6   market-affordable workforce housing, IDA

 7   incentives, and they function very much the

 8   same way as 421-a exemptions do in New York

 9   City.

10           So my question here is, why would

11   421-a exemptions be exempted but IDA

12   incentives are included, again in terms of

13   this formula?

14           Lastly, an IDA property tax

15   abatement -- it's not received at the time of

16   or during the construction of a project, it's

17   provided over many years, depending on the

18   duration of the PILOT.   The value of an

19   incentive at the time of approval varies

20   greatly over time.

21           So my question is, is there any

22   consideration to the present value of an

23   incentive versus the value of that same

24   incentive over the length of the abatement?

 1   These are moving estimates.   And so going

 2   forward, perhaps over a long-term abatement

 3   period, how is it being considered that there

 4   is a present value or a future value for

 5   purposes, again, of creating the formula?

 6         Thank you.

 7         COMMISSIONER GERTLER:    I'm going to

 8   sort of provide a general structure.     I'm

 9   going to have my colleague Kevin Younis get

10   into some of the specifics.

11         You know, obviously your question

12   raises the point about prevailing wages and

13   how do we structure that for -- under the new

14   proposal.   So obviously a minimum $5 million

15   cap and then 30 percent, as you point out, if

16   there's 30 percent of public funding -- well,

17   let me put it another way.    If it's less than

18   30 percent of public funding, there will be

19   no prevailing wages attached to that project.

20         You identified a number of different

21   types of projects.   And, you know, under the

22   proposal there are certain exclusions.    You

23   talked about affordable housing.   Affordable

24   housing would be one of those that would be

 1   excluded.    And, you know, and just one more

 2   point before I turn it over to my colleague.

 3         On the flip side, in terms of the

 4   balance and ensuring that we're also under

 5   prevailing wages ensuring that we are

 6   obviously under that formula paying workers

 7   more but also realize that, by doing so,

 8   we're able to get higher-skilled, more expert

 9   labor on those projects, which could in

10   fact -- and I've seen this in many cases --

11   make the project more efficient, more

12   effective.

13         Now let me turn to my colleague to

14   talk to some of the specifics that you raise

15   on the funding threshold.

16         ESD COO YOUNIS:    Thanks, Eric.

17         Assemblyman, the one thing I would add

18   to Eric's point is that our understanding of

19   the bill is both the incentives and the

20   project costs that are in the calculation are

21   those related specifically to construction.

22         And I think that was a point you made

23   in terms of the numerator/denominator.    Our

24   understanding is that those are both numbers

 1   that are constrained to construction costs

 2   and to construction-related incentives.

 3         CHAIRWOMAN WEINSTEIN:    Thank you.

 4         We've been joined by Assemblyman

 5   Epstein.

 6         We go to the Senate.

 7         CHAIRWOMAN KRUEGER:    Senator Jim

 8   Tedisco.

 9         SENATOR TEDISCO:   Thank you,

10   Commissioner, for being here today and for

11   your service.

12         I really like how you started out and

13   appreciate those four vibrant pillars you

14   talked about for economic development.     I was

15   wondering if you thought we could consider

16   you, as the leader of our economic

17   development programs, and the Governor and

18   the Legislature adding a fifth vibrant

19   pillar, and that would be a pillar that

20   incentivized New Yorkers to stay, live, work,

21   build a business, create jobs, get their

22   kids' educations in New York, and attract and

23   incentivize others to come to New York.

24         Basically what I'm talking about is an

 1   issue that's probably better called the

 2   elephant in the room, or in every room in

 3   New York State.    It's the exodus of people

 4   leaving New York State, and how it might

 5   relate to economic development and the work

 6   you do, the work we do, and the work the

 7   Governor does.

 8         I know you probably know the

 9   statistics:     1.4 million people left the

10   State of New York in the last decade;

11   189,000 walked out last year alone.     Number

12   one in outmigration for the Empire State.

13   Mr. Commissioner, if we continue in this

14   trend, we won't be the Empire State, we'll be

15   the Empty State.

16         We have to change course direction I

17   think in some ways as it relates to a lot of

18   issues, but economic development I think is

19   one of those.    The statistics which are

20   really disconcerting and dangerous to us, I

21   think, is the fact that the people who are

22   leaving -- and the statistics show this --

23   are those who are $150,000 in income or more.

24   These are the people that can afford to leave

 1   New York State now.   The people who are

 2   staying, I think it's 8.2 percent, are those

 3   in the lower-income brackets.

 4         The real concern I think you should

 5   have and we should have and the Governor

 6   should have is how can we balance a

 7   $170 billion budget if we're no longer "I

 8   love NYS" but "I leave NYS."    We have to

 9   retain people who live here and attract

10   others to come here, especially those who

11   want to build and grow a family, create jobs,

12   create a small business, and those economic

13   leaders in the state.

14         Infrastructure, education, our

15   libraries, our senior citizens, our most

16   vulnerable populations, healthcare -- those

17   are all programs built into a $170-plus-

18   billion budget.   We're not going to be able

19   to afford budgets -- there won't be a

20   $6.1 billion deficit if we continue this

21   trend, we'll go bankrupt in New York State.

22         So I think my question to you is, how

23   do you square what's happening with economic

24   development in New York State with the trend

 1   of people being number one -- 189,000 walking

 2   out of New York State -- of all 50 states in

 3   the nation in losing population?

 4         And it relates primarily to where I

 5   live in upstate New York.   I think the city

 6   is doing pretty well attracting individuals.

 7   Long Island has probably stabilized.   But the

 8   fact of the matter, when someone says it

 9   could be the weather, it might be somewhat,

10   but the statistics show 16 percent are

11   walking out and going to New Jersey.   Now,

12   Commissioner, that's not exactly the sunny or

13   balmy place in the Northeast United States.

14   So it can't be blamed on the weather

15   unconditionally.   There's got to be a lot of

16   other issues.

17         So what I would ask you is what do you

18   think you, I, we, the Governor can change in

19   New York State as it relates to economic

20   development that can induce people to say, I

21   want to continue to live in New York State, I

22   don't want to walk out and go to New Jersey

23   or Florida or South Carolina or

24   North Carolina -- incentivize them to stay

 1   here and live here and attract others.         How

 2   do you square the good things in economic

 3   development we're discussing and you pointed

 4   to with people number-one in leaving the

 5   state?

 6            COMMISSIONER GERTLER:    So, sir, we

 7   obviously look at the data, that data is

 8   extremely important.   Population trends

 9   statewide, cities, regions are extremely

10   important to us.    So the data that we have

11   since the last census count, we've actually

12   seen a slight increase in terms of population

13   for New York State.

14            Now, over the last number of years we

15   have seen an outmigration.       There's a number

16   of different factors that is -- that is the

17   result of, and certainly we've seen some

18   outmigration to some of the southern states.

19   There's also been, you know, a change of

20   policy at the federal level.      No doubt the

21   change in the SALT deductions, state and

22   local tax deductions have had an effect --

23            SENATOR TEDISCO:   Well, this is

24   10 years, Commissioner, 1.4 million.      It

 1   can't be SALT over a 10-year period.

 2         COMMISSIONER GERTLER:    Well, sir,

 3   we've -- you know, we've certainly seen an

 4   effect of SALT.

 5         We've also seen, you know, this is a

 6   state that is proud of our immigrant

 7   heritage, a high percent of the residents in

 8   New York are from -- are immigrants.       We've

 9   had a high percentage.   There's been, you

10   know, really a war on immigrants; that's also

11   affected things.

12         There's more data I can give you.       I

13   know we're out of time, so thank you, sir.

14         SENATOR TEDISCO:    Thank you.

15         CHAIRWOMAN KRUEGER:     Thank you.

16         Assembly.

17         CHAIRWOMAN WEINSTEIN:    Assemblyman

18   Rodriguez.

19         ASSEMBLYMAN RODRIGUEZ:    Thank you.

20         And welcome, Commissioner.

21         I just wanted to focus on one of the

22   areas of investment that are particularly

23   time-sensitive with respect to 2020 Census.

24         So in 2018, Fiscal Policy Institute

 1   came out with a report stating that separate

 2   from other state investments, we would need

 3   approximately $40 million to go to community

 4   groups to be able to really address the

 5   hard-to-count population.   So last year we

 6   appropriated $20 million to begin those

 7   efforts.

 8         Can you tell us a little bit about

 9   what our timeline is?   The Census starts

10   beginning to take online applications on

11   March 12th.   And it's my understanding thus

12   far that we have not released any of that

13   money to community groups to begin to do the

14   counting efforts and activities and ramp up

15   for Census.

16         And then separate from that, in this

17   year's budget you have a $10 million

18   appropriation to address Census.   If you

19   could tell us how that money is planned to be

20   spent, what's the timeline for that, and how

21   quickly is that going to go?

22         And then just to continue to reiterate

23   that, there are hundreds of billions of

24   dollars at stake in terms of our share, in

 1   addition to, you know, reapportionment

 2   considerations.    But most importantly, you

 3   know, these are funding dollars that we rely

 4   on from the federal government.    So if we get

 5   this wrong, there are billions of dollars at

 6   stake.

 7            And I think thus far we're missing the

 8   mark, our money is not out the door.      You

 9   know, we begin in earnest on March 12th but

10   then April 1st is the legislative deadline.

11   And for us to get this right this year, you

12   know, money has to be in the hands of those

13   people who can help in our communities, in

14   our hard-to-count areas to be able to do

15   that.

16            So if you could speak to that.

17   Needless to say, members of the Legislature

18   are concerned that thus far, the investment

19   is insufficient and from a time perspective,

20   you know, we're not responsive comparative to

21   some other partners.

22            COMMISSIONER GERTLER:   Sure.   Let me

23   state at the outset that we share your

24   outlook, that we understand that the Census

 1   count is extremely important, both in terms

 2   of the dollars that are at stake as well as

 3   sort of the political calculus in terms of

 4   how electoral maps get done and so on.

 5         So we are an economic agency, so we'll

 6   certainly -- so from an economic standpoint

 7   we want to -- we want to have the maximum

 8   number of dollars coming into New York State.

 9         You know, to your point, the way we

10   look at it, there was a $20 million

11   appropriation, there's $40 million of

12   services and work through the agencies, and

13   the Governor added another $10 million.   And

14   I -- you know, I agree that that money is

15   extremely important to make sure that we get

16   to all the hard-to-reach New Yorkers.    We

17   want to make sure that we can count every

18   single New Yorker.

19         In terms of the process, I can tell

20   you that the application for counties, that

21   is up right now.   I think you referred to the

22   dates; we have April 1st is when the actual

23   counting begins.   So we are, you know, on top

24   of sort of the process.

 1           We are in -- you know, we are working

 2   right now to determine all of the trusted

 3   voices to ensure that we can rely on

 4   nonprofits that have been designated to help,

 5   through the counties, to be able to use those

 6   fundings to identify hard-to-reach New

 7   Yorkers.   We're working with our sister

 8   agencies to make sure that we are

 9   coordinated.

10           I'm going to ask my colleague Kevin to

11   add to, you know, some of the efforts and

12   some of the process that we're working on as

13   well.

14           ESD COO YOUNIS:   Sure.   Thanks, Eric.

15           I would add, as Eric said, the

16   applications are online today and due

17   March 2nd.

18           We have -- for maybe lack of a better

19   term, but the way we have allowed for the

20   money to flow would be typically we do things

21   on a reimbursement basis.   This funding will

22   front essentially 70 percent of the available

23   funding, and then the next 20 will be

24   available by some demonstration of the first

 1   70 percent having been spent.

 2         So we'll move the money very quickly

 3   to the agencies --

 4         ASSEMBLYMAN RODRIGUEZ:    Sorry, I have

 5   to interrupt, just because I only have

 6   15 seconds.

 7         I would say reconsider that

 8   investment.   You have 30-day amendments where

 9   you can make revisions to that number.    I

10   mean, I think more money needs to go to

11   community groups to be able to do this work.

12   And the reimbursement efforts are sometimes

13   challenging for some of these organizations

14   that are smaller and without a clear time

15   frame for, you know, when that's going to

16   happen.

17         So I would say March 10th I think is

18   when you're approving these applications for

19   something that happens on April 1st, which

20   means organizations are not going to move

21   unless they know they're going to get

22   something, until that point, which I think

23   puts us, you know, in a precarious position

24   to meet our goals and our deadlines.    So I

 1   think more resources are going to be needed,

 2   and I suggest you make the corrections in the

 3   30-day amendments.

 4          COMMISSIONER GERTLER:      Thank you.

 5          CHAIRWOMAN WEINSTEIN:      Thank you.

 6          We go to the Senate.

 7          CHAIRWOMAN KRUEGER:     Thank you.   I

 8   think it's my turn.    Welcome.

 9          COMMISSIONER GERTLER:      Thank you.

10          CHAIRWOMAN KRUEGER:     So the Governor

11   recently announced --

12          (Calls of "mic.")

13          CHAIRWOMAN KRUEGER:     Sorry.   Thank

14   you.   We are going to get new ones next year

15   for you.

16          THE REPORTER:    Thank you.

17          CHAIRWOMAN KRUEGER:     The Governor

18   recently announced a billion-dollar

19   public/private partnership with a company

20   called Cree up in Marcy, New York, where --

21   I'm just looking for the stats, but I believe

22   the estimate was this would cost us a million

23   dollars per job.

24          One, can you tell me about this?        Two,

 1   can you let me know how much the state spent

 2   on this facility previously on deals that

 3   didn't go through?   And three, what are they

 4   going to make there?

 5            COMMISSIONER GERTLER:     I'm sorry, the

 6   last part is what are they going to make

 7   there?

 8            CHAIRWOMAN KRUEGER:     What are they

 9   going to make in this factory?

10            COMMISSIONER GERTLER:    Okay, sure.

11            So Cree is a silicon carbide company

12   that's based in North Carolina, and it was --

13   they were looking for a new facility to

14   create their new -- call it their silicon

15   carbide wafers and their chips.      This is an

16   industry of the future.   This is an area that

17   New York State has invested in previously,

18   and we as an economic development perspective

19   see huge investment opportunity in this

20   particular industry.

21            So in the announcement that was made

22   back in September, Cree decided that it would

23   move to -- move and create its facility in

24   New York State, really based on two reasons.

 1   One is that they could develop their

 2   production line at the SUNY Poly site near

 3   Albany, and also the site that was in the

 4   Marcy area was ideal for what they were

 5   looking to do.

 6         The way the deal was structured in our

 7   announcement, Cree would invest a billion

 8   dollars to build the site, to bring 614 jobs,

 9   to bring thousands of construction jobs to

10   create a facility that would really become

11   one of the most important factors for these

12   chips, which should -- in an era where we're

13   going into autonomous vehicles, smart cars

14   and things like this, this facility would be

15   manufacturing a high percentage of the chips

16   needed for that business.

17         Going back to the deal, as they

18   completed -- complete the site, jobs, they

19   would be eligible for the $500 million that

20   went to support their location in upstate

21   New York.

22         CHAIRWOMAN KRUEGER:   I'm going to cut

23   you off there for a second, just because I

24   see my clock ticking.

 1            So the 500 million is going to them as

 2   tax credits for jobs, not actually the State

 3   of New York handing them money?    Which is it?

 4   Because I thought they were getting --

 5            COMMISSIONER GERTLER:   I'm sorry, I

 6   couldn't --

 7            CHAIRWOMAN KRUEGER:   My understanding

 8   was there was 500 million plus Excelsior

 9   credits if jobs are created.     So the

10   500 million, that's not us handing them

11   500 million?

12            ESD COO YOUNIS:   Senator, the

13   500 million is only a grant.     There is a

14   nominal Excelsior tax credit associated with

15   the project.

16            Primarily, as you know, when a company

17   receives Excelsior tax credits, they are able

18   to get -- some of the energy companies will

19   provide a waiver on the tariff for energy

20   usage, and so that's -- so almost all -- all

21   grant.

22            CHAIRWOMAN KRUEGER:   But the

23   500 million is a grant.

24            ESD COO YOUNIS:   Is a grant.

 1           CHAIRWOMAN KRUEGER:   So in your budget

 2   documents, and it's follow-up on Senator

 3   Liu's question earlier, where would I see

 4   that 500 million?

 5           ESD COO YOUNIS:   It's in the

 6   reappropriations.   It's probably called Nano

 7   Utica or something like that.

 8           This was -- I think to your previous

 9   question about whether funding was provided

10   to other companies that didn't locate, there

11   was a company announced at that site some

12   years ago that didn't ultimately come, so

13   that funding was appropriated.    I don't know

14   the year, but '15, 2015, 2016.    And so this

15   funding was available -- none of that money

16   went to that project, but the funding that

17   was originally identified for that was used

18   here.

19           CHAIRWOMAN KRUEGER:   So we legislated

20   this database of deals -- that's the

21   shorthand name for it.    Is that up and

22   running?   Can I look up this project and all

23   the other projects that we might have nowhere

24   else to go to see what kind of deal's been

 1   made, how much state money has been promised,

 2   and what's out the door?

 3           COMMISSIONER GERTLER:    So going back

 4   to your question on the database of deals,

 5   that database will be completed by the end of

 6   the year.    We're in the process of working on

 7   that.   We've identified a company, an IT

 8   contractor, to do that, it's an MWBE firm.

 9   They're in the process of working on that,

10   and that will be completed by the end of the

11   year.

12           CHAIRWOMAN KRUEGER:     Okay.

13           COMMISSIONER GERTLER:    But we've

14   certainly announced that.     It's been, you

15   know, in our reports.   We've made that

16   information public already.

17           CHAIRWOMAN KRUEGER:     Can you tell me

18   something about the Opportunity Zones

19   program?    Is it costing us money?     I know

20   it's a federal program, but the design of the

21   zones and where they are was the ESDC, so we

22   decided where the zones were going to be.

23           Are we spending any state money in

24   addition to whatever the package is from the

 1   feds?   How many deals have been made?

 2           COMMISSIONER GERTLER:    So as you

 3   correctly noted, it is a federal program.       We

 4   were involved in designating the various

 5   Opportunity Zones, I think somewhere in the

 6   range of 600-plus Opportunity Zones.

 7           The reality is it's a federal program,

 8   so I don't have access to that federal data.

 9   So I'm unable to --

10           CHAIRWOMAN KRUEGER:     So they don't

11   have to file anything with the State of

12   New York if they're going to claim that

13   they're an Opportunity Zone project?

14           COMMISSIONER GERTLER:    No, we don't

15   have access to that data.

16           ESD COO YOUNIS:   No, we don't have any

17   involvement with the program.     Other than the

18   initial designation, as you said.

19           CHAIRWOMAN KRUEGER:     So there's no

20   matching program with the state that you are

21   trying to offer people or package in some

22   way?    It's just something the feds did?    The

23   newspaper articles around the country are

24   it's a really bad deal, but it's not

 1   something that the State of New York is

 2   involved in?

 3         COMMISSIONER GERTLER:    No, it's -- to

 4   the best of my -- no, it's a federal tax

 5   program, so we have no more involvement after

 6   the designation of those zones.

 7         CHAIRWOMAN KRUEGER:     Okay.   Prior to

 8   your getting here, there were a number of

 9   fairly major scandals associated with

10   subsidiary corporations set up, run through

11   mostly SUNY Polytech or SUNY Research

12   Foundation or a combination therein.    And

13   when I say subsidiary companies, I guess

14   not-for-profit companies, but I've been told

15   they are now under your authority.

16         Can you tell me what's going on and

17   how you have ensured that the bad business

18   practices of the old regime do not continue?

19         COMMISSIONER GERTLER:    So the team at

20   ESD has been involved since about 2016, and

21   have worked diligently in terms of, you know,

22   writing and sort of, you know, rethinking

23   many of these projects.

24         The most important -- we've had a

 1   number of accomplishments recently.     I mean,

 2   this has been a program where the team at ESD

 3   has worked very hard over the last number of

 4   years, has done a lot of good and positive

 5   work to right the ship.

 6         This -- these projects are now under a

 7   nonprofit called NY CREATES, which now

 8   governs both the projects at Fuller Road and

 9   Fort Schuyler.   We have also now, you know,

10   brought in an individual, Doug Grose, who

11   oversees that.   So these are under a

12   separate, you know, nonprofit that now has

13   good governance, it's got transparency, it

14   has all the things that you would want that

15   we like to see in our deals.

16         We've also taken a leading role in

17   terms of bringing new clients into it to help

18   ensure that there's a greater financial

19   stability.   We have also looked to refinance

20   some of the debt, working on that to make

21   that more effective.

22         I'm also going to have my colleague

23   Kevin, who has also worked diligently on this

24   over the last number of years, to add to some

 1   of that effort.

 2           ESD COO YOUNIS:   Thanks.

 3           I think to your question, Senator, and

 4   Eric -- as Eric said, the steps that we have

 5   taken to promote integrity of the

 6   organization -- so we don't technically

 7   manage those organizations at a legal

 8   perspective, but we have worked with them to

 9   reform their board, to ensure open meetings,

10   to ensure FOIL, you know, compliance with the

11   Public Officers Law.

12           And so we've taken a number of steps

13   to really address the issues I think you're

14   concerned about.

15           CHAIRWOMAN KRUEGER:   You don't manage

16   them.   Are they -- they're independent in

17   what way?

18           ESD COO YOUNIS:   The NY CREATES is --

19   it's an independent 501(c)(3), as were the

20   Fort Schuyler and Fuller Road entities.

21           CHAIRWOMAN KRUEGER:   I believe you owe

22   the Legislature a report on the broadband

23   program.    Do you know when that will be

24   coming out?    There was a piece of legislation

 1   requiring a New NY Broadband Program.

 2            COMMISSIONER GERTLER:     So we'll look

 3   into it and we'll be -- we'll ensure that the

 4   Legislature gets that report.

 5            CHAIRWOMAN KRUEGER:      Okay.   And just

 6   in closing, quickly, I'd like to agree with

 7   my colleagues who emphasized and expressed

 8   their frustration over the proposed changes

 9   ending Centers for Excellence, not focusing

10   on investing in the infrastructure needed for

11   entrepreneurs and small businesses to start

12   up and stay open in New York, but rather

13   these giant megadeals that statistically has

14   been proven don't work, and we waste a lot of

15   money.

16            And I don't think anyone on these

17   panels thinks we have any money to waste in

18   New York State.

19            Thank you.   Assembly?

20            CHAIRWOMAN WEINSTEIN:     We go to

21   Assemblyman Barron.

22            ASSEMBLYMAN BARRON:      Thank you.   Thank

23   you very much.

24            You know, I sit here really trying to

 1   be patient, but when I look at what's

 2   happening in black and brown neighborhoods,

 3   and we look at this so-called economic

 4   development plan, it's not reaching our

 5   neighborhoods.   We're in a crisis in our

 6   neighborhoods.   We've got an occupant in the

 7   White House that just released a

 8   4.8-trillion-dollar budget cutting food

 9   stamps, Medicaid, Medicare, cutting

10   everything in sight.   It's a reverse Robin

11   Hood budget, robbing from the poor to give to

12   the rich.

13           And when we look at this occupant in

14   the State House, blaming everything on

15   Medicaid, $6 billion deficit, looking to cut

16   Medicaid -- but they don't call them cuts.

17   Neither two of those gentlemen call them

18   cuts.   They call them savings.    Savings.   So

19   that we can think that we are saving money,

20   we're not cutting stuff.

21           This plan doesn't do anything for

22   poverty in our neighborhoods.     I don't think

23   if you all been to the neighborhoods of East

24   New York and Brownsville and Harlem and see

 1   the poverty and the unemployment.   And when

 2   you give unemployment statistics and say

 3   unemployment is down, you need to look at the

 4   statistics that show "not in the workforce,"

 5   how many people are not in the workforce,

 6   because unemployment statistics are based

 7   upon those getting unemployment benefits.

 8         So when I look at the 421-a program in

 9   this state that got major, major tax breaks,

10   subsidies -- if you add up all of the

11   subsidies in this state that rich white male

12   developers got, you wouldn't need to touch

13   Medicaid.   We'd have a surplus if you cut

14   that out.

15         So when you look at economic

16   development, we can't look at START-UP NY,

17   that's the Governor's pet program for

18   developers that he's fond of.   START-UP NY.

19   It ain't starting up nothing in East

20   New York.

21         So I'm really livid that we go through

22   this year after year, $178 billion of

23   All-Funds spending budget in this state,

24   $178 billion.

 1         And when I look at the Regional

 2   Economic Development Councils awards for a

 3   youth workforce development program in

 4   Brooklyn, $25,000.    For a cultural program

 5   that teaches African dance and develops the

 6   mind and the cultural enlightenment for young

 7   people so that they can do better in the

 8   workforce, $32,000.

 9         But yet billions of dollars are given

10   out to white, male, rich developers.

11   Billion-dollar deals, partnerships -- it

12   never comes down to our neighborhoods.    And

13   I'm sick of going through these budgets --

14   that's why I don't have a question for you,

15   because you know how to answer all the

16   questions, or you don't answer the questions,

17   or you talk long enough so our time runs out

18   and you never get to the questions.

19         MWBEs cannot get certified or

20   recertified.   You never addressed that

21   adequately, and won't.    So I'm not asking you

22   any question, I'm saying to you that we need

23   to do way better than this.

24         This is a shame that we have that kind

 1   of money, $4.8 trillion in the federal

 2   budget, $178 billion in the state budget,

 3   $95 billion in the city budget, 30 percent

 4   poverty in my beloved East New York.         Thirty

 5   percent poverty in Harlem.       Forty percent

 6   poverty in the South Bronx.      Brownsville,

 7   impoverished.    None of this addresses that.

 8            You and the Governor should be ashamed

 9   of yourselves coming forth with this annual

10   budget for economic development.      What

11   economic development?    In our neighborhoods

12   it's not happening.    The rich -- this is a

13   fact -- the rich are getting richer in

14   New York, and the poor are getting poorer in

15   New York.

16            So I'm hoping that we in the state

17   legislature, my colleagues up here, we should

18   definitely not accept this nor this

19   $178 billion budget that blames all of the

20   problems in the budget on Medicaid.      The most

21   vulnerable people in this state are being

22   blamed for the budget deficit.      This is a

23   shame.

24            CHAIRWOMAN WEINSTEIN:    Thank you,

 1   Assemblyman.

 2            The Senate has no more questions, so

 3   we go to -- oh, sorry.     Sorry.   We go back

 4   to --

 5            CHAIRWOMAN KRUEGER:   I'm so sorry.

 6            Anna Kaplan, as chair, has a second

 7   round.

 8            SENATOR KAPLAN:   It's not a question,

 9   really, it's just my understanding the

10   matching grant program in NYSTAR is closed,

11   and I'm sure you're aware of that.     I would

12   ask that ESD fund a new matching grant

13   program so that our universities can continue

14   to work with the private entrepreneurs to

15   help start high-tech companies.

16            These public and private partnerships

17   are the engine that will continue to keep

18   New York State at the forefront of innovation

19   and industry, and we need to do everything we

20   can to support these programs that have been

21   so successful and helped with a lot of small

22   businesses also.

23            Thank you.

24            CHAIRWOMAN KRUEGER:   (Inaudible.)

 1            SENATOR KAPLAN:   I'm good.   You could

 2   go ahead.

 3            CHAIRWOMAN KRUEGER:     I'm sorry.

 4            Assembly.

 5            CHAIRWOMAN WEINSTEIN:    We go to

 6   Assemblyman Tague.

 7            ASSEMBLYMAN TAGUE:    Well, good

 8   morning, good afternoon, Commissioner.

 9            First of all, I just want to thank you

10   for your service and for testifying here

11   today.

12            I do take a little bit of issue with

13   one thing that you said.      I'm kind of on the

14   same page as Senator Tedisco.      I don't

15   believe that the SALT tax deduction is the

16   reason why people are leaving New York State.

17   I would more look at it that it's people are

18   leaving New York State due to high taxes,

19   overregulation, and better jobs.

20            So, you know, I don't buy the argument

21   about the SALT deduction, because I think

22   Senator Tedisco said it best, the SALT

23   deduction wasn't around in 2010 and it's

24   since 2010 that we've lost between

 1   1.4 million residents.

 2         But with that being said, I want to

 3   talk about the climate, just a little bit

 4   different type of climate.    I want to talk

 5   about the business climate.

 6         Our tens of thousands of pages of

 7   business regulations have led to our

 8   oppressive business climate here in New York

 9   State, and many prominent companies have been

10   leaving for more business-friendly states.

11   And I want to just go over some rankings with

12   the State of New York.

13         Tax Foundation, "2020 State Business

14   Tax Climate," New York ranks 49th.   CNBC,

15   "America's Top State for Businesses 2019,"

16   New York ranks 42nd for the cost of doing

17   business.   And "2019 Thumbtack, Small

18   Business Friendly: A Survey," New York got a

19   grade of D.

20         You know, simply, here in New York

21   State we're last where we should be first and

22   first where we should be last.   So I'm going

23   to ask you a couple of questions here.

24         Number one, what regulatory burdens

 1   affecting small businesses are your top

 2   priorities to address this year?    And

 3   secondly, how does New York compare to other

 4   states when it comes to our regulatory

 5   environment?

 6         And thirdly, Governor Cuomo states

 7   that New York has 8.3 million private-sector

 8   jobs, which is an all-time high.    However,

 9   between October 2011 and October of 2019,

10   New York lost 25,000 manufacturing jobs, for

11   a decrease of 5.7 percent.    During the same

12   time period, over 1 million manufacturing

13   jobs were created nationwide.

14         Why does New York continue to lose

15   manufacturing jobs to other states?   And how

16   can we here in New York be more competitive

17   here in the manufacturing industry?

18         COMMISSIONER GERTLER:     Thank you.

19         So I think there's certainly a number

20   of different things that we at ESD and the

21   Governor has done to improve the business

22   climate.   And certainly, you know, having

23   record high private-sector employment is an

24   indication that these policies are working.

 1         And on the flip side --

 2         ASSEMBLYMAN TAGUE:     Doesn't that have

 3   to do nationwide?   Aren't we experiencing

 4   nationwide record employment levels?     You

 5   know, it doesn't seem just here in New York,

 6   it's kind of a trend throughout the whole

 7   country.

 8         COMMISSIONER GERTLER:     Well, I think

 9   the policies that we're putting into place

10   from the REDCs, where we're relying on input

11   from regional -- from various regions; the

12   fact that we have a diversified economy

13   across the state, where we have biotech in

14   Long Island, we got financing tech in

15   New York City, we've got, between Mohawk and

16   the Capital Region -- I'm sorry, Central

17   New York, we've got unmanned -- you know,

18   drone technology.   We talked about silicon

19   carbide, those industries.

20         The fact that we've got this

21   diversified set of industries, investments in

22   jobs of the future, an innovative, growing

23   economy -- we also have a budget in which the

24   Governor has decreased taxes for small

 1   businesses, decreased taxes for corporations,

 2   decreased taxes for manufacturers.

 3         So there's a lot of different things

 4   that we are doing to ensure that we can

 5   continue to grow jobs, grow small businesses,

 6   ensure that we're investing into the future.

 7   There are a whole host of different things

 8   that we do in New York State that other

 9   states do not do.   The types of strategic

10   bets that we've done.   All of that together

11   ensures that we're creating a strong and

12   vibrant economy and one that I think is very

13   well positioned, you know, for the future.

14         In addition to the fact that life

15   sciences -- I mean, I could continue.    But I

16   think there's a whole host of different ways

17   that we're ensuring that this economy is

18   growing.

19         CHAIRWOMAN WEINSTEIN:    Thank you.

20         The Senate has no more questions, so

21   we go to Assemblywoman Buttenschon.

22         ASSEMBLYWOMAN BUTTENSCHON:     Thank you

23   very much for being here.

24         I represent the 119th Assembly

 1   district, which is in upstate New York, the

 2   Utica-Rome area.   And I appreciate your

 3   comments in regards to the collaboration that

 4   you discussed with the Excelsior Jobs Program

 5   and enhancing exports in the State of

 6   New York.

 7         I had the opportunity, under the

 8   direction of our Chair Schimminger, to hold

 9   roundtables throughout the State of New York

10   with many businesses that have been here and

11   are rooted here.   With this input that you've

12   provided this morning in regards to the

13   statement of linking these and attracting

14   export industry into the state, I would also

15   ask that you reflect on the importance of the

16   businesses that are here and have been stable

17   and would like to be a part of these tax

18   credits.    Which I know that this program

19   doesn't completely link with that, but that

20   is something that was requested through these

21   roundtables.

22         In addition, my colleagues had talked

23   about the various issues they see with the

24   women-owned and minority business

 1   technicalities that they're seeing in regards

 2   to the processing.   So I know that my fellow

 3   colleagues have brought that up.    I would

 4   just reemphasize the importance of

 5   considering that.    I also hear from

 6   businesses that have to travel at great

 7   lengths to utilize various businesses due to

 8   the processing being slow.

 9         And finally, the importance of the

10   linkage to education through apprenticeships,

11   internships that tied directly whether it's

12   in secondary ed, through our BOCES, as well

13   as through higher ed in regards to how we

14   ensure that that pipeline remains

15   significant.

16         So if you could just highlight a

17   little bit on the Excelsior job program and

18   its linkage to export, please.

19         COMMISSIONER GERTLER:    Sure.

20         So the -- you know, the Excelsior Jobs

21   Program, when our team at ESD evaluates any

22   particular company, we do a very serious

23   analysis.   We take the fact that we can

24   provide tax credits very seriously.     We do,

 1   you know, a very detailed analysis of is this

 2   company appropriate for these investments,

 3   will we see the types of returns that we

 4   expect.

 5         What we have discovered, and where we

 6   put the emphasis, is on what we call tradable

 7   sectors.   So these are growing sectors, you

 8   know, export-oriented, to help to ensure that

 9   we're seeing sort of, quote, even more bang

10   for the -- more bang for the buck.

11         So I think that's -- we're always

12   making sure that those tax credits are used

13   wisely and efficiently and that they're

14   performance-based.   And then we make sure

15   that there are certain sectors, like I talk

16   about, that will be able to avail themselves

17   of those credits.

18         ASSEMBLYWOMAN BUTTENSCHON:     Well, many

19   of them were small business owners that

20   attended the roundtables.   So they would be

21   able to be a part of this, as stated with

22   your opening statements in regards to

23   ensuring that the small businesses would have

24   access to this?

 1           COMMISSIONER GERTLER:    So I can't talk

 2   to those specific companies.     Certainly

 3   there's been small, growing companies that

 4   have received tax credits where -- you know,

 5   again, performance- based.      They need to hit

 6   their targets, hit their results.     And these

 7   are after an analysis of what we've done.

 8           So, you know -- I don't know if you

 9   want to add to that, but --

10           ESD COO YOUNIS:   The program is

11   definitely available to small businesses.

12   There's a job-creation requirement, but the

13   number is, in many instances, like 5 to 10

14   jobs.   So they -- depending on their

15   industry, they can be eligible.

16           ASSEMBLYWOMAN BUTTENSCHON:    And also I

17   want to ensure that I address the

18   agricultural industry, that is very prevalent

19   within the district that I represent, that

20   are concerned about that and embrace in

21   joining the export industry in regards to

22   their products not only leaving this country

23   but, more importantly, staying throughout the

24   states.   So we use the word "export" not only

 1   internationally, but within the United States

 2   also.

 3            COMMISSIONER GERTLER:    Right.     All I

 4   can say to that is there are a number of

 5   different programs where we work closely with

 6   Commissioner Ball at Agriculture.     We have a,

 7   you know, good relationship and we look to

 8   support each other, and we understand the

 9   importance of agriculture in this state, so.

10            ASSEMBLYWOMAN BUTTENSCHON:   Thank you

11   very much.

12            CHAIRWOMAN WEINSTEIN:    We go to

13   Assemblyman Epstein.

14            ASSEMBLYMAN EPSTEIN:    I want to thank

15   you for being here.

16            And I just have to really discuss our

17   economic development policy in New York

18   State.    And I see it as a huge failure for

19   New York.    I see what you're doing is

20   focusing on large corporations, giving

21   giveaways to big conglomerates, and not

22   focusing on where the real economic engine is

23   in New York, where it's small businesses.

24   They're the business drivers, they're the

 1   ones who are helping the middle class, sort

 2   of keeping jobs in the community.

 3            Whether it's, you know, what happened

 4   recently at Atlantic Yards, what is going on

 5   with Amazon -- I really want to ask about the

 6   Atlantic Yards, because literally in 2003

 7   there was a deal that happened where we were

 8   getting 1242 units of affordable housing.      In

 9   August of 2019, you worked with a new

10   billionaire who's going to purchase, you gave

11   him an extra 100,000 square feet of retail

12   space.    No additional affordable housing in

13   that project.    They resell and sell the

14   project.

15            And so we're seeing lots of giveaways

16   to businesses and big corporations, with no

17   comeback for our community.    I'm wondering

18   how that can be a positive economic

19   environment where New Yorkers, as we're

20   seeing, we've heard, you know, middle-class

21   people are leaving, nonstop, across the

22   state.    And when you're focusing your

23   economic development projects on these large

24   projects that are giveaways to large

 1   corporations.

 2         COMMISSIONER GERTLER:       So as a general

 3   matter, as a general matter, let me sort of

 4   talk about, you know, our Excelsior program

 5   and how we -- how we think about, you know,

 6   that type of economic development tool.

 7         Because when we evaluate companies

 8   that will be -- who are potentially able to

 9   access some of these credits, you know, you

10   used the word "giveaway."   I mean, what we

11   do -- and we make sure that these are

12   performance-based incentives that --

13         ASSEMBLYMAN EPSTEIN:    I just have to

14   interrupt you.   A hundred thousand square

15   feet of retail space given to the

16   Atlantic Yards developer, given away with no

17   new commitment for affordable housing for our

18   community.   No new commitment.

19         We need affordable housing.      And the

20   decision you all made in August of 2019 is

21   just the same continuation of a policy that's

22   a failed policy that gives away billions to

23   large corporations, that doesn't impact

24   communities and doesn't impact real

 1   employment opportunities for low-income

 2   people or middle-income people.

 3         There's no plan in place to ensure

 4   that the middle class can stay in New York

 5   and have good jobs when you could really be

 6   investing in community-based organizations,

 7   investing in neighborhoods, investing in

 8   small businesses.   But the model that you

 9   create creates a system that benefits the

10   large corporations.

11         COMMISSIONER GERTLER:    So, you know,

12   when we undertake all of our deals and ensure

13   the process by which we go through, we make

14   sure that there are those types of community

15   benefits.   They change project by project.

16   You know, it may be transportation upgrades,

17   there may be public parks, there's an

18   emphasis on MWBE requirements -- there's a

19   whole host of different types of community

20   benefits that we make sure happen as part of

21   these projects.

22         ASSEMBLYMAN EPSTEIN:    So why no

23   affordable housing in Atlantic Yards when you

24   made a deal last summer?   Why no new

 1   affordable housing?

 2         ESD COO YOUNIS:    In terms of the

 3   specifics, I don't have all of those at my

 4   fingers.    But I would just say I think

 5   oftentimes the big projects, folks have a

 6   misconception that is primarily what we do.

 7   It's not.

 8         I mean, the reality is is that ESD has

 9   over 30 programs which are targeted to small

10   businesses.    Our EAC centers, we have capital

11   access programs, we -- I would tell you that

12   the majority of the people that work at ESD

13   and the majority of our programs do focus on

14   small businesses.

15         ASSEMBLYMAN EPSTEIN:    I have to say

16   that the small businesses in my district and

17   the small businesses I hear from who are

18   trying to get support from ESD, they can't

19   get the support they need.

20         We talk to micro-lending programs that

21   were helping small businesses, and they need

22   support, and they're not being able to get

23   the support.   We've heard a lot of problems

24   with MWBE.    It's like I understand what

 1   you're saying, but the reality on the ground

 2   is very different.

 3          So just -- I want you to hear that.

 4   And the expectation from communities is

 5   that's how we have -- that's the engine we

 6   need to support.

 7          And the idea that we're giving money

 8   or additional FAR to places like

 9   Atlantic Yards without making any commitment

10   to more affordable housing is really

11   antithetical to what we need in New York when

12   we have 90,000 homeless people in New York

13   State and you have the leverage in that

14   moment to get more affordable housing.

15          And I know my time is up, but thank

16   you.

17          CHAIRWOMAN WEINSTEIN:    Thank you.

18          We go to -- well, first, we've been

19   joined by Assemblywoman Hyndman and

20   Assemblyman Zebrowski.   And we go to

21   Assemblyman Friend.

22          ASSEMBLYMAN FRIEND:     Thank you,

23   Madam Chair.

24          I just want to say congratulations on

 1   your new appointment.

 2           COMMISSIONER GERTLER:    Thank you.

 3           ASSEMBLYMAN FRIEND:     I'm going to jump

 4   right back to SolarCity.   I mean, that's a

 5   billion-dollar project, practically, that

 6   spent on building the facility as well as

 7   equipping it.

 8           So I just want to know, do you have an

 9   idea of how much of that facility is actually

10   being utilized?   Are there actually large

11   pieces that are open?   I don't know that the

12   lease that we gave the -- well, not

13   SolarCity, the availability for the state to

14   be able to step in and build a -- lease that

15   out to other companies that would love to use

16   that?

17           COMMISSIONER GERTLER:    So again, you

18   know, with respect to the RiverBend facility,

19   I had the opportunity to visit the facility,

20   I guess last week, took a tour.     I was

21   impressed with the hustle and bustle of the

22   facility, the -- all of the workers working

23   on different production lines.      From what I

24   saw on the tour, it was being well-used, it

 1   was, you know, fairly busy.    They've added

 2   different lines.

 3         I mean, if we look at the history of

 4   this deal, it went from Silevo, one company,

 5   to SolarCity, to Tesla.   We've seen, you

 6   know, businesses change slightly, and yet

 7   they're still doing the solar panel business,

 8   but they've now added a production line on

 9   charger stations.   So they're doing other

10   things.   They are relying on the ecosystem to

11   make investments into that facility.

12         But to go back to your main question,

13   is the facility being used, it is.    It's

14   being, I think, well used --

15         ASSEMBLYMAN FRIEND:     But are we at

16   50 percent utilization, 75 percent?

17         COMMISSIONER GERTLER:     There is -- as

18   we know, Panasonic is also in that facility.

19   But in terms of percentage, I -- I -- you

20   know, again, it's hard to see as you walk

21   around, because it seemed to be pretty

22   full -- but certainly a high, very high

23   majority of it, if not almost complete.

24         ASSEMBLYMAN FRIEND:     Just to kind of

 1   jump to if it's being underutilized -- again,

 2   in future contracts, if we can't do it

 3   here -- if we're doing these big deals like

 4   this, to be able to step in and say if you're

 5   not utilizing that space, then the state has

 6   an opportunity -- because I know there are

 7   businesses up in the Buffalo region, as well

 8   as our universities, the COEs, the CATs,

 9   would love to be able to jump in and use

10   that.

11            What about the equipment that we

12   bought for production?     Is that being used?

13   I mean, again, that's hundreds of thousands

14   of dollars, millions of dollars are being

15   spent.    Did they use it, or is it just

16   sitting there idle?

17            COMMISSIONER GERTLER:   Do you want to

18   address the equipment?

19            ESD COO YOUNIS:   Thanks, Assemblyman.

20            Certainly some of the equipment

21   ultimately, you know, in that transition from

22   Silevo to SolarCity to Tesla, ultimately

23   wasn't used.    But certainly the majority of

24   it is, or is no longer being used.

 1            In addition, Tesla has invested some,

 2   you know, hundreds of millions of dollars in

 3   additional equipment that it has brought

 4   along to the folks on the solar panel -- the

 5   development of the solar roof tile.

 6            ASSEMBLYMAN FRIEND:     Okay.   And then

 7   when we're looking at this 1460 FTEs that

 8   need to be counted, are we going to allow

 9   them to count the Panasonic that they're

10   subcontracting to?    Will that be part of the

11   1460?    Or do they have to have all of their

12   own employees?

13            COMMISSIONER GERTLER:    So, you know,

14   again, under the contract, 1460 jobs by

15   April 30th.    You know, the Panasonic jobs are

16   not included in that.

17            ASSEMBLYMAN FRIEND:     Okay.   Just to

18   jump into -- again, back to small business.

19   Again, we're focusing on a lot of the big

20   glitzy stuff with the technology, which is

21   great.    It keeps people kind of motivated and

22   interested.    But we do have a lot of the

23   smaller businesses that really aren't as

24   glitzy that really need support in my region,

 1   whether it's from paving driveways, resealing

 2   driveways, plumbing, electricians.

 3         So a lot of times those small

 4   businesses have one or two or three employees

 5   and because of all the regulatory framework

 6   that's involved, they may end up having to

 7   put one employee just to kind of keep up with

 8   that regulation.    And is there anything that

 9   you can discuss to maybe give them an amnesty

10   period if they haven't hit that regulation

11   and they're hit with a fine, to allow them to

12   comply with that and not be penalized?

13         COMMISSIONER GERTLER:     You're saying

14   for the Tesla jobs?

15         ASSEMBLYMAN FRIEND:     No, no, no.   For

16   small businesses.    Just, again, jumping away

17   from big companies to really small companies

18   who don't have many employees that are just

19   trying to make the economy work, going out

20   there and starting up their own business.

21         COMMISSIONER GERTLER:     I'm not

22   sure I -- I apologize, I'm not sure I

23   understand the question, so --

24         ASSEMBLYMAN FRIEND:     Oh, I can reach

 1   out to you there.

 2         I just, before my time's up, want to

 3   comment on MWBE.    We did great strides in

 4   work with that last year.     It's still a big

 5   issue across the Southern Tier, because we

 6   don't fit into that 30 percent framework

 7   because of the application processes.       I

 8   appreciate that the Governor is going to try

 9   to streamline that process, but what would be

10   even more helpful?   To encourage more

11   diversity across the state.

12         To have more MWBEs in every region of

13   the state would have MWBE certification and

14   qualifications based on a region to, again,

15   keep MWBEs in each region of the state, not

16   just in the cities, which is what we're kind

17   of seeing happen.    As well as more

18   certification that they're not just a

19   pass-through, that they're actually providing

20   some sort of skill and subset so that they're

21   learning and hiring wage-earners --

22         CHAIRWOMAN WEINSTEIN:      Thank you,

23   Assemblyman.

24         ASSEMBLYMAN FRIEND:      Thank you,

 1   Madam Chair.

 2            CHAIRWOMAN WEINSTEIN:   We've been

 3   joined by Senator Borrello, who has a --

 4   we'll go to him for a question.

 5            (Discussion off the record.)

 6            SENATOR BORRELLO:   Okay, I'm on now,

 7   thank you.

 8            First of all, thank you for your

 9   testimony today.   Appreciate it.

10            You know, I know we've already -- that

11   somebody's brought up Amazon and the issues

12   there.    And my question is, you know -- and

13   I, as a former county executive, and having

14   our county IDA and sitting on the REDC board,

15   I know how difficult it is to have

16   conversations with people that aren't already

17   doing business in New York State, trying to

18   convince them to come here with a, you know,

19   a hostile environment when it comes to

20   business.    And it's a challenge that we've

21   all faced in local government for a long

22   time.

23            But now, in light of what happened

24   with Amazon, my question is, how are

 1   conversations going with big companies that

 2   you're trying to attract to New York, knowing

 3   that you could have -- you know, be

 4   politically derailed outside of what's

 5   happening within your organization?   Are you

 6   having difficulty talking to companies,

 7   trying to attract them to New York, because

 8   of the hostile political environment that

 9   created the Amazon situation?

10         COMMISSIONER GERTLER:     Thank you,

11   Senator.   So we as an agency, and I, were --

12   we talk to companies all the time.    And you

13   know, as you can imagine, different companies

14   have different issues, you know.

15         Let's take one of the companies we

16   talked about, Cree, which was a silicon

17   carbide manufacturer that was based in

18   North Carolina.   They made the decision to

19   come to New York State because they felt it

20   was the best place for them to build their

21   next-generation facility.

22         I had conversations with their CEO,

23   who is delighted with where they're locating

24   the factory.   They were pleased with the fact

 1   that they could identify and obtain the type

 2   of talent that they needed.   They were

 3   pleased with the universities around there.

 4   In fact, they are -- even before they are

 5   opening up their facility, they are taking a

 6   group of potential future workers down to

 7   North Carolina to train them for the

 8   summer -- summer jobs, so that they can be

 9   ready to work in New York.

10         So my point being is that different

11   companies invest and come to New York for all

12   sorts of reasons.   Our team is focused on

13   recruiting, attracting companies from all

14   around the world.   So, you know, at -- at

15   this point, you know, we continue to, you

16   know, have good conversations with companies

17   who are looking to come to New York.

18         SENATOR BORRELLO:   You know, in my

19   area we have a company, Truck-Lite, that just

20   announced that they're going to be moving

21   their manufacturing out of Falconer, New

22   York, where they've been since they started

23   in 1955.   One of the reasons that they cited

24   to me when I met with them personally was the

 1   increasing minimum wage.

 2         Now, this is a union organization that

 3   does not pay a single employee minimum wage.

 4   But the pressure, the upward pressure of

 5   minimum wage has affected their ability and

 6   their profitability because of negotiations

 7   with the union.

 8         So are you seeing the rising minimum

 9   wage as an impact and a difficulty and a

10   challenge in being able to attract people and

11   keep people here because of that upward

12   pressure?

13         COMMISSIONER GERTLER:    So, you know,

14   it's a balance when you're implementing

15   economic development.   On the one hand, the

16   Governor has reduced taxes -- corporate

17   taxes, manufacturing taxes, taxes for small

18   businesses have all come down.   That

19   certainly helps.

20         On the -- on the other side, looking

21   to uplift workers with increased wages,

22   increased benefits.   To the extent that you

23   are recruiting higher-skilled workers, that

24   helps businesses.   So I think it -- in many

 1   cases it depends on the specific business.

 2   But, you know, that balance seems to be

 3   working.

 4         And, you know, I've cited the

 5   statistic frequently today, but jobs --

 6   private-sector jobs are at an all-time high.

 7   So I think that balance is working

 8   effectively in New York State.    We're able to

 9   ensure that we're having a diversified

10   economy, we're making bets in jobs of the

11   future throughout the whole state.   And I

12   think that, you know, our program of cutting

13   taxes, of uplifting workers, of using

14   investments through REDCs has been, in large

15   part, very effective.

16         SENATOR BORRELLO:   Well,

17   private-sector jobs are up, but not in

18   upstate New York.   In fact, if you remove the

19   Capital Region, there's a net loss over the

20   last 10 years.   And it's a challenge that we

21   face, and a lot of it has to do with

22   regulations and taxes, you know, that come

23   out of Albany.

24         You know, for example, I'm constantly

 1   hearing about the cost of workers'

 2   compensation and the many multiples it is

 3   over the state of Pennsylvania, which my

 4   district borders, 20 times higher in New York

 5   State than it is in the state of

 6   Pennsylvania.

 7         So those are huge challenges for us

 8   that haven't solved any problems in upstate

 9   New York at this point.

10         Thank you.

11         CHAIRWOMAN WEINSTEIN:      Thank you.

12         We go to Assemblyman Ra.

13         ASSEMBLYMAN RA:     Thank you,

14   Commissioner.   I just want to go back to the

15   Centers of Excellence and Centers of Advanced

16   Technology.   And the conversation about Cree

17   I think underscores the point.    My

18   understanding is that, you know, the Center

19   for Advanced Technology at SUNY Poly was

20   instrumental in attracting that type of

21   investment into our state.

22         In terms of this process and the

23   competitive funding, I know these entities --

24   I mean, it really runs the gamut of the

 1   different types of technology they're

 2   researching and studying.     You know, it could

 3   be healthcare-related, it could be energy.

 4   So what are the criteria that are going to be

 5   used to determine who will get that funding?

 6           COMMISSIONER GERTLER:    So, you know,

 7   what we have, you know, discussed is -- and

 8   I've addressed this previously today -- by

 9   doing the competitive bidding, what we're

10   looking to do is to, you know, achieve a

11   number of different things.     We're looking to

12   focus on forward-looking job creation and

13   industries.

14           You know, the reality is is that the

15   business world is changing, it's changing

16   rapidly.   We want to make sure that we're

17   well-positioned for some of these new

18   industries like quantum computing.     We want

19   to make sure that we are maximizing our

20   resources in a way that leads to the highest

21   ROI in terms of industry growth, in terms of

22   jobs.   And in -- doing so in a very

23   collaborative way, which is why we have the

24   Innovation Hub, which can help each of the

 1   CATs be able to invest appropriately in these

 2   different areas.

 3         Now, we like the competitive bidding

 4   process.   I'm going to have Kevin address

 5   some of the, you know, the specifics related

 6   to that, which will happen after the budget

 7   session has concluded.   But the reality is

 8   that in a world where things are changing so

 9   rapidly, we want to make sure that we have

10   these CATs that are focusing on industry as

11   opposed to -- as opposed to the centers

12   themselves.   Because in that way we can

13   assure that we're using our investment

14   dollars to achieve the maximum ROI in terms

15   of job creation.

16         If you want to go through some of the

17   specifics on the competitive bidding and how

18   we're thinking about it.

19         ESD COO YOUNIS:    I think we have a

20   limited time base.

21         But quickly, the CATs currently are

22   competitively bid.   And that process includes

23   leverage -- you know, an analysis of

24   leveraging private-sector support, what is

 1   the technology, right, what are the

 2   applications for that technology,

 3   opportunities for that technology to use --

 4   to be used in New York.    And we would imagine

 5   the same criteria being used on -- as we move

 6   the COEs to the CAT program.

 7         ASSEMBLYMAN RA:     Okay, thank you.

 8         I just want to go back for a minute to

 9   something my colleague Assemblyman Friend was

10   talking about at the end of his remarks,

11   MWBEs and, you know, the 30 percent goal.

12         You know, we just renewed the program,

13   as Assemblyman Friend said, there's been some

14   changes made.   But, you know, I hear

15   constantly from colleagues in upstate areas

16   about their frustrations and inability to

17   find contractors to meet that.    So is that

18   something the department is looking at, or

19   would the department, you know, support some

20   type of regional approach where the goal

21   is -- takes into account the availability of

22   certified MWBE contractors within that

23   particular region of the state?

24         COMMISSIONER GERTLER:     You know, I can

 1   tell you on -- you know, on our MWBE program,

 2   I mean, it has been one where we've seen, you

 3   know, increases year after year.        And as you

 4   point out, you know, almost 30 percent of our

 5   contracts are to MWBE firms.      Nearly

 6   $3 billion of our contracts are going to MWBE

 7   firms.    So, you know, that's nation-leading.

 8            And we're constantly looking for ways

 9   that we can improve that program, make it

10   easier on applicants.      In one sense we're a

11   victim of our own success -- 1200 MWBE firms

12   are being certified every year.

13            We continue to think about different

14   ways.    So, you know, we are reducing the

15   amount of documentation.     We've looked to

16   reduce that documentation by 30 percent.

17   We've looked at increasing the time frame for

18   the validity of those certifications from

19   three to five years.    We're adding more

20   staff.    We're continuing to look for

21   different ways that we can make that program

22   more accessible to the community.

23            ASSEMBLYMAN RA:   Thank you.

24            CHAIRWOMAN WEINSTEIN:    Senate?

 1         CHAIRWOMAN KRUEGER:     Thank you.

 2         Next, Senator Skoufis.

 3         SENATOR SKOUFIS:   Thank you very much,

 4   Madam Chair.

 5         Thank you, Commissioner, for your

 6   service.

 7         My idea of economic development

 8   incentives is, as such, it must fit one of

 9   these two categories to be appropriate.

10   Either it is to attract a business to

11   New York that would otherwise not come to

12   New York without said incentive, or to retain

13   a business here in the state that otherwise

14   would genuinely leave New York without said

15   incentive.

16         Do you agree that those are the only

17   two categories that would make an incentive

18   appropriate?

19         COMMISSIONER GERTLER:    So I can tell

20   you that when our team looks at the potential

21   to award incentives, we look at it, you know,

22   very seriously.   We do an entire analysis to

23   make sure that, you know, first and foremost

24   we're investing in the right types of

 1   companies that will help to grow the economy.

 2   You know, tradable sectors --

 3           SENATOR SKOUFIS:   I have a number of

 4   questions, so with all due respect, I mean,

 5   just -- it's really a yes or no question.

 6   Are those the two instances by which you

 7   would deem an incentive appropriate?

 8           COMMISSIONER GERTLER:   So, look, I

 9   will tell you in terms of we try to do our

10   best efforts.   Certainly we don't want

11   businesses to leave the state, so that's

12   certainly a good way of using incentives.      We

13   also use them to attract -- you know, attract

14   businesses.

15           But, you know, there may be other

16   ways.   I don't have a whole list, you know,

17   in front of me.   But we want to make sure,

18   again, that we're using those incentives in a

19   constructive way that's performance- based,

20   to ensure that we're helping those companies,

21   you know, invest in a way that we think is

22   appropriate.

23           SENATOR SKOUFIS:   Okay.   It sounds

24   like perhaps there -- you disagree with my

 1   assessment, but that's okay.

 2         So let's say that a business that

 3   exists in New York State comes into ESD and

 4   says, Well, I'm looking to leave to

 5   New Jersey, I'm looking to relocate to

 6   Pennsylvania.    What do you do to scrutinize

 7   those threats?

 8         COMMISSIONER GERTLER:      So we do --

 9         SENATOR SKOUFIS:      Do you have

10   investigators within ESD?

11         COMMISSIONER GERTLER:      We have a team

12   that looks at exactly that.     When we're

13   looking at approving for a company that has

14   said that they're going to leave the state,

15   we go, we make -- we undertake research, we

16   look at where the potential is that they're

17   saying that they're going.

18         I can assure you that we have a team

19   of people at ESD who take this role very,

20   very seriously, who do a deep financial

21   analysis and also look at the other

22   opportunities that these companies may have

23   to leave.   So we are doing that type of

24   research.

 1            SENATOR SKOUFIS:    Back in September,

 2   the New York Times reported that down in

 3   New Jersey there were a dozen companies that

 4   made such threats to leave to New York, but

 5   what was peculiar was that all 12 companies

 6   cited a threat to relocate to a very specific

 7   business park in Pearl River, Rockland

 8   County.

 9            Are you familiar with this story that

10   I'm referencing?

11            COMMISSIONER GERTLER:    I did read that

12   story.

13            SENATOR SKOUFIS:    Yeah.   And the

14   New York Times seems to have done the

15   investigative work that the New Jersey

16   Economic Development Office should have been

17   doing in speaking with the real estate agents

18   for the office park and actually going there

19   and, you know, trying to identify were they

20   even here looking at space.

21            Do you do that?    Does ESD do what

22   New Jersey did not do?

23            COMMISSIONER GERTLER:    As I said, you

24   know, we have a team dedicated, hardworking,

 1   that when a company says that they're looking

 2   to move to another location, they follow that

 3   lead, they make sure that those -- that, you

 4   know, that sort of, quote, unquote, threat is

 5   real, and they do the necessary due diligence

 6   before we approve that.

 7         SENATOR SKOUFIS:    I have no doubt that

 8   they're hardworking.   I guess my question is,

 9   you know, if I were to or someone else was to

10   FOIL, for example, travel vouchers at ESD,

11   would we see that your men and women are

12   traveling to other states on the ground,

13   looking at spaces that businesses are

14   threatening to leave to, speaking to realtors

15   on the ground in these other states?    Would

16   we find that that activity exists at ESD?

17         COMMISSIONER GERTLER:    So again, I

18   mean, it is a -- there's a number of

19   different ways that our team looks at

20   ensuring that the incentives are being

21   provided, are being done so in an appropriate

22   way, in ensuring that we're taking the tax

23   credits that we award to companies seriously,

24   in a very serious way, that we're respecting

 1   the role that we have to provide these

 2   companies --

 3         SENATOR SKOUFIS:   Okay, yeah --

 4         COMMISSIONER GERTLER:    And I will tell

 5   you that I have asked the question to the

 6   team, you know, how sure are we?     What work

 7   have we done?   There's always follow-up,

 8   there's always calls, there's always

 9   information, they request information from

10   the company.

11         So we do the best that we can to

12   ensure -- we want to make sure --

13         SENATOR SKOUFIS:   I got it.    One last

14   question.

15         COMMISSIONER GERTLER:     -- that those

16   tax credits, when awarded, are done so

17   seriously and effectively.

18         SENATOR SKOUFIS:   One last question.

19   I know ESD, in the Executive Budget, you're

20   looking to extend by I think 15 years the

21   Excelsior job tax credit program.

22         Do you think that we're getting the

23   return on investment that we should be

24   getting with that program?    What do you think

 1   the price tag per job ought to be that would

 2   deem this program a good return on

 3   investment?

 4         COMMISSIONER GERTLER:     We are

 5   absolutely seeing an ROI, a positive ROI on

 6   the investment that we're making.

 7         CHAIRWOMAN KRUEGER:     You know what?

 8   We would love that answer in writing, because

 9   I think we'd all love the answer to that.

10   And that allows you to put your thinking on

11   paper for all of us.   There were a lot of

12   questions today people had that I don't think

13   you fairly had time to answer, so we look

14   forward to written responses.

15         And I know Senator Skoufis will look

16   forward to it.   But we'll share it with

17   everyone involved besides.    Thank you.

18         You're done, Assembly?

19         CHAIRWOMAN WEINSTEIN:     No.

20         CHAIRWOMAN KRUEGER:     Assembly.

21         CHAIRWOMAN WEINSTEIN:     So I have just

22   a couple of questions on areas that haven't

23   been touched yet.

24         In Market New York the Executive

 1   proposal provides $15 million for Market

 2   New York, split between operating and

 3   capital.     What's the estimated direct

 4   economic impact created by the program, and

 5   what types of initiatives do these funds

 6   support?     And are there new initiatives or

 7   locations planned?    If so, where are they?

 8            ESD COO YOUNIS:   Thank you,

 9   Assemblymember.

10            We -- I don't have the direct ROI.     We

11   can certainly get the leveraged investment

12   against those.    As you noted, it is a split

13   between operating and capital, and the two --

14   the reason for that split is the operating

15   tends to support what you're marketing,

16   right?     So it might be the marketing of a

17   particular cultural event in a region.

18            And then on the other side, the

19   capital funds are used to support what we

20   would think of as the tourism infrastructure.

21   Sometimes it's the improvement of a hotel up

22   in Lake Ontario.    So it's -- that's the type

23   of projects that are supported with those

24   funds.

 1         CHAIRWOMAN WEINSTEIN:    So maybe along

 2   with some of the other material that you'll

 3   be -- responses that you'll be sending us,

 4   you could give us a little bit more detail

 5   about where the past funding has gone and

 6   where the new proposals are.

 7         And I see for the first time there's a

 8   new $2 million fund to support diversity

 9   efforts within the state's motion picture and

10   television industry.   Can you give us any

11   insight as to how the fund will operate, and

12   how will the effectiveness of the fund be

13   evaluated?

14         COMMISSIONER GERTLER:    So, you know,

15   the film industry is an important industry to

16   New York State.   We've seen, certainly at a

17   time when there's been robust -- robust

18   creation of content in this area -- in fact,

19   it's one of the great times for content

20   creation, all the shows that are being done,

21   film -- it's an important industry to New

22   York State.

23         We want to make sure that we are

24   training the workforce of tomorrow in the

 1   industry.   We also want to make sure that we

 2   have a, you know, diversified workforce.

 3   That is what the money's going to go to, as

 4   well as 0.25 percent is going to be dedicated

 5   to fulfilling that.   That's part of some of

 6   the -- some of the changes that were done for

 7   the program.

 8         CHAIRWOMAN WEINSTEIN:    Thank you.

 9         And then I have a question on behalf

10   of Senator Helming.

11         There have been a number of localized

12   natural disasters in recent years throughout

13   the state, and we spoke at our environmental

14   hearing about the "Restore Mother Nature"

15   Bond Act proposed in the Executive Budget.

16   But does ESD have any thought to creating

17   permanent programs to assist businesses that

18   are impacted by natural disasters with either

19   loans, grants, even if they're not eligible

20   for federal aid?

21         COMMISSIONER GERTLER:    So you make a

22   very important point that we are seeing more

23   and more, you know, climate -- storms that

24   are having severe impact on communities

 1   throughout New York State.     You know, these

 2   storms that used to happen once every several

 3   hundred years now seem to be happening every

 4   few years, sometimes every year.    And I think

 5   in line with that, I think that's part of the

 6   reason why the CLCPA was passed with the

 7   Legislature.

 8           But it's also a reason why we need to

 9   continue to invest in the green economy, why

10   that needs to be a priority.    That's

11   certainly a priority that the Governor has

12   made.   It's something that ESD will focus on.

13   There are right now -- from our standpoint,

14   we've seen job growth in the green economy

15   grow over the last few years by almost

16   10 percent, 160,000 jobs in the green

17   economy.   And we want to continue that, we

18   want to double down on that to make sure that

19   we continue our nation-leading efforts in the

20   green economy.

21           So part of the increase in the

22   incentives that we talked about are to ensure

23   that we've got even higher incentives to help

24   companies invest and focus on the green

 1   economy.   So both in terms of a percentage of

 2   wages, in terms of R&D, in terms of

 3   investment, all of those are enhanced to

 4   ensure that we can continue to make the type

 5   of investments that are critical so that our

 6   economy is one that is led by a green economy

 7   and to ensure that we are creating those jobs

 8   of the future.

 9         CHAIRWOMAN WEINSTEIN:    I think part of

10   the question really is though for businesses

11   that are negatively impacted by a natural

12   disaster such as flooding, like we had at

13   Lake Ontario, is there some relief that could

14   come to help support them through ESD?

15         COMMISSIONER GERTLER:    So the -- I was

16   a cochair of the Lake Ontario resiliency, and

17   there are monies that ESD is dedicating to

18   help businesses be able to become more

19   resilient for the future.   Thirty million

20   dollars was set aside.   We've received

21   applications, we'll look at processing those.

22   And, you know, obviously it's critical that

23   we make sure that businesses are prepared for

24   the next storm.

 1            So I apologize for not answering that

 2   in the last go-round, but that is an

 3   important part of ensuring that those

 4   businesses that have seen the effects of that

 5   flooding are able to be prepared for the next

 6   storm.

 7            CHAIRWOMAN WEINSTEIN:   I guess some of

 8   the question relates to the fact that as you

 9   said, with seeing in our state increasing

10   effects of climate change, rather than being

11   reactive to a disaster, to be proactive and

12   have something in the budget that could

13   relate to -- that would keep in mind that we

14   may have more of these disasters in the

15   future and that we can have something readily

16   available to interact with businesses that

17   are impacted, rather than have to wait to,

18   post-disaster, come up with some relief.

19            So that's just something I think the

20   agency should think about.

21            COMMISSIONER GERTLER:   Well, thank

22   you.   And that certainly was the approach

23   that we took in this particular case in

24   helping -- you know, in being prospective in

 1   ensuring that the funds that we were using

 2   toward these businesses would help them be

 3   more resilient for the future.

 4         CHAIRWOMAN WEINSTEIN:      Thank you.

 5         CHAIRWOMAN KRUEGER:     Thank you.

 6         Senator Savino.

 7         SENATOR SAVINO:     Thank you,

 8   Senator Krueger.

 9         Good afternoon -- is it afternoon?

10   It's almost afternoon.    I want to -- I'll be

11   very brief.   I just want to talk to you a bit

12   about some of the challenges that we have

13   attracting businesses to New York.     It's been

14   referenced before.   And I know one of the

15   things that when people want to relocate to

16   New York and we want to incentivize them to

17   come, is they're looking for a well-educated,

18   well-trained workforce.

19         One of the criticisms of the Amazon

20   proposal in Long Island City -- which I

21   supported, I was not opposed to it -- but one

22   of the concerns was that Amazon was going to

23   come in, or a big company like Amazon would

24   come in and because in New York we have a

 1   huge training gap with respect to technology

 2   professionals, that those jobs that were

 3   going to be created would not go to actual

 4   New Yorkers, and the people who lived there

 5   would be saddled with the increased cost of

 6   housing and the effects of having a major

 7   employer come in like that.

 8         What do you see as the role of ESD

 9   with respect to closing that tech gap?     It's

10   been reported on.   The Center for an Urban

11   Future just released a study that shows that

12   New Yorkers by and large are falling way

13   behind on technology training.

14         What can we do to improve those

15   circumstances so that we do have the best

16   workforce and we're going to be able to

17   attract those companies who come here, stay

18   here, and actually hire New Yorkers?

19         COMMISSIONER GERTLER:    So there is no

20   doubt that when we are talking to businesses

21   that are looking to locate in New York State,

22   one of the principal differentiators is that

23   we do have a skilled workforce, that we have

24   an educated workforce.   And if you look at

 1   any of these statistics in terms of, you

 2   know, NIH grants and so on, New York always

 3   ranks, you know, at the top, near top, and

 4   it's because we do have an incredible

 5   education system, we're producing skilled

 6   workers.

 7            But, you know, we want to still make

 8   sure that we have the next generation of

 9   workers that -- just because we're at -- you

10   know, enjoying an economy with the highest

11   private-sector employment, that does not mean

12   that we rest on our laurels and don't help to

13   train.

14            In many cases -- and I come from, you

15   know, many years in the private sector --

16   it's led by companies.   We need to know what

17   the companies need.    And so when we're able

18   to bring companies like an Amazon to

19   New York, they will hire -- they will hire

20   current New Yorkers, but by definition they

21   also must train those New Yorkers too.   And

22   that's why, you know, it's critically

23   important that we are bringing these types of

24   companies to New York State.

 1         I've talked about Cree, which is a

 2   silicon carbide company.   They chose their

 3   location near Marcy in part because of the

 4   workforce that was around their facility,

 5   their ability to help to work with some of

 6   the training centers and some of the

 7   community colleges.   And, you know, their CEO

 8   is very proud that they are taking a group of

 9   interns down to their facility in North

10   Carolina to train them there so they can see

11   how the process works and then come back to

12   New York.

13         So, you know, this is a -- you know,

14   it's a partnership.   And at the end of the

15   day, the idea behind workforce is to make

16   sure that we're training the types of people

17   that these companies need.   Bringing more

18   companies in and working with those companies

19   is a critical part of ensuring that we're

20   doing that.

21         Now, I will also tell you that there

22   is a $175 million workforce development

23   initiative that's focused on centers of the

24   future, that's focused on, you know,

 1   apprenticeship, focused on training

 2   individuals for the future.    That too -- that

 3   too is important.   But in all cases it --

 4   and, you know, and we have our workforce

 5   centers, like Northland in -- near Buffalo.

 6   It's -- it's all of those things that we need

 7   to do to make sure that we are training those

 8   individuals for the future.

 9          SENATOR SAVINO:   Well, I'm happy to

10   hear that.

11          I would suggest you take a look at

12   this report, it was just released this week,

13   from the Center for an Urban Future, and it

14   outlines where the gaps are in training, and

15   maybe you guys can help close that.      Thank

16   you.

17          COMMISSIONER GERTLER:    Great.    Thank

18   you so much.

19          CHAIRWOMAN WEINSTEIN:    Senator Funke.

20          CHAIRWOMAN KRUEGER:     Senator Funke.

21          SENATOR FUNKE:    Thank you,

22   Madam Chair.

23          Thank you, Commissioner.

24          COMMISSIONER GERTLER:    Thank you,

 1   Senator.

 2         SENATOR FUNKE:   A quick question for

 3   you -- a couple of quick, very quick

 4   questions for you.

 5         How long does it take ESD to put a

 6   package of incentives together for a business

 7   that may want to relocate to New York State?

 8   I've heard like in North Carolina, as an

 9   example -- you mentioned North Carolina --

10   that they can have a package together in

11   48 hours, but that here in New York State it

12   takes laborious hours to get something put

13   together here.

14         So what would you say?   Is there a

15   time frame that is accurate, or does it vary

16   from business to business?

17         COMMISSIONER GERTLER:    I will tell you

18   that we'll take, you know, sufficient time to

19   make sure that we're doing it properly, that

20   we're doing it effectively.

21         As I've said before, we take very

22   seriously the fact that we are utilizing tax

23   credits, and at times, you know, there's

24   different committees that it goes through,

 1   there's questions that ESD workers will have,

 2   there will be questions that I'll have.        We

 3   want to make sure that we've answered all

 4   those questions before we provide a package

 5   for a company.

 6            SENATOR FUNKE:    Is there a way to

 7   streamline that process, in your mind?

 8            ESD COO YOUNIS:   Senator, Kevin

 9   Younis.

10            The one thing I would say, in my

11   experience, generally speaking, we're waiting

12   for the business.    We move more quickly in

13   terms of our incentives.     You know, we do

14   what -- as Eric said, we do the process

15   appropriately.    But more often than not we

16   are -- we're very quick, we're very

17   responsive.    And we are, as often as not,

18   waiting for the next step from the business

19   in terms of documentation or a decision.

20            SENATOR FUNKE:    One of the impediments

21   that we hear about, you know, from businesses

22   is the 750,000 regulations we have on the

23   books.    Is it ever within your purview to

24   look at those regulations and make

 1   recommendations to the Legislature about

 2   getting rid of some of them?

 3            COMMISSIONER GERTLER:   So I'm new on

 4   this job.    And, you know, our focus is to --

 5   again, we're focused on jobs, we're focused

 6   on all the different ways that we can help

 7   jobs grow in New York State.

 8            To the extent that we believe that

 9   there are ways to do something better, we'll

10   certainly, you know, look to -- you know,

11   through either others in the administration

12   or directly provide, you know, those ideas.

13            SENATOR FUNKE:   Given all your time in

14   the --

15            COMMISSIONER GERTLER:   You know, we're

16   focused on job creation, as is everyone else.

17            SENATOR FUNKE:   We're all ears on how

18   we can, you know, best improve the business

19   climate.    But you came from the private

20   sector, so I'm curious to know what you think

21   of the business climate in New York State and

22   how you would improve it.

23            COMMISSIONER GERTLER:   So, you know, I

24   had a wonderful career in the private sector,

 1   but it's a privilege to serve the people of

 2   this state, to serve -- you know, to serve

 3   the Governor.

 4         I have to say that, you know, on

 5   personal level I've been, you know, impressed

 6   with, you know, the programs, with how New

 7   York State is doing.   You know, there's areas

 8   that, you know, we're looking to, you know,

 9   focus on, areas of passion.    For example, you

10   know, life sciences; the Governor has made a

11   commitment to life sciences.    I think that,

12   you know, that is an industry that has -- you

13   know, already we're seeing benefits -- has

14   enormous potential.    We have seen some of the

15   best science that's being done in the world

16   here in New York State.

17         So -- but, you know, as I and the team

18   figure out better ways to, you know, grow

19   industry, grow jobs, we're not shy.   I've

20   had, you know, for example, many

21   conversations, I've gone around the state,

22   I've listened to businesses.    There's many

23   suggestions that we've had from businesses

24   from around the state, and, you know, we take

 1   those to heart.

 2         SENATOR FUNKE:      I mentioned this last

 3   night, late last night.    But several years

 4   ago the Legislature passed, the Governor

 5   signed into law the creation of an innovation

 6   technology center in the State of New York,

 7   similar to what North Carolina has, to allow

 8   high-tech companies to come down and test

 9   their wares, pilot programs and so on.        And

10   we've got a lot of smart people in our state

11   that should be able to come down here and

12   test what innovation, what technology they

13   have on big data.

14         This program has never been funded.

15   The technology center does not exist.     It's

16   been on the books for two years.     I would

17   encourage you, your agency, to do whatever

18   you can to fund that program, because I think

19   it would be a big win.    In North Carolina,

20   the first year, they saved $6 million just

21   through the efforts of the private sector,

22   being able to show them what they can do.

23         COMMISSIONER GERTLER:      All right,

24   thank you.

 1           CHAIRWOMAN KRUEGER:     Thank you.

 2           I think that is it for you gentlemen.

 3   Thank you very much for being with us today.

 4           COMMISSIONER GERTLER:    Thank you so

 5   much.

 6           CHAIRWOMAN KRUEGER:     We look forward

 7   to your responses in writing.

 8           COMMISSIONER GERTLER:    Thank you.

 9           CHAIRWOMAN KRUEGER:     We are making an

10   announcement that clearly this hearing is not

11   going to be over now, since we have everyone

12   else.   So for those who have been sitting

13   here patiently, hoping for a -- Taxes is

14   scheduled for 1, likely 2:00, 2:30, if people

15   want to go out and enjoy our fabulous food

16   offerings on the Concourse, or other

17   activities.

18           Oh, mic.   Yet again.   This hearing

19   will not be over at 1:00 --

20           (Laughter.)

21           CHAIRWOMAN KRUEGER:     -- this hearing

22   will probably be over at 2:00 to 2:30, with

23   Taxes starting then.

24           So those of you who were really

 1   waiting for Hearing II, enjoy our wonderful

 2   food on the Concourse or anywhere else of

 3   your choosing.   Although since OGS is coming

 4   up, and they're responsible for food on the

 5   Concourse, you can let them know whether it's

 6   wonderful or not in your own ways.

 7           (Laughter.)

 8           CHAIRWOMAN WEINSTEIN:    We've been

 9   joined by Assemblyman Mosley.

10           CHAIRWOMAN KRUEGER:     I don't think we

11   have any new Senators right now.

12           Hello.

13           COMMISSIONER DESTITO:    Hello.   Thank

14   you for the comments.

15           CHAIRWOMAN KRUEGER:     Absolutely, a

16   little pitch.

17           So we are joined by the New York State

18   Office of General Services Commissioner RoAnn

19   Destito, who was previously an Assemblywoman,

20   so she always gets a lot of love when she's

21   here.

22           (Laughter.)

23           COMMISSIONER DESTITO:     Thank you,

24   Senator.

 1            Good morning to you, Chairs Krueger

 2   and Weinstein, Ranking Members Ra and I see

 3   Senator Helming, and the distinguished

 4   members of the committees.    I am Commissioner

 5   RoAnn Destito.    I'm pleased to be here today

 6   to provide testimony about the Office of

 7   General Services.

 8            I really would like to talk with you

 9   today about some of the exciting things

10   happening at OGS.    Our Procurement Services

11   group continues to lead the way in new and

12   innovative procurements.   In August they were

13   nationally recognized by Governing magazine

14   as a top-five procurement organization in the

15   United States.    This was one of seven

16   national accolades for our OGS procurement

17   this past year.

18            We maintain the largest information

19   technology catalogue contracts in the

20   country, attracting New York-based small,

21   MWBE, and SDVOB businesses, as well as many

22   of the largest technology companies in the

23   world.    We have approximately 500 MWBE and

24   SDVOB vendors in the IT space alone.

 1         In 2019, we did approximately 40

 2   trainings and outreaches, educating over

 3   5,000 government employees on our contracts,

 4   and 3,000 businesses on how to do business

 5   with New York State, and did trainings and

 6   outreaches for over 8,000 government

 7   employees.   And we maintained an Amazon-like

 8   electronic catalogue of over 10 million items

 9   to purchase from, and facilitated employing

10   individuals with disabilities on

11   approximately 216 service and commodity

12   projects across the state.

13         We added contracts for community

14   solar, intelligent security systems and

15   solutions, statewide laundry and linen

16   services, and telecommunication connectivity

17   services, to name a few, and we continued our

18   success with contracts such as centralized

19   resources for project labor agreement studies

20   and contracts for translation services across

21   state agencies and local governments.

22         When the Legislature modernized the

23   voting process by authorizing early voting

24   and electronic poll books, our team built a

 1   single centralized contract supporting all

 2   58 local boards of elections, and even found

 3   a way to reduce the list of the necessary

 4   associated hardware that resulted in

 5   administrative savings.

 6         In Buffalo, a dynamic downtown

 7   revitalization is underway.   OGS, working

 8   with state and local officials, determined

 9   that in the current competitive and robust

10   Buffalo real estate market, the highest and

11   best use of the Senator Walter J. Mahoney

12   State Office Building is no longer a state

13   office space and that it will be sold at

14   auction later this year.   State employees

15   will remain in the downtown Buffalo footprint

16   that currently encompasses more than 600,000

17   square feet of space leased by the state.

18         Here in Albany, as part of our work to

19   meet the Governor's clean energy goals, NYPA

20   and OGS have unveiled a new project that

21   takes into consideration legislative,

22   community, and expert feedback, budgetary

23   constraints, and the need to replace obsolete

24   equipment at the Sheridan Hollow Steam Plant.

 1            The project has five major components.

 2   First, very happily, we have demolished the

 3   old steel smokestack at the former ANSWERS

 4   plant.    Second, we are replacing the existing

 5   obsolete emergency generators with quiet,

 6   state-of-the-art emission-controlled units.

 7   Third, we are going to electrify one of the

 8   on-site steam-driven chillers at the Empire

 9   State Plaza chill plant -- and electrifying

10   this one chiller will reduce local gas use

11   and emissions by 18 percent.    Fourth, we are

12   installing LED lighting technology throughout

13   the entire plaza complex to reduce energy and

14   statewide greenhouse gas emissions.   And

15   fifth, we are in the process of establishing

16   a 38-megawatt solar photovoltaic project at

17   the former Oriskany Airport, a property now

18   owned by OGS.    This project would be financed

19   through a power purchase agreement and would

20   generate over 50 percent of the electricity

21   used by the Empire State Plaza.

22            We are also working on a project at

23   the Capitol Courtyard, which serves as a roof

24   over the basement mechanical space of this

 1   building.   The original roof has had multiple

 2   layers of reroofing over the past hundred

 3   years; the project will repair the leaking

 4   roof and reintroduce windows along the

 5   Hawk Street passage.

 6         I hope you've noticed the new

 7   grab-and-go lunch stop in the LOB, and that

 8   is serving up fresh salads, sandwiches and

 9   snacks on session days.   We've also begun a

10   multiyear phased project to renovate and

11   modernize the public bathrooms in the

12   Legislative State Office Building.    All of

13   the renovated bathrooms will meet modern ADA

14   standards, including a family restroom with

15   an adult changing station.

16         In conjunction with other agency

17   partners, OGS has launched the Employee Zero

18   Emissions Vehicle Charging Pilot Program in

19   targeted OGS parking facilities throughout

20   downtown Albany, the Harriman State Campus,

21   with a total of 64 charging ports.    In

22   addition, we have completed the installation

23   of fleet charging stations at our building on

24   Wolf Road in Albany and will complete similar

 1   installations at the Roosevelt Office

 2   Building in Poughkeepsie.    Additional

 3   charging stations are in development.

 4         OGS is also participating in the

 5   Governor's Resiliency and Economic

 6   Development Initiative, or the REDI program.

 7   In addition to serving on the REDI committee

 8   and advancing multiple projects for the

 9   initiative, OGS is directly managing the

10   $15 million navigation dredging initiative,

11   which is part of the Governor's efforts to

12   dredge 20 sites in navigable waterways and

13   harbors and keep them operational.

14         In an effort to expand savings and

15   efficiencies for New York State taxpayers,

16   OGS would like the legislature to consider

17   granting expansion of its design-build

18   authority to additional state entities, just

19   as the Legislature did last year for a number

20   of New York City agencies.    Granting OGS full

21   DB authority would allow parity for OGS to

22   consider alternative delivery methods, just

23   as other comparable state construction

24   agencies do.

 1           OGS does an excellent job also at

 2   growing businesses.    In 2011, the OGS

 3   eligible MWBE utilization rate was

 4   14 percent, and we are very proud to say that

 5   we now have exceeded the Governor's goal of

 6   30 percent.   As an example, in that time

 7   MWBEs have received in excess of $702 million

 8   from contracts associated with our D&C group

 9   alone -- up from $538 million at this time

10   last year.

11           Our success implementing the SDVOB

12   program continues.    We have now approximately

13   770 certified businesses in a wide range of

14   categories, from construction and financial

15   services to commodities.   Over the 12 months

16   ending September 30th, New York State

17   disbursed over $103 million to SDVOBs, which

18   represents an 83 percent growth over last

19   year.   One great example is Walker Diving

20   Underwater Construction, owned by a post-9/11

21   veteran who was awarded the largest SDVOB

22   contract, at $9.8 million.

23           Providing an exceptional visitor

24   experience is a source of pride for the OGS

 1   team.   I'm very pleased to report that we

 2   have completed renovations at the

 3   Adam Clayton Powell Building in Harlem, and

 4   we opened up the community room and art

 5   gallery, and the Harlem Art Collection has

 6   made its first return to the building in over

 7   25 years.

 8           In the mid-1990s a majority of these

 9   works in the collection were moved to storage

10   in the basement of the building, where we

11   found them to be damaged by water.   The

12   collection was then moved to the building's

13   13th-floor storage area, where it remained in

14   poor condition and hidden from public view.

15   In 2012, the collection was rediscovered --

16   while I was touring the building -- and we

17   temporarily relocated it to Albany, where the

18   condition of the artwork was assessed and

19   individual pieces were cleaned and conserved.

20           Portions of the collection were

21   returned to the Adam Clayton Powell state

22   office building for the 2019 exhibition,

23   titled "Harlem Roots," and most recently for

24   the exhibit "Harlem Art Then and Now: A

 1   Celebration of Community and Contemporary

 2   Art."

 3           Over the next year, in addition to

 4   sharing this newly renovated space with the

 5   community, we will be hosting new public

 6   exhibits with additional works from the

 7   collection.     Also, this year's Black History

 8   Month exhibit marks the first time works from

 9   the Harlem Collection have been displayed in

10   the State Capitol.

11           As commissioner, I'm honored to lead

12   the hardworking and dedicated team at the

13   Office of General Services.    Their service to

14   the people of New York State never wavers and

15   can be counted on at all times.    Thank you

16   for listening, and I'd be glad to answer any

17   questions.

18           CHAIRWOMAN KRUEGER:    Thank you.

19           Any Senators?   Anna Kaplan -- excuse

20   me, not just any Senator, but the chair of

21   the appropriate committee, Senator Anna

22   Kaplan.

23           SENATOR KAPLAN:   Thank you,

24   Commissioner.    Thank you for being here --

 1         COMMISSIONER DESTITO:    Thank you,

 2   Senator.

 3         SENATOR KAPLAN:    -- and presenting

 4   testimony, and also for serving.

 5         Honestly, I had some questions which

 6   you already answered in your opening

 7   statements.    But if you -- I might have

 8   missed this part.   If you can give us a

 9   little bit of an update on capital spending

10   for the microgrid, an efficient energy system

11   for the Empire State Plaza that was first

12   appropriated in 2017.

13         COMMISSIONER DESTITO:    Yes.   We

14   have -- the microgrid project that we did

15   with NYPA, we halted the CHP -- the CHP

16   project and we went into a -- the five things

17   that we did.   We listened to -- we listened

18   to the people, we listened to all of the

19   feedback that we received, because we went

20   out and we listened.

21         So we demolished the steel smokestack.

22   We're replacing the -- our emergency

23   generators, which are needed desperately in

24   the complex, with state-of-the-art

 1   emission-controlled units, and we are

 2   electrifying an on-site steam-driven chiller

 3   at the Empire State Plaza.    So this

 4   electrification will reduce our local gas use

 5   by 18 percent, so we are very proud of that.

 6         And the LED lighting is included now

 7   in this project.   And fifth, and more

 8   importantly, is we're in the process of

 9   establishing the 38-megawatt solar

10   photovoltaic project, which will in fact --

11   we're financing it through a power purchase

12   agreement with NYPA, and it will generate

13   over 50 percent of the electricity we use

14   here at the Empire State Plaza.    And we're

15   always looking at more projects like that

16   with our partner at NYPA.

17         SENATOR KAPLAN:   Thank you.

18         No further questions.

19         CHAIRWOMAN KRUEGER:     Thank you.

20         Assembly.

21         CHAIRWOMAN WEINSTEIN:    We go to

22   Assemblyman Zebrowski, chair of the

23   Government Operations Committee.

24         ASSEMBLYMAN ZEBROWSKI:    Good morning,

 1   Commissioner.

 2           COMMISSIONER DESTITO:    Good morning,

 3   Assemblyman.

 4           ASSEMBLYMAN ZEBROWSKI:   Great to see

 5   you.

 6           COMMISSIONER DESTITO:    It's good to

 7   see you.

 8           ASSEMBLYMAN ZEBROWSKI:   Let me just

 9   first compliment you on all your

10   accomplishments and all the things OGS has

11   done, both invisible and visible, in terms of

12   modernization, in terms of efficiency and

13   many of the things that I think, if you walk

14   around the Capitol complex, you certainly

15   see.    So I appreciate all your efforts.

16           COMMISSIONER DESTITO:    Thank you very

17   much.

18           ASSEMBLYMAN ZEBROWSKI:   I just have a

19   few questions related to some sort of

20   technical procurement and other related

21   things in the Governor's budget, if we could

22   just handle those.

23           The Governor's budget authorizes the

24   Correctional Industries Program of the

 1   Department of Corrections to provide services

 2   as a preferred source.    Are you aware of what

 3   type of services the department is sort of

 4   envisioning to be provided as a preferred

 5   source?

 6         COMMISSIONER DESTITO:     We are not

 7   aware of what services.    But I will tell you

 8   that we are all very much -- our goal is to

 9   employ people with disabilities.    But any

10   service that they propose will have to come

11   back to the Procurement Council, of which the

12   Senate and the Assembly do have membership,

13   you designate someone on the Procurement

14   Council.

15         So just giving them the approval --

16   any service application that they want will

17   come back to the Procurement Council, and we

18   will review it for the authorization.

19         ASSEMBLYMAN ZEBROWSKI:     Okay.   So are

20   there any existing MOUs that are currently in

21   effect or that are -- through this budgetary

22   proposal, that are expected?    Or is this just

23   a blanket sort of authorization and we'll

24   figure out what later?

 1         COMMISSIONER DESTITO:    It's

 2   authorization.   It's authorization to allow

 3   them to provide additional services.     But

 4   again, the services will have to be -- they

 5   will have to provide an application, as

 6   everyone -- any of our preferred sources do,

 7   and they will have to go in front of the

 8   Procurement Council.

 9         ASSEMBLYMAN ZEBROWSKI:   Okay.     So it's

10   safe to say, though --

11         COMMISSIONER DESTITO:    And be

12   considered by the Procurement Council and go

13   through all of the -- you know, the rigid

14   explanation and the process that we go

15   through.

16         ASSEMBLYMAN ZEBROWSKI:   Okay.    So it's

17   safe to say that OGS is supportive of the

18   authorization.

19         COMMISSIONER DESTITO:    We're always

20   supportive of employing and making sure that

21   there are jobs for people with disabilities.

22         ASSEMBLYMAN ZEBROWSKI:   Okay, thanks.

23         The technology service contracts,

24   there's a part of the budget that authorizes

 1   the director of ITS to issue comprehensive

 2   technology service contracts.   Could you sort

 3   of talk about how OGS currently procures

 4   technology services, how other agencies

 5   procure that?   Do you do that for them?     And

 6   what would change as a result of that

 7   proposal?

 8         COMMISSIONER DESTITO:     So we have

 9   centralized contracts that we put out there,

10   whether they're our umbrella contracts, our

11   HBITS contracts, our project-based contracts

12   -- HBITS being our hourly-based IT services

13   or project-based IT services.    We have

14   centralized contracts that agencies can use,

15   ITS can use, our authorized users can use,

16   which is anybody -- is in a municipality, and

17   many not-for-profits.   So those are our

18   centralized contracts that we have.

19         The proposal that I have seen that

20   will give another tool to ITS is to procure

21   large technology system contracts.    And it is

22   my understanding that this bill is not

23   intended to replace any OGS contracts.       So

24   our contracts are out there, they're

 1   competitive, they're -- you know, we have

 2   transparency.

 3         These are for larger contracts.     And

 4   they still may -- ITS may still procure using

 5   the traditional state finance 163 process.

 6   So it's not intended to eliminate any of our

 7   contracts, because our contracts are used by

 8   more than just ITS.

 9         ASSEMBLYMAN ZEBROWSKI:   Okay.    Yeah, I

10   asked that question of the ITS director

11   yesterday and asked for maybe some follow-up

12   information from him related to this --

13         COMMISSIONER DESTITO:    We certainly

14   could also work with -- it was Jeremy

15   Goldberg; correct?

16         ASSEMBLYMAN ZEBROWSKI:    Yeah, I think

17   so.

18         COMMISSIONER DESTITO:    We work with

19   Jeremy quite a bit, and --


21         COMMISSIONER DESTITO:    -- and we will

22   look -- we will look to provide you with any

23   information that you would like.   And we'd

24   like to certainly show you what our contracts

 1   look like, if there was any time you would

 2   like to see them.

 3            ASSEMBLYMAN ZEBROWSKI:   Sure.   Great.

 4   Great.

 5            Just in relation to that sort of

 6   further information, there's like a provision

 7   related to cost increases, and we were sort

 8   of wondering is that a common issue with

 9   technology contracts that we're seeing, so

10   that we need to change the language in

11   procurement that I believe there -- there's a

12   -- in the language it provides a sort of

13   cancellation procedure for cost increases and

14   things like that.

15            COMMISSIONER DESTITO:    That would be a

16   new -- that's a new provision, and we'd have

17   to look at it.

18            ASSEMBLYMAN ZEBROWSKI:   Okay.   I just

19   have one more question, Madam Chair, so --

20            COMMISSIONER DESTITO:    We do not have

21   that provision in our contracts.

22            ASSEMBLYMAN ZEBROWSKI:   Okay.   There's

23   other people, you can go to them, and then

24   ...

 1          (Discussion off the record.)

 2          CHAIRWOMAN KRUEGER:     Yes, we have

 3   Senator Borrello.

 4          SENATOR BORRELLO:     Thank you, Madam

 5   Chairman.

 6          COMMISSIONER DESTITO:    Hi, Senator.

 7          SENATOR BORRELLO:   How are you today?

 8          COMMISSIONER DESTITO:    Good, thank

 9   you.

10          SENATOR BORRELLO:   Well, you know,

11   we've had two and a half hours of the

12   previous testimony, so we don't want you to

13   feel left out that you weren't going to be

14   here long enough, so I'll ask you one more

15   question.

16          (Laughter.)

17          COMMISSIONER DESTITO:    Okay.

18          SENATOR BORRELLO:   I do actually have

19   a serious question.

20          COMMISSIONER DESTITO:    Yes.

21          SENATOR BORRELLO:   I heard you mention

22   that part of your project is going to be

23   dredging 20 navigable waterways, is that

24   correct?

 1         COMMISSIONER DESTITO:    Twenty

 2   navigable waterways on Lake Ontario, yes.

 3         SENATOR BORRELLO:   Lake Ontario.

 4         COMMISSIONER DESTITO:    Yes.

 5         SENATOR BORRELLO:   So, you know, the

 6   concerns with Lake Ontario, the same as Lake

 7   Erie, where I represent, you know, is access.

 8   You have beaches that have virtually

 9   disappeared because of the high water levels.

10         So how will the dredging impact that?

11   I guess what I'm asking is, you know,

12   dredging is something you typically do when

13   you have low water levels, when you have an

14   inability for, you know, boats to get in and

15   out and so forth.   But with the water levels

16   being at hundred-year highs, how is this

17   going to be impacted?

18         COMMISSIONER DESTITO:    So I served on

19   the REDI Commission with several of my

20   colleagues, and my area was Oswego and Cayuga

21   Counties.   We worked with the local

22   governments and the local businesspeople as

23   well as the local individual homeowners.    And

24   this was something that was brought up from

 1   the people themselves.   They made this a high

 2   priority, that the areas along the waterway,

 3   along Lake Ontario, needed dredging.    They

 4   feel that it contributed to much of the

 5   flooding.

 6         So this was a high priority of theirs,

 7   and OGS is stepping in to oversee the

 8   project.    But it was definitely -- it came

 9   from the local governments.

10         SENATOR BORRELLO:     And I would agree

11   with those folks, as someone who has a lot of

12   experience with flooding.    So --

13         COMMISSIONER DESTITO:     Senator Helming

14   was there a lot.

15         SENATOR BORRELLO:     Yes, so we can

16   certainly agree on that.

17         COMMISSIONER DESTITO:     Yes.

18         SENATOR BORRELLO:     You know, in the

19   past the difficulties I have seen have been

20   with coordination between DEC and Army Corps

21   of Engineers, particularly when it comes to,

22   you know, flooding.   Because they don't agree

23   with us that these areas that need dredging

24   are the cause of flooding.

 1            In fact, we had a major flood back in

 2   2009 where I live, and they insisted that,

 3   you know, it was ice jam flooding.     And this

 4   actually happened during August.     And I'm not

 5   an engineer or a hydrologist, but I'm certain

 6   it wasn't caused by ice jam flooding in

 7   August.

 8            So my concern is, are you going to be

 9   able to get the cooperation to actually get

10   this done?    Because DEC and Army Corps don't

11   seem to be on the same page.

12            COMMISSIONER DESTITO:   We are working

13   very closely.    My design and construction

14   team is working very closely with DEC and the

15   Army Corps of Engineers.     The Army Corps of

16   Engineers was at a meeting with my staff, and

17   we have put this project together in concert

18   with them.

19            SENATOR BORRELLO:   Well, I wish you

20   luck, because it is a lot of bureaucracy

21   and --

22            COMMISSIONER DESTITO:   Thank you.

23   It's a lot of work and it's a lot of

24   coordination, but we are doing it.     Thank

 1   you.

 2            SENATOR BORRELLO:   Thank you.

 3            CHAIRWOMAN WEINSTEIN:    We go back to

 4   Assemblyman Zebrowski for an additional five

 5   minutes.

 6            ASSEMBLYMAN ZEBROWSKI:   Thank you,

 7   Chair.

 8            COMMISSIONER DESTITO:    Thank you,

 9   Assemblyman.

10            ASSEMBLYMAN ZEBROWSKI:   One last

11   question, Commissioner.

12            COMMISSIONER DESTITO:    Yes.

13            ASSEMBLYMAN ZEBROWSKI:   The Buy

14   American Act.    So Part EEE would make this

15   permanent.    We were just wondering if we

16   could get a sense of how you believe -- I

17   think we're a few years into the original

18   authorization -- how you believe the program

19   has been going, do you have an estimate on

20   the number of contracts that have been

21   required.

22            COMMISSIONER DESTITO:    So it doesn't

23   affect us because it's for roads and bridges.

24            ASSEMBLYMAN ZEBROWSKI:   Okay.

 1          COMMISSIONER DESTITO:    But I will tell

 2   you, Assemblyman, that we have in fact used

 3   Buy American, the Buy American process.      And

 4   many of our projects where we could use it,

 5   we have used it.    So it is working.

 6          ASSEMBLYMAN ZEBROWSKI:    Okay.     Do you

 7   have any idea of how many contracts were

 8   required by the enabling authorization?      I

 9   know that's a specific question, so if you

10   don't have it, if we could talk later about

11   it.

12          COMMISSIONER DESTITO:     I'm going to

13   tell you that I will get you that information

14   based on my agency alone.

15          ASSEMBLYMAN ZEBROWSKI:    Okay.

16          COMMISSIONER DESTITO:    Okay?

17          ASSEMBLYMAN ZEBROWSKI:    Thank you.

18   That's it for me.

19          CHAIRWOMAN WEINSTEIN:    We go to

20   Senator Helming.

21          COMMISSIONER DESTITO:    Senator, thank

22   you.

23          SENATOR HELMING:     Thank you.   Thank

24   you, Commissioner.

 1            Commissioner, I was just wondering --

 2   first of all, I want to thank you -- {mic

 3   problems}.

 4            Commissioner, thank you for being here

 5   today.    It's always great to see you.   You're

 6   always filled with such enthusiasm and

 7   excitement, and really appreciate that.      And

 8   all of your work with the REDI Commission --

 9   it's great to see the work actually

10   beginning, so thank you for that.

11            I was just wondering if you could

12   briefly comment on how the Office of General

13   Services engages with our veterans.

14            COMMISSIONER DESTITO:   So it's the

15   Service Disabled Veteran Owned Business.       And

16   we have five -- the -- vendors in the IT

17   space, we have the SDVOBs in the IT space,

18   and we also have certified 700 of the vendors

19   since the program has been established in

20   2014.    So we have one of the most robust

21   service-disabled veteran-owned business

22   programs in -- probably in the country.

23            And as I stated, we have one of the --

24   one of our major contracts, one of our major

 1   vendors in this space, we just received one

 2   of the largest contracts in the history of

 3   the program.   So we are taking it very

 4   seriously.    And that's where OGS services

 5   veterans.

 6         And in addition to -- we have

 7   memorials on our Empire State Plaza, we have

 8   a lot of different -- we have the museum in

 9   the Judiciary Building.   But we -- most

10   importantly, we do the SDVOB program.

11         SENATOR HELMING:    Thank you.

12         COMMISSIONER DESTITO:     You're welcome.

13         CHAIRWOMAN KRUEGER:     Thank you.     You

14   might have noticed we are hoping to improve

15   our microphone and speaker system for next

16   year, so if you have any specialists on staff

17   for that --

18         COMMISSIONER DESTITO:     We do.

19         CHAIRWOMAN KRUEGER:     You do.

20         COMMISSIONER DESTITO:     We'll be glad

21   to help you.

22         CHAIRWOMAN KRUEGER:     Thank you.   Thank

23   you very much for being here with us today.

24         COMMISSIONER DESTITO:     Thank you.

 1   Thank you very much for having me.      I

 2   appreciate it.

 3         CHAIRWOMAN KRUEGER:     Appreciate it.

 4         CHAIRWOMAN WEINSTEIN:     Thank you,

 5   Commissioner.

 6         CHAIRWOMAN KRUEGER:     Our next

 7   victim -- I'm sorry.

 8         (Laughter.)

 9         CHAIRWOMAN KRUEGER:     Our next guest,

10   New York State Council on the Arts, Mara

11   Manus, executive director.

12         NYSCA EXEC. DIR. MANUS:    Good

13   afternoon.

14         CHAIRWOMAN KRUEGER:     Good afternoon.

15         NYSCA EXEC. DIR. MANUS:    Chairs

16   Krueger and Weinstein and members of the

17   committee, thank you for the invitation to

18   address you today.

19         I am Mara Manus, the executive

20   director of New York State Council on the

21   Arts, also known as NYSCA.    On behalf of our

22   chair, Katherine Nicholls, and our council

23   and staff, we deeply appreciate the Governor

24   and Legislature's continued support and

 1   recognition of NYSCA's role in our state's

 2   thriving arts sector.

 3         According to data released in 2019 by

 4   the NEA and the BEA, New York State's arts

 5   sector generated $120 billion for the state's

 6   economy and employed over 460,000 workers.

 7         NYSCA's core focus is grant-making to

 8   nonprofit organizations and artists.     Our

 9   grantees range from small community-based

10   organizations, like Pendragon Theater in

11   Saranac Lake, to large institutions such as

12   the Glimmerglass Music Festival in

13   Cooperstown.   NYSCA's support reaches all

14   62 counties.

15         For FY 2020, we awarded $41 million

16   to 2500 organizations.   NYSCA has the highest

17   budget of all state arts agencies in the

18   nation, and 98 percent of our budget comes

19   from New York State.

20         Studies show that the arts teach

21   discipline, focus, cooperation and

22   creativity, traits that a majority of

23   employers cite that they seek when hiring.

24   This year NYSCA expanded our workforce

 1   development support to over $4 million.

 2         For the first time, NYSCA also offered

 3   our application on a new portal, the

 4   NYSCA-CFA, to improve the application process

 5   and broaden access.

 6         I am pleased to share with you our new

 7   cross-sector partnerships that are

 8   demonstrating the critical role of the arts

 9   in our economy and in the health of people

10   and places.

11         As we all know, the arts fuel tourism.

12   In 2019 there were 150 million on-site visits

13   to NYSCA grantees.    For FY 2020 we created a

14   new Arts Impact category to expand public art

15   events that draw tens of thousands of

16   visitors.   An upcoming example is Albany

17   Symphony Orchestra's Trailblaze Music

18   Festival, which will offer free performances

19   in May and June connecting the canals and the

20   Empire State Trail.    NYSCA is also working

21   with Parks to ensure that the arts

22   destinations will be represented on the new

23   Empire State Trail website map.

24         In October we worked with I LOVE NY,

 1   which is -- they've become a great partner

 2   with us.   We also launched a joint arts event

 3   platform reaching 300,000 viewers with a

 4   single submission.   And we are also

 5   partnering with Metro-North to create

 6   seasonal promotional materials for cultural

 7   events.

 8         We're very excited to be continuing

 9   our partnership with the Department of

10   Corrections.   NYSCA is currently supporting

11   creative programing in the Hudson and

12   Adirondack youth facilities and in the Ulster

13   County Correctional Facility Senior Living

14   Program.   This year programming will expand

15   to OCFS residential sites.

16         In partnership with NYSOFA, we are

17   just launching a 12-site creative aging

18   initiative pilot in the North Country,

19   Capital Region, and Long Island.   The goals

20   of creative aging are instructional, and the

21   results are often therapeutic.   Researchers

22   have discovered that the aging brain is far

23   more pliable than previously believed, and

24   that structured learning, especially through

 1   the arts, can improve cognitive functioning

 2   and reduce social isolation.

 3         Thank you again for the opportunity to

 4   share the impact and reach of the arts in

 5   New York State, and NYSCA's role in

 6   supporting the transformative work of our

 7   grantees.   Sixty years after NYSCA's

 8   founding, we know that arts and creativity

 9   play a central and catalytic role in every

10   aspect of our lives, making New York State

11   healthier, stronger, and creating a future of

12   opportunity and growth.

13         I now welcome your questions.

14         CHAIRWOMAN KRUEGER:      Thank you.

15         Senator Anna Kaplan.

16         SENATOR KAPLAN:     Hello.   Thank you for

17   being here, and thank you for your testimony.

18         Can you give us a number, approximate,

19   how many grant applications do you anticipate

20   receiving in 2020?   And furthermore, if you

21   could tell us what percentage of these grant

22   applications will be awarded.      And third, if

23   you can give us a little bit of breakdown of

24   the regions that would be beneficiaries of

 1   this.

 2            NYSCA EXEC. DIR. MANUS:    Sure.

 3            So we average about 3,000 grants a

 4   year.    We do fund the majority of the grants.

 5   That funding ranges by program, so we have 15

 6   programs ranging from museums, arts

 7   education, theater, dance, et cetera, as well

 8   as we participate in the REDC initiative.     So

 9   on any given year the amount that we fund

10   does vary by the program.

11            The next question was --

12            SENATOR KAPLAN:   In terms of the

13   region, would they be based on the regional

14   economic development, is that how you would

15   narrow them down?    Or --

16            NYSCA EXEC. DIR. MANUS:    So all of our

17   grants are made -- we roughly fund about half

18   in New York City and about half across the

19   state.

20            SENATOR KAPLAN:   Thank you.

21            NYSCA EXEC. DIR. MANUS:    We also

22   fund -- our funding mechanism is -- should be

23   in this way.    We funded directly about 1100

24   organizations in the last fiscal year and

 1   about 1300 through re-grant programs.       So we

 2   have a lot of boots on the ground in local

 3   organizations that understand the local

 4   ecology even better than we do.

 5          SENATOR KAPLAN:   Thank you.

 6          CHAIRWOMAN KRUEGER:     Thank you.

 7          Assembly.

 8          CHAIRWOMAN WEINSTEIN:     Excuse me, I

 9   have one question.   Can grants be used for

10   things like updating or establishing a

11   website or IT, other kinds of IT purposes?

12          NYSCA EXEC. DIR. MANUS:    So our grants

13   are -- you can either apply for a general

14   operating support grant or a project grant.

15   And that covers -- the general operating

16   support grant covers a wide variety of uses,

17   yes.

18          CHAIRWOMAN WEINSTEIN:    So a general

19   operating grant could be used for developing

20   a website and other kinds of IT programs.

21          NYSCA EXEC. DIR. MANUS:    Yes.   Yes.

22   We also have a facilities program, and that

23   does fund equipment, specific kinds of

24   equipment that may fall under the IT rubric.

 1           CHAIRWOMAN WEINSTEIN:     Because the

 2   reason I ask is when a number of us met with

 3   some of the smaller Brooklyn arts groups,

 4   they were saying that this is some of their

 5   greatest needs, that they don't have

 6   expertise in these areas and they need

 7   support for these kind of -- just to get

 8   their technology and websites together.

 9           So I'm glad to hear that there is

10   availability of funds for those kind of

11   purposes.

12           NYSCA EXEC. DIR. MANUS:    There is.

13   Also, we are going to be in Brooklyn next

14   week.   We go around the state to talk about

15   our grant opportunities each year.     And this

16   year we actually have all programs on a

17   webinar as well as our tour around the state,

18   and actually I'm heading to Rochester

19   tonight.    So it would be Rochester, Troy, and

20   in New York City we're really looking to

21   reach new grantees, new applicants, and so

22   we're -- last week we were in the Bronx, and

23   next week we'll be in Brooklyn.

24           CHAIRWOMAN KRUEGER:     Thank you.

 1         I have a couple of questions, thanks.

 2         So according to your testimony the

 3   arts generates $120 billion for the state's

 4   economy and employs almost 500,000 workers.

 5   So that's an NEA report that we can get

 6   access to?

 7         NYSCA EXEC. DIR. MANUS:       Yes.    That's

 8   a Bureau of Economic Analysis -- I think it's

 9   a collaborative report with the NEA.        But

10   yes, we can also -- yes, it's publicly

11   available.

12         CHAIRWOMAN KRUEGER:    If you could just

13   send a copy to each of our offices.         Because

14   I think that's very important information --

15         NYSCA EXEC. DIR. MANUS:       Sure.

16         CHAIRWOMAN KRUEGER:     -- in the context

17   of the budget and economic development.

18         And then there's also a reference that

19   the Governor cut $100,000 out of your budget.

20   That was two grants, one to the Museum of the

21   Bronx and one to the Museum of the City of

22   New York.    Is that not correct?

23         NYSCA EXEC. DIR. MANUS:       That was a

24   direct line -- I believe those were -- I have

 1   to double-check, but I believe those were

 2   direct line items.   I don't think that came

 3   out of our budget.

 4            CHAIRWOMAN KRUEGER:   Okay.   So they

 5   just went -- they were member adds that went

 6   through your budget.

 7            Is there any reason to believe those

 8   two organizations wouldn't have been eligible

 9   for this kind of funding?

10            NYSCA EXEC. DIR. MANUS:   So it's the

11   Bronx --

12            CHAIRWOMAN KRUEGER:   The Bronx Museum

13   and the Museum of the City of New York.

14            NYSCA EXEC. DIR. MANUS:   So both of

15   those organizations get ongoing funding from

16   NYSCA.

17            CHAIRWOMAN KRUEGER:   So this would

18   have been supplemental money awarded through

19   the Legislature that the Governor cut out.

20            NYSCA EXEC. DIR. MANUS:   I believe so,

21   yes.

22            CHAIRWOMAN KRUEGER:   Not necessarily

23   that you felt that they didn't meet the

24   qualifications for your funding.

 1            NYSCA EXEC. DIR. MANUS:    Correct.

 2   It's very -- it's a little hard to hear

 3   the --

 4            CHAIRWOMAN KRUEGER:     Sorry.    You

 5   didn't believe they don't meet the

 6   qualifications for your funding.

 7            NYSCA EXEC. DIR. MANUS:    No, they

 8   absolutely do.    And I would imagine that both

 9   of those institutions have been getting NYSCA

10   support for many years.

11            CHAIRWOMAN KRUEGER:     Okay, thank you.

12   Thank you very much for your -- oh, excuse

13   me, one more Assemblymember.

14            CHAIRWOMAN WEINSTEIN:    Assemblyman

15   O'Donnell.

16            ASSEMBLYMAN O'DONNELL:    Good

17   afternoon.

18            NYSCA EXEC. DIR. MANUS:    Good

19   afternoon.

20            ASSEMBLYMAN O'DONNELL:    I'm glad

21   you're not testifying at midnight.

22            So as you know, I have for years

23   advocated a dramatic increase in funding for

24   the arts, both through capital programming

 1   and through programmatic programming.    And

 2   it's a shame to me that we've never really

 3   recovered from the cut to these programs from

 4   years ago.

 5         So can I first ask you to talk about

 6   how to improve the process for applying for

 7   that, and what the impact of that is?

 8         NYSCA EXEC. DIR. MANUS:    Sure.   That

 9   would be our regular grants, correct?

10         ASSEMBLYMAN O'DONNELL:    Correct, yes.

11         NYSCA EXEC. DIR. MANUS:    The regular

12   application process.

13         So when I came aboard, it was very

14   clear from the field as well as from our

15   staff that the application process was a

16   cumbersome one.   It's to be noted that half

17   of our grantees have budgets under half a

18   million dollars, so they're working with very

19   small staff sizes.

20         We have -- I'm very pleased to say

21   that this last year we were able to offer our

22   application on a new application portal

23   called the NYSCA-CFA.   We worked with a CFA

24   team in Albany.   And we saw this year, in

 1   just one year, a reduction of application

 2   error by 15 percent.   So we're pleased and --

 3   we don't even believe, at this point, that

 4   everyone is -- that the field is completely

 5   up-to-date with the fact that we do have an

 6   application portal, but that's something

 7   we're underscoring in our webinars as well as

 8   our information sessions on the road.

 9         ASSEMBLYMAN O'DONNELL:    There is

10   significant concern from some of the outside

11   of New York City members that they don't get

12   their fair share of arts funding.   Can you

13   explain how you make sure that that happens?

14         NYSCA EXEC. DIR. MANUS:     Sure.   I do

15   want to also just add one more point.     Well,

16   I'll wrap into this.

17         So our largest -- as I mentioned, half

18   of our grants are made to our re-grant

19   partners, and the decentralization program is

20   our large re-grant partner.    It's about a

21   $4 million program.    It is administered

22   through 27 arts councils and centers around

23   the state.   They are really, as I mentioned,

24   our boots on the ground.

 1         And they're responsible not just for

 2   administering a grant program -- which

 3   actually has a much more shorter application,

 4   very short application process -- but also

 5   ensuring the health of the local

 6   organization.    So they work on capacity

 7   building.

 8         And part of our criteria for selecting

 9   them is that they not only understand the

10   local economy and ecologies, but they do have

11   the ability to support the local and much

12   smaller organizations.

13         ASSEMBLYMAN O'DONNELL:    I'm going to

14   try again this year to increase your funding

15   significantly.   I'm fighting really hard.

16         One year we put money, capital money

17   into the budget and the Governor kind of

18   stole it and sent it to EDC.    And when EDC

19   got it, it created a set of hurdles and rules

20   about how much money you had to have and how

21   much money you had to apply for.   And most

22   specifically, the EDC applications required

23   that there be 50 percent matching.

24         So can you just describe the money

 1   that we give to you for capital, what the

 2   thresholds or what the requirements are for

 3   entities to get that money?

 4            NYSCA EXEC. DIR. MANUS:    Sure.   And,

 5   Assemblyman O'Donnell, do you want me to talk

 6   about both the 2018 as well as the 2019

 7   allocations for capital?

 8            ASSEMBLYMAN O'DONNELL:    Okay.

 9            NYSCA EXEC. DIR. MANUS:    Okay.   So I

10   think the question you're asking is about the

11   match.

12            So we did receive, in 2018 and '19,

13   about $30 million of capital between those

14   two years.    The first one was through REDC,

15   and the second one was split between NYSCA

16   and REDC.

17            What we found through both of those

18   years was that while we required a match for

19   the majority of those grants, that didn't

20   prove to be a hurdle, especially for smaller

21   organizations.    And I don't -- I can get back

22   to you with the numbers, but we funded -- I

23   know that for the midsize opportunity in

24   2019, I believe that we funded at least 2300

 1   organizations that had budgets under a

 2   million dollars.    The majority of the capital

 3   went to organizations with budgets under

 4   $5 million.

 5            But I can get you any more detail if

 6   you require.

 7            ASSEMBLYMAN O'DONNELL:    No, I have

 8   that detail.    I actually knew the answer to

 9   the question before I asked it, I just wanted

10   to get the answer on the record.

11            I want to praise you for your fine

12   work, and hopefully we can convince the

13   second floor to increase your budget to do

14   even better work than you already do, which

15   will be kind of hard without money.

16            Thank you very much.

17            NYSCA EXEC. DIR. MANUS:    Thank you for

18   having me today.

19            CHAIRWOMAN KRUEGER:    I'm going to just

20   jump to Senator Funke.

21            Senator Funke.

22            SENATOR FUNKE:   Thank you, Madam

23   Chair.

24            Hi.

 1           NYSCA EXEC. DIR. MANUS:   Hi.

 2           SENATOR FUNKE:   Thanks for all your

 3   good work.

 4           I wanted to bounce off of something

 5   that Assemblyman O'Donnell was talking about.

 6   As you said, arts fuel tourism.   And, you

 7   know, the economy in the State of New York

 8   is -- it is what it is.    New York City is

 9   doing a heck of a lot better than upstate

10   New York.    So tourism is particularly

11   important to us.

12           And you said half of the funding that

13   you get -- which is how much?

14           NYSCA EXEC. DIR. MANUS:   Forty-one

15   million dollars.

16           SENATOR FUNKE:   Half of that goes to

17   New York City, and the rest is spread around

18   the state.

19           NYSCA EXEC. DIR. MANUS:   Yeah, it

20   varies by year.

21           SENATOR FUNKE:   What's that?

22           NYSCA EXEC. DIR. MANUS:   It varies by

23   year.

24           SENATOR FUNKE:   It varies by year.

 1           NYSCA EXEC. DIR. MANUS:     But within

 2   those parameters, yes.

 3           SENATOR FUNKE:   Can you tell me how

 4   Rochester fared in that, the Rochester area?

 5           NYSCA EXEC. DIR. MANUS:     I can get you

 6   those numbers.   I don't have them at my

 7   fingertips.

 8           SENATOR FUNKE:   Okay.    It's critically

 9   important to upstate New York.       And matching

10   grants in particular are critically

11   important, which the Assemblyman alluded to.

12           So the more we can do to increase

13   funding for you, the better off we are all

14   going to be in that regard, because Rochester

15   is a culturally rich area, as you well know.

16           So thanks very much for your hard

17   work.   But I'd like to know how Rochester

18   fares, if you can get me those figures.

19           NYSCA EXEC. DIR. MANUS:     Sure.

20           I will add right now that -- I think

21   you're aware -- the George Eastman Museum got

22   significant funding from the state and is

23   undergoing what I think will be a

24   transformative renovation.       The collection,

 1   both the photography and the film, is

 2   globally recognized, and the visitor

 3   experience is less than that.    And this

 4   renovation focuses completely on the visitor

 5   experience.

 6         And so I think it's going to be a very

 7   exciting time, and that's going to reopen

 8   this summer.    So -- and I think it's going to

 9   be a great boon for Rochester.

10         SENATOR FUNKE:    Thank you.

11         CHAIRWOMAN WEINSTEIN:      Just one

12   additional question.

13         I know Assemblyman O'Donnell was

14   talking about trying to increase funding to

15   where it's getting close to where it's been

16   in the past.    Do you offhand know what was

17   the highest level of funding we had, compared

18   to what the current year's budget proposes?

19         NYSCA EXEC. DIR. MANUS:     I don't have

20   those numbers at my fingertips.    I know that

21   for the last few years we have had a steady

22   state budget.

23         CHAIRWOMAN WEINSTEIN:     And if you had

24   additional funds -- do you get more grant

 1   applications than funding that you have

 2   available for those -- grant applications for

 3   groups that would otherwise be qualified

 4   under the criteria but you don't get a grant

 5   but for the fact that there's not sufficient

 6   funding?

 7            NYSCA EXEC. DIR. MANUS:    I'm sorry, I

 8   can't hear so well --

 9            CHAIRWOMAN WEINSTEIN:     Do you get more

10   applications for funding for either operating

11   or capital than you have resources to be able

12   to fund those grants?

13            NYSCA EXEC. DIR. MANUS:    Yes.

14            CHAIRWOMAN WEINSTEIN:     Do you have a

15   to say no to people who are -- to

16   organizations that are otherwise eligible for

17   funds?

18            NYSCA EXEC. DIR. MANUS:    I think it's

19   -- for the most part, we are able to fund

20   most qualified applications.     So that's a

21   good thing.    We do a lot with what we have.

22   I think the question would be whether we

23   could give more to the qualified applicants.

24            CHAIRWOMAN WEINSTEIN:   Thank you.

 1           Senate.

 2           CHAIRWOMAN KRUEGER:     Thank you very

 3   much for your time today.      Appreciate it.

 4           NYSCA EXEC. DIR. MANUS:     Thank you so

 5   much.   Thank you for you having me.

 6           CHAIRWOMAN KRUEGER:     Thank you.     All

 7   right, we are now completing the government

 8   representatives.   We will be moving to a

 9   panel, New York Association for the Education

10   of Young Children and Hand in Hand:      The

11   Domestic Employers Network.

12           And non-government at this point is

13   five minutes for each person or group.       So if

14   you have two people from a group, you're

15   still splitting five minutes.

16           And we always highlight that because

17   we sit here and watch somebody take

18   41/2 minutes and leave their neighbor and

19   friend with 30 seconds.      And we always feel

20   bad for the second person.

21           Hi.   And you are?

22           MS. BERGER:   Hi.    I'm Ilana Berger

23   with Hand in Hand.

24           CHAIRWOMAN KRUEGER:     Great.

 1           MS. BERGER:    And I'm alone, so I don't

 2   get to steal my coworker's time.

 3           (Laughter.)

 4           CHAIRWOMAN KRUEGER:      Well, they didn't

 5   show, so too bad on them.

 6           MS. BERGER:    And I'm sorry she's not

 7   here.

 8           CHAIRWOMAN KRUEGER:      And just

 9   double-checking, the New York Association for

10   the Education of Young Children is not here?

11   Okay.

12           So hello, you get the whole five

13   minutes for yourself.

14           MS. BERGER:    All right.    Hi.    Thank

15   you so much for the opportunity to testify.

16   My name is Ilana Berger.       I'm the New York

17   director of Hand in Hand --

18           CHAIRWOMAN KRUEGER:      Can you speak

19   into the mic a little more?

20           MS. BERGER:    Yeah.    Is that better?

21   Yeah?   Okay, great.

22           Ilana Berger, New York director of

23   hand in Hand:   The Domestic Employers

24   Network.   We're a sister organization to the

 1   National Domestic Workers Alliance.     We work

 2   with people who employ nannies, house

 3   cleaners, and home-care workers.

 4         Here in New York specifically, we're

 5   working with seniors and people with

 6   disabilities across the state who employ

 7   home-care workers, working for rights for

 8   employers and workers.   And we are a

 9   co-convener of the New York Caring Majority,

10   which is a campaign made up of all of the

11   statewide organizations representing seniors,

12   people with disabilities, family caregivers,

13   and direct care workers, working for

14   affordability for long-term-care services and

15   supports and dealing with the home-care

16   workforce crisis -- shortage.

17         So I'm going to start by just talking

18   about some demographics.   There's a lot of

19   numbers in the testimony that I submitted, so

20   I'm going to try to stick to the sexiest,

21   most exciting numbers for you in my

22   testimony, essentially just to say that as

23   most of you probably know, we are in a huge

24   aging boom in our state.   Many people call it

 1   the "silver tsunami."   Our population is

 2   aging rapidly, and people are living longer.

 3         So according to the Cornell Program on

 4   Applied Demographics, between 2015 and 2040,

 5   our overall state population will grow about

 6   1.3 percent, but the number of adults who are

 7   65 and over will increase by 50 percent, and

 8   the number of adults over 85 will double.     At

 9   the same time the number of working-age

10   adults for every adult over 85 will drop from

11   28 to 14.   So that's a lot less people to

12   care for our aging loved ones.

13         So people are also living longer, and

14   most choose to live and age in dignity in

15   their own homes and communities.     It's a

16   great opportunity for us to live in vibrant

17   intergenerational communities.   It's also

18   cheaper than institutionalization.

19         While we think we might be able to age

20   gracefully and independently, the reality is

21   70 percent of people over 65 will need home

22   care at some point in their lives.    Despite,

23   though, the growing need for home care, there

24   is already a workforce shortage in the state,

 1   particularly in upstate parts of New York.

 2         So according to PHI, between 2016 and

 3   2026, if you count demographics and the high

 4   turnover in home care, we're going to have

 5   750,000 job openings in home care in New York

 6   State -- 750,000.

 7         Despite the importance of this work,

 8   the average median wage for home-care workers

 9   in New York is $19,000 a year.   And if you

10   combine that with no benefits, real

11   challenges in transportation, particularly

12   upstate, uneven and erratic scheduling and a

13   lack of benefits, it is very hard to recruit

14   the workers we need to fill this workforce.

15         Despite this, and because of this,

16   home care and consumer-directed personal

17   assistance are driving local economies across

18   New York and creating jobs in every corner of

19   the state.   You want to talk about economic

20   development and jobs?   Look at home care.

21   Employment in the healthcare sector is

22   expected to grow faster than employment in

23   any other sector in New York between 2016 and

24   2026, with home healthcare being the highest

 1   level of job growth.

 2         Even the Governor, who is going after

 3   consumer-directed personal assistance and

 4   Medicaid-funded home care, had to admit in

 5   his budget address, when he quoted a Daily

 6   News editorial, that the Medicaid-funded

 7   personal care industry added 36,000 new jobs

 8   in the first nine months of 2019, making up

 9   75 percent of citywide private-sector job

10   growth over this period.

11         So he used it to denigrate the sector,

12   but I just want to say I urge you to see the

13   growth in the home-care sector as a possible

14   development for our state.   It has the

15   potential to lift community members out of

16   poverty while creating a care infrastructure

17   that allows all New Yorkers to stay in the

18   state for the duration of their lives.

19         At Hand in Hand, we believe if we're

20   talking about economic development and the

21   model here about investing in private

22   companies to create new jobs, let's actually

23   look at investing and making the jobs that

24   are growing the fastest in this state quality

 1   jobs.

 2           One, we believe that's actually going

 3   to save the state money by better health

 4   outcomes and low-wage workers having more

 5   money to spend in their local economies.

 6           Two, it's a huge contributor to racial

 7   equity.   The home-care workforce is majority

 8   women of color, and if we can lift the wages

 9   up and the floor for women of color workers

10   in this state, we are benefiting all of our

11   communities.

12           And third, I just want to say New York

13   is the only state in the country to be given

14   an "Age Friendly" designation by the World

15   Health Organization and AARP.   If we really

16   want to live up to that and invest in a

17   robust care infrastructure, we're going to be

18   creating a competitive advantage where young

19   families can come to this state to work,

20   knowing they will not have to interrupt their

21   careers to care for aging parents.

22           So we have three recommendations in

23   this year's budget.   One is to put aside

24   $15 million -- $5 million a year for three

 1   years -- for the Home Care Jobs Innovation

 2   Fund that will allow us to invest in pilot

 3   projects around the state to create

 4   innovative solutions to the workforce

 5   shortage.

 6         We also ask for REDC money to be set

 7   aside specifically for home-care investments

 8   and that the Workforce Development Initiative

 9   set aside $50 million of its $175 million to

10   invest in the home-care workforce.

11         Thank you for taking the time to

12   listen.

13         CHAIRWOMAN KRUEGER:    Thank you.

14         Any Senators have questions?

15         I just want to thank you for your

16   testimony.   I think you bring up an important

17   point that the service jobs for healthcare

18   and home care and other categories are real

19   jobs with real economics behind them.     And I

20   don't think we talk about those kinds of jobs

21   as economic development activity.    So

22   appreciate your testimony.

23         MS. BERGER:   Thank you.   Obviously

24   they do create a better economic climate,

 1   care jobs with childcare and home care.      If

 2   we're able to create a place where people can

 3   stay in the state for the duration of their

 4   lives, it's contributing to our economy.      So

 5   thank you.

 6           CHAIRWOMAN KRUEGER:     Thank you very

 7   much.

 8           Next, New York State Economic

 9   Development Council, Ryan Silva, executive

10   director.

11           I know the protestors are outside, but

12   they really still want to be at the next

13   hearing, so they might want to get lunch.

14           (Laughter.)

15           MR. SILVA:    Thank you, Senator.

16           I appreciate the opportunity to be

17   here and speak today.    I will make sure that

18   I keep my time within the five-minute time

19   frame --

20           CHAIRWOMAN WEINSTEIN:    We have a

21   panel, though, right, with --

22           CHAIRWOMAN KRUEGER:     No, that's

23   afterwards.

24           CHAIRWOMAN WEINSTEIN:    I think Brian

 1   Sampson.

 2         CHAIRWOMAN KRUEGER:        Oh, I'm so sorry.

 3   We did combine someone with you, with your

 4   agreement.   Brian Sampson, Associated

 5   Builders and Contractors.

 6         MR. SILVA:        Brian did tell me I could

 7   still have my five minutes, though.

 8         (Laughter.)

 9         MR. SILVA:        No, I'm just kidding.

10         CHAIRWOMAN KRUEGER:        No, no, you each

11   get your five minutes.

12         MR. SILVA:     I appreciate it.    Thank

13   you, Senator.

14         CHAIRWOMAN KRUEGER:        And I'm sorry, I

15   forgot that --

16         MR. SILVA:     Yeah, no problem.

17         CHAIRWOMAN KRUEGER:        -- we had circled

18   and arrowed.    Okay.

19         MR. SILVA:     I may begin?

20         CHAIRWOMAN KRUEGER:        Yes.

21         MR. SILVA:     Thank you so much,

22   Senator.

23         And I appreciate the opportunity to be

24   here on behalf of the New York State Economic

 1   Development Council.   We're a private

 2   membership organization representing a

 3   thousand organizations across New York State.

 4   We focus on advocacy, education and policy

 5   development.

 6         Many of the things that we prioritize

 7   have already been really discussed here

 8   today, so I won't dive into a lot of the

 9   specific details that have already been

10   talked about.   However, we do remain

11   concerned about upstate lagging behind

12   downstate when it comes to job growth as well

13   as population increases and deadlines.

14         It is exciting to see cities like

15   Buffalo, Rochester, Syracuse, Utica seeing

16   investment in downtown, starting to see

17   millennials move back into those communities.

18   We want to see that continue.   But we do

19   remain very concerned that other parts of

20   upstate are seeing a rapid decline in

21   population, which only further erodes our tax

22   base and our influence in Washington, D.C.

23         Much of that is exacerbated really by

24   the fact that New York State gets back less

 1   than any other state does from the federal

 2   tax dollars we send there.   According to a

 3   Rockefeller Institute for Government study

 4   and the OSC, $116 billion was sent to the

 5   federal government over the last four years

 6   that New York State taxpayers did not get

 7   back.

 8           In essence, this means that New York

 9   State subsidizes other states that, in turn,

10   boast better economic and business climates

11   than we have because they can keep their tax

12   bases low.   In turn, we're also now relying

13   on higher state and local taxes to offset

14   that deficit and make sure that we're keeping

15   the commitments we at the local and state

16   level have made.

17           The long term of this trend is just

18   going to be disastrous and catastrophic for

19   the state's economy, and we need to be

20   mindful of any additional burden, both

21   regulatory and financial, that is placed on

22   our economy.

23           Therefore, we do continue to remain

24   opposed to any expansion of prevailing wage

 1   mandates to privately funded and supported

 2   projects in New York State.    We will be

 3   sharing more detailed information.     We're in

 4   the process of conducting a study to just

 5   show the economic impacts that exist by

 6   expanding this mandate.    However, we've seen

 7   what happens when this is applied at the

 8   local level with projects just ceasing to

 9   happen.     It happened in the City of Yonkers

10   and it happened in Ulster County when

11   prevailing wage mandates were applied to

12   those communities.

13         However, we also do believe that

14   economic development means more than just how

15   many jobs you create per tax dollar spent,

16   and it's more than just tax revenue.    It's

17   growing a successful economy, and it means

18   investing in people, it means investing in

19   place making, and it means investing in

20   progress.

21         We have a relatively low unemployment

22   rate, but we need to invest in communities to

23   help improve quality of life.    This requires

24   public, private, academic, and nonprofit

 1   organizations working and investing together.

 2         Investing in training our workforce is

 3   essential for the jobs of tomorrow.   I know

 4   there's going to be a whole panel discussion

 5   on that.    We at the EDC firmly believe that

 6   the state should continue to invest in

 7   workforce, invest in skills, and invest in

 8   training.    And in fact, many of our members

 9   would like to help be a part of that.

10         Investing in infrastructure and

11   transportation is also vital to building

12   sustaining, livable communities.    In the

13   absence of a long-awaited federal

14   infrastructure bill, we need to lead by

15   investing in water, sewers, roads, bridges,

16   high-speed fiber and rail.

17         So with that, these are some of the

18   things included in the Governor's budget

19   proposal that we would continue to support:

20   Funding of the REDCs, the Downtown

21   Revitalization Initiative, the $3 billion

22   "Restore Mother Nature" Bond Act,

23   $100 million in Green Bank financing.    We do

24   like the Upstate Airport Economic Development

 1   and Revitalization competition for the

 2   airports, and also the expansion of the

 3   $175 million Workforce Initiative.

 4         We also do support the Governor's

 5   small business tax cut, and we would

 6   encourage the Legislature to look at ways to

 7   expand on it and support it.

 8         Additionally, there are several policy

 9   proposals that we believe are important to

10   success across the state.   Those include a

11   statutory change allowing IDAs funds to be

12   invested in local economies, like workforce

13   training, land banks, and small businesses.

14   A shovel-ready funding to create shovel-ready

15   sites to attract large-scale economic

16   development.   We support a video game tax

17   credit, which is a growing industry here in

18   New York.

19         We support continued funding for the

20   Centers for Advanced Technology and the

21   Centers of Excellence.   We support the

22   RESTORE NY program, which is a very popular

23   program for a number of years.   And one other

24   area we really see an opportunity is

 1   investing in cybersecurity and homeland

 2   security technologies, which would include a

 3   state-sponsored technology test bed and a

 4   virtual apprenticeship program.

 5           Thank you very much for the

 6   opportunity to provide some testimony, and I

 7   would welcome your questions.

 8           CHAIRWOMAN KRUEGER:     Thank you.

 9           Hi.

10           MR. SAMPSON:   Hi.   Good afternoon.

11   Appreciate the opportunity to be here today.

12           My name is Brian Sampson.    I'm

13   president of Associated Builders and

14   Contractors of New York State.     We represent

15   over 400 construction companies from Buffalo

16   out to the eastern tip of Long Island.       Our

17   primary objective is to help --

18           CHAIRWOMAN KRUEGER:     Pull the

19   microphone a little closer.

20           MR. SAMPSON:   I can.   Is that better?

21   Okay.

22           So our primary objective is to help

23   our members compete and win work in the State

24   of New York.   And they wish to do that on the

 1   merit of the bid, not based on any undue

 2   influence or, if you will, a finger on the

 3   scale one way or the other.

 4         We're here to testify because we have

 5   some significant concerns about the expansion

 6   of prevailing wage to private work.    It was

 7   an issue that's been debated hotly over the

 8   last few years, last year in particular.     And

 9   as it relates to prevailing wage, one of the

10   concerns that we have right now is the State

11   of New York does not enforce its own

12   prevailing wage laws as they exist on the

13   books right now.

14         New York State says in order to

15   negotiate prevailing wage, you have to

16   represent 30 percent of the workforce.     But

17   by all measurable standards, organized labor

18   does not represent 30 percent of the

19   construction industry overall.   They do

20   represent -- in certain trades, in certain

21   regions, they do have that 30 percent, are

22   entitled to negotiate that prevailing wage.

23   But by the vast majority of the State of

24   New York, they do not.

 1            So before we expand prevailing wage, I

 2   think one thing we would like the state to do

 3   is actually enforce the law that's already on

 4   the books and how it calculates and

 5   determines what prevailing wage is.

 6            We also are a big fan of the 421-a

 7   program in New York City.   We believe it has

 8   done a great deal of good for the boroughs in

 9   helping development and helping affordable

10   housing there.    That is a local decision

11   that's based on local leadership.

12            The same programs exist throughout the

13   state.    They're not 421-a, but they are PILOT

14   programs, payment in lieu of taxes.    They are

15   local decisions that are to be determined by

16   people that represent the local community.

17            So our question is if 421-a is going

18   to be excluded from the expansion of

19   prevailing wage to private work, why would

20   you also not include PILOT programs as well?

21   They do the same thing, they allow for local

22   decision-making.    If New York City will be

23   allowed and should be allowed to determine

24   its economic future, so too should upstate

 1   and Long Island.

 2         The other thing -- a couple of other

 3   things that we would like to talk about is,

 4   you know, expanding prevailing wage to

 5   private work.     I think there's a

 6   misunderstanding of the collateral damage

 7   that may exist.

 8         When you look at the construction

 9   for -- the construction workforce project,

10   they take turnstile data from large

11   construction projects down in New York City.

12   And what it shows is that more than 90

13   percent of the people that are working on

14   those private jobs in New York City -- and

15   80 percent of the private work in New York

16   City right now is being done in an open shop

17   environment -- 90 percent of that workforce

18   is minority, and over 95 percent of it comes

19   from the five boroughs.

20         That's the people that will be

21   impacted under this -- they'll be the

22   collateral damage that exists in this program

23   should this go.

24         The other part of it is that the

 1   contractors that choose to do that work, they

 2   are some of the fastest growing and safest

 3   contractors in the State of New York.     We do

 4   a survey of our members, and we collect their

 5   OSHA information and their OSHA data, and

 6   what it shows is as it relates to total

 7   reportable incident rates, they are

 8   460 percent safer than the construction

 9   industry at large.    And as it relates to days

10   away from work, they're over 500 percent

11   safer.

12            So the very people that are employing

13   the vast majority of the minority workers in

14   the State of New York are the safest

15   contractors.    And expanding prevailing wage

16   to that private work will impact them and

17   their workforce.

18            Our final point is this.   The

19   Governor's proposal asks to create a wage

20   subsidy board.    There's nothing that could be

21   a worse idea as it relates to the

22   construction industry.   Construction, much

23   like every other industry in the State of

24   New York, wants predictability.     It wants the

 1   elected body -- you -- to be the determining

 2   factor of what is considered construction

 3   work and what those thresholds should be.

 4         It should not be an independent,

 5   unelected 11-person panel that's going to

 6   determine which projects get captured, which

 7   projects don't, what those thresholds will be

 8   in the future, what they may not be.          We

 9   would like the legislative body to continue

10   to be the elected body that makes those

11   decisions.

12         And with that, we are concerned about

13   that expansion of the prevailing wage, we're

14   opposed to it, and would welcome any

15   questions you may have.

16         CHAIRWOMAN KRUEGER:        Thank you.

17         Senator Kaplan.

18         SENATOR KAPLAN:     I'm good.      Thank you.

19         CHAIRWOMAN KRUEGER:        Okay.   Any other

20   Senators?    Senator Borrello.    Sorry, then

21   Assembly, then I'll come back to the Senator.

22         SENATOR BORRELLO:     My turn?      Okay,

23   thank you.   Thank you, Madam Chairman.

24         And thank you both for being here.

 1         MR. SAMPSON:    Thank you, Senator.

 2         SENATOR BORRELLO:    I do have a

 3   question.    And again, I'm privileged to serve

 4   on the Western New York REDC board -- as a

 5   county executive, and I continue now as a

 6   Senator.    So -- and I do believe that the

 7   work that is done is valuable.

 8         My concern is, though, with the

 9   prevailing wage.   I go back to a study that I

10   read by the Center for Government Research

11   that said that the prevailing wage can add

12   20 percent or more to the cost of a project.

13   So if you're talking about this 30 percent

14   threshold that's already tenuous to begin

15   with, that essentially we're giving the state

16   incentives almost entirely to cover the cost

17   of prevailing wage that it adds to a project.

18   That's number one.

19         But more importantly is that you have

20   this subsidy board -- an earlier question was

21   asked of the 11 members that are all

22   appointed by the Governor, who is on the

23   board, and only seven of the 11 could

24   actually be identified.

 1         But more importantly, that board could

 2   change that 30 percent threshold.      Which I

 3   think is troublesome, because that's going to

 4   create an issue where now we're going to

 5   jeopardize projects based on the fact that

 6   this board, unelected, and in some cases

 7   unknown members, are going to decide whether

 8   or not these projects are going to qualify

 9   for these subsidies that are critical to

10   overcoming and leveling the playing field

11   when it comes to economic development in

12   New York State.

13         So my question is, how do you control

14   that and not basically throw the baby out

15   with the bathwater?

16         MR. SAMPSON:     So it's a great

17   question, Senator.    We appreciate it.

18         The board as constructed in the

19   Governor's bill we don't think should exist.

20   It's not right -- we need predictability.

21   Banks need it, insurance agents need it,

22   bonding agents need it, contractors need it,

23   employers need it.    They need that

24   predictability.

 1         If you don't have that, what you will

 2   do is you will suppress economic development

 3   in the State of New York because of

 4   unpredictability.

 5         If something is going to get done, and

 6   if there's a group that's going to determine

 7   it, it should be an independent body, much

 8   like the legislature, that makes those

 9   determinations.     Without predictability,

10   you're not going to see economic development

11   in upstate New York and Long Island.

12         SENATOR BORRELLO:     Yeah, and I agree.

13   As a business owner myself, we're willing to

14   take risks, but we're not willing to take

15   unpredictable risks.    And that's what happens

16   in New York State with this situation,

17   correct?

18         MR. SAMPSON:     Absolutely correct.

19         MR. SILVA:     I would just add that the

20   20 percent number from the CGR study was

21   based on Western New York.     When you actually

22   take a broader step back, it varies from

23   region to region.

24         I mean, we've talked about how there's

 1   10 different regional economies for the last

 2   decade.    New York City is different than Long

 3   Island, different than the North Country,

 4   different than Western New York.        Other parts

 5   of the state, that cost increase is upwards

 6   of 40 percent.    So increasing costs by

 7   40 percent will more than likely cause a lot

 8   of projects just not to happen --

 9            SENATOR BORRELLO:      So 20 percent is

10   low --

11            MR. SILVA:     -- for some regions.

12            I believe you are correct, in

13   Western New York it's 20 percent, based on

14   that study.

15            SENATOR BORRELLO:      Well, thank you for

16   that.    The challenges continue with trying to

17   level the playing field in New York State.

18   Thank you.

19            MR. SAMPSON:    Thank you, Senator.

20            CHAIRWOMAN KRUEGER:      Thank you.

21            Assembly?    Anyone?    Assemblywoman

22   Hyndman.

23            ASSEMBLYWOMAN HYNDMAN:      Thank you,

24   Senator.

 1            Mr. Sampson, thank you.    You said two

 2   things.     You said that your membership -- how

 3   many members do you have in your --

 4            MR. SAMPSON:   We represent over 400

 5   members across the state.

 6            ASSEMBLYWOMAN HYNDMAN:    Four hundred

 7   members.    And you said most of your members

 8   have employees that come from the five

 9   boroughs.    Do you have numbers that show

10   that?

11            MR. SAMPSON:   So there's a -- there's

12   graphs in our testimony from the Construction

13   Workforce Project that demonstrates and shows

14   the demographics of the people on those

15   worksites.

16            ASSEMBLYWOMAN HYNDMAN:    So this is

17   all -- your members represent nonunion labor?

18            MR. SAMPSON:   So predominantly

19   nonunion labor, yes.

20            ASSEMBLYWOMAN HYNDMAN:    Okay.   All

21   right.    And you don't know how long they

22   remain on these job sites?     Like this number

23   is from how many years?

24            MR. SAMPSON:   So this is a current

 1   snapshot of about 134 projects.

 2           ASSEMBLYWOMAN HYNDMAN:    One hundred

 3   thirty-four projects going on right now in

 4   New York City.

 5           MR. SAMPSON:   Correct.

 6           ASSEMBLYWOMAN HYNDMAN:    Your members

 7   employ thousands of MWBEs, you said, or

 8   companies?

 9           MR. SAMPSON:   So -- so if you look at

10   those graphs, what they'll show is that over

11   90 percent of the workforce is either black

12   or Hispanic on those 134 projects.

13           ASSEMBLYWOMAN HYNDMAN:    So you break

14   this down by women and then you break it down

15   also by black or Latino and Asian.

16           MR. SAMPSON:   Yes.   The turnstiles

17   that they utilize -- so when you go onto the

18   construction site, you have to use your

19   finger to get onto the construction site and

20   it tracks that information.

21           ASSEMBLYWOMAN HYNDMAN:    Oh, you do?

22   Okay.   All right, thank you.

23           CHAIRWOMAN KRUEGER:     Okay, thank you.

24           Senator Diane Savino.

 1         SENATOR SAVINO:   Thank you,

 2   Senator Krueger.

 3         So I'm going to follow up on my

 4   colleague in the Assembly's question line.

 5   So let's go back.   The prevailing wage law,

 6   as you know, dates back to 1934.     It was

 7   adopted at one of the rare constitutional

 8   conventions that we've ever had in this

 9   state, and in fact it was overwhelmingly

10   voted on by the people because there was a

11   belief that government money going to private

12   employers should have some requirements on

13   it, one of them being the prevailing wage, so

14   that we are not driving down people into

15   poverty.

16         But you made a couple of points.        You

17   said that your members are largely minority

18   contractors who represent minority

19   construction workers.   Insinuating that the

20   union contractors and/or those who are under

21   the prevailing wage somehow don't have any

22   minority workers.

23         I would suggest that you take a look

24   at today's building trades.   They are

 1   overwhelmingly minority.   Now they reflect

 2   the -- in many respects, the immigrant

 3   workforce.

 4         But even if I accepted your assertion

 5   that in fact they are minority contractors

 6   with minority workers, are you suggesting

 7   that minority workers in these minority

 8   contractors should earn less than their white

 9   counterparts in the unionized trades?

10         MR. SAMPSON:   Absolutely not.

11         SENATOR SAVINO:   Because that's what

12   you would be doing by rejecting the

13   prevailing wage.

14         MR. SAMPSON:   Let me clarify.    Our 400

15   contractors, what we're talking about is when

16   we look at their workforce and that turnstile

17   data, that's what the data tells us, that

18   they are employing -- more than 90 percent of

19   the workforce is black and Hispanic in New

20   York City.

21         SENATOR SAVINO:   And they should earn

22   more money.

23         MR. SAMPSON:   And I don't think

24   anybody is disagreeing with that.   The

 1   question that has to be answered is what will

 2   the impact of expanding prevailing wage have

 3   on private work.

 4            We believe, based on examples in

 5   Yonkers, in Ulster, in other parts of the

 6   country, when you expand prevailing wage to

 7   private work, you stifle that opportunity to

 8   create that growth.    If you're going to ask

 9   me to pay 20 to 30 to 40 percent more, right,

10   to get my incentive, I'm simply not going to

11   do it.    Again --

12            SENATOR SAVINO:   With all due respect,

13   Mr. Sampson, you don't have to apply for the

14   incentives.    If it's so burdensome or the

15   cost is too high, which is going to eat into

16   your profit -- and I get that.      I understand

17   that.    Nobody wants to pay for things that

18   they don't have to pay.

19            But it's public money.   We're not

20   talking about in everything.      You have the

21   right to decide whether or not you want to

22   negotiate with the building trades or not.

23   That's perfectly within your rights.     But if

24   you're going to use our money, we have --

 1   there's a public interest, an interest on the

 2   part of the state, to see to it that money

 3   does not go into salaries that are below the

 4   prevailing rate.   It's very simple.

 5         So we're saying if it's burdensome,

 6   don't apply for the incentives.   But if

 7   you're going to apply for the incentives, you

 8   should be held to the same standard that the

 9   voters in 1934 said, overwhelmingly, when

10   they adopted the prevailing wage law.

11         MR. SAMPSON:    And we wouldn't disagree

12   with you.    What we would say, though, is we

13   have to put so many incentives on the market

14   to incentivize job growth and job retention

15   because New York State is incredibly

16   expensive.

17         I think the other thing we would say

18   is if prevailing wage was adopted -- and it

19   was, through a convention -- then let's have

20   the state actually follow the law that it

21   adopted and say if you represent 30 percent

22   of the market, you can negotiate the

23   prevailing wage.   But if you don't, you

24   shouldn't.

 1            SENATOR SAVINO:    That's fair.

 2   Obviously the prevailing wage law has been

 3   watered down over the years through a series

 4   of regulations and judicial decisions, and

 5   that's what the definition of prevailing rate

 6   is trying to correct, so that we can go back

 7   to the restoration of what the original

 8   intent of the law was.

 9            Thank you.

10            MR. SAMPSON:   Sure.   Thank you.

11            SENATOR SAVINO:    Other than that, fine

12   testimony.    I loved it all.

13            (Laughter.)

14            MR. SAMPSON:   Thank you.

15            CHAIRWOMAN KRUEGER:     All right.    I

16   think there were not other Assembly, but --

17   Senator Helming.

18            SENATOR HELMING:    Thank you,

19   Senator Krueger.

20            (Mic off.)

21            SENATOR HELMING:    Stop the clock.

22            (Laughter.)

23            SENATOR HELMING:    Testing, one, two,

24   three.

 1           Ryan, Brian, thank you both for being

 2   here and for your testimony today.    I really

 3   appreciate it.

 4           MR. SAMPSON:    Thank you.

 5           SENATOR HELMING:   Brian, you touched

 6   on how there are so many pieces -- everything

 7   from infrastructure needs to workforce

 8   development -- that impact economic

 9   development in our state.    So I was glad to

10   hear your comments; I think they mimicked

11   what I opened up with earlier this morning.

12           But Brian, I wanted to touch a little

13   bit about -- are you aware of the Governor's

14   proposed cuts to the BOCES reimbursements?

15   For me, BOCES programs do a wonderful job.

16   They construct, if you will, this pipeline of

17   workforce-ready folks in the construction

18   trades, in all of our trades areas.   So the

19   Governor has proposed a cut of just over

20   $1 billion.   Do you have any thoughts on

21   this?

22           MR. SAMPSON:   So we're very supportive

23   of the BOCES program.    We deliver curriculum

24   here, an NCCR curriculum, State Ed, DOL, DOB

 1   approved.    And we probably administer that

 2   for about 40 BOCES across the state.     So any

 3   cut to the BOCES is going to have a dramatic

 4   impact on the construction industry.     I think

 5   by and large both union and nonunion

 6   contractors are getting a good majority of

 7   their employees out of the BOCES.

 8         SENATOR HELMING:      Thank you.

 9         MR. SILVA:     I would just add that

10   based on my own personal experience working

11   with the Capital Region BOCES and the Questar

12   BOCES here, they do phenomenal work.     We

13   should be supporting our BOCES programs as

14   much as humanly possible.

15         In fact, a partnership over 15 years

16   ago between those two led to the Tech Valley

17   High School which was created in the Capital

18   Region, which was one of the first

19   skills-based learning institutions that

20   really is working on those next generation of

21   skills.     That's really a tremendous model

22   that we think could be replicated and

23   variations of it are being replicated in

24   Monroe County, down in New York City with

 1   Per Scholas, and out in the Buffalo area with

 2   Northland.

 3         So we think any time that you're

 4   investing in trades and skills is a good

 5   thing and should continue.

 6         SENATOR HELMING:   Thank you.

 7         CHAIRWOMAN WEINSTEIN:     Thank you.

 8   That's all the questions we have.

 9         MR. SAMPSON:    Thank you very much.

10         CHAIRWOMAN WEINSTEIN:      So the next

11   panel is The Business Council of New York

12   State, Ken Pokalsky, and The Business Council

13   of Westchester, John Ravitz.

14         And as they come to the table, the

15   next few witnesses after this will be the

16   New York Association of Training and

17   Employment Professionals, followed by

18   New York Cannabis Growers and Processors

19   Association.

20         Feel free to begin, gentlemen.

21         CHAIRWOMAN KRUEGER:      Good afternoon.

22         MR. RAVITZ:    Good afternoon.   And just

23   to be clear, do we get two and a half minutes

24   each or five?

 1         CHAIRWOMAN KRUEGER:    Five.

 2         MR. RAVITZ:   Great.   So I'll try not

 3   to talk too fast.

 4         Senator Krueger, Assemblywoman

 5   Weinstein, members of the State Legislature,

 6   thank you for giving me the opportunity to

 7   participate in today's hearing.   My name is

 8   John Ravitz. I'm the executive vice president

 9   and chief operating officer for The Business

10   Council of Westchester.   We're the county's

11   only business membership organization

12   focusing on economic development and advocacy

13   on behalf of the business community.    We have

14   over a thousand members ranging from the

15   multi-international companies that call

16   Westchester home to all the hospitals and

17   universities, the biotech pioneers that are

18   leading the charge around the world in their

19   field, to professional service firms,

20   midsized and small businesses.

21         And we have 138 non-for-profits as

22   members.   And our role for non-for-profits is

23   to remind folks that non-for-profits are

24   economic engines.   They create jobs, they

 1   bring in revenue as well as delivering the

 2   essential services.

 3            I want to touch on two points, one

 4   you've already heard about today.   But since

 5   I'm here in front of you, one of our main

 6   goals in our legislative agenda that we put

 7   out each year -- and each of you will be

 8   getting a copy of that next week -- is the

 9   issue of accelerating the full gaming license

10   for Empire City Casino in Yonkers, New York.

11            Empire City Casino is a proven winner.

12   It already employs 1,200 folks on a daily

13   basis.    It continues to bring in money for

14   the City of Yonkers, the county, as well as

15   the state in terms of education dollars.

16            The potential that we see at Yonkers

17   Empire City with a full gaming license is

18   going to be an incubator for workforce

19   development for decades and decades to come.

20   The new jobs that would be created, the new

21   opportunities that would be created in

22   different areas -- not just gaming, but in

23   hospitality and in security and in IT -- is

24   mind-boggling.

 1         So as you continue to negotiate the

 2   budget, we hope that you will look at that as

 3   well, as something that is really imperative

 4   that gets done this year and that will bring

 5   in revenue to New York State, which we know

 6   we all need.

 7         Prevailing wage.    We have been engaged

 8   in this issue for many years.   We have raised

 9   our concerns, you'll see it in my testimony.

10   There are just a few things I would like to

11   put on the table today.

12         We're representing a coalition of

13   developers in Westchester County that really

14   have brought a renaissance to some of our

15   urban areas.   The exciting projects that are

16   now happening in Mount Vernon, in

17   New Rochelle, in Yonkers, in Peekskill --

18   those are all projects that, again, are going

19   to have positive ramifications for decades

20   and decades.   It's going to bring in new

21   revenue, it's going to create new jobs, it's

22   going to bring in a sense of real community

23   economic development that we haven't seen

24   before.

 1           And so we're asking you to be very,

 2   very conscious of some of the concerns that

 3   you've heard today and will hear later on

 4   about what the negative impact could be for

 5   prevailing wage.   We can't afford to turn

 6   down developers who want to invest in these

 7   communities by telling them that their jobs

 8   and their projects could be a 30 to

 9   50 percent increase in cost.   It just won't

10   work.   It's just not realistic.   They will

11   not do what we want them to do.

12           And then who suffers at the end?   The

13   construction jobs that could be created, the

14   other related businesses in those communities

15   that would definitely benefit from these new

16   developments, and the county and the state as

17   a whole.

18           Three points I'll raise, and then I'll

19   end.

20           Our developers have a very good

21   working relationship with our local unions.

22   They meet with them on a regular basis.

23   They've made it a priority to have a strong

24   line of communications and offer for them to

 1   bid on those projects that are happening in

 2   Westchester County.   And secondly, they have

 3   come up with some ideas that hopefully can

 4   continue to be discussed, like a training

 5   program that would be sustained through the

 6   local IDAs so that future trade -- folks

 7   getting into those trades would have all the

 8   updated skills and training that they need to

 9   be able to participate in the many projects

10   that are happening.

11         Second, as has already been raised

12   today, there was a model that we can look at

13   about how this cannot work, it sometimes

14   can't work.   And that happened in the City of

15   Yonkers when the city imposed on their IDA a

16   prevailing wage.   There were no projects that

17   went through the IDA during that course of

18   action.

19         And finally, we are developing a white

20   paper, an independent assessment, working

21   with some of our partners around the state,

22   that hopefully will give some clear

23   indicators of prevailing wage and the impact

24   it will have in communities throughout the

 1   state.    We're not just going to be focusing

 2   on Westchester County in this paper, we're

 3   working with our upstate partners and our

 4   downstate partners so that you in the

 5   Legislature over the next few weeks will be

 6   able to see some hard numbers.     And numbers

 7   don't lie in this area.

 8            And so, again, we will make sure that

 9   you have this in time as you're deliberating

10   this for the next couple of weeks as you move

11   forward on this.

12            So again, enhancing full gaming

13   licenses for Empire City in Yonkers, giving

14   the ability for this organization to grow and

15   create jobs and bring in revenue for the

16   education system as well as for the rest of

17   the county and the state, and being concerned

18   about the impact that prevailing wage would

19   have.

20            Thank you.

21            CHAIRWOMAN WEINSTEIN:   Thank you.

22            MR. POKALSKY:   Good afternoon.   My

23   name is Ken Pokalsky.     I'm vice president of

24   The Business Council of New York State.

 1   We're a statewide employer association

 2   representing about 2400 private-sector

 3   employers across the state in all sectors.

 4   We're very diverse.    And by our last count,

 5   our members employ somewhere in the

 6   neighborhood of 1 million New Yorkers.

 7         So we have a lot of issues of interest

 8   to us in the budget.   This being the Economic

 9   Development hearing, one of the things we'd

10   like to do today is focus not just or not

11   exclusively on economic development programs,

12   but on economic climate and how many issues

13   in the budget affect that climate negatively.

14         In our testimony we provide some data

15   that illustrates what's been alluded to

16   several times today.   New York State overall,

17   compared to the nation, is doing very well

18   growing out of the 2008 recession.    But

19   New York State is made up of different

20   regional economies.    New York City has grown

21   private-sector jobs about 24 percent compared

22   to pre-recession levels; upstate, overall, is

23   about 3 percent.   And there's pockets of

24   upstate New York, labor regions in upstate

 1   New York that have fewer jobs today than in

 2   2008.

 3           I do a lot of traveling, we have

 4   chamber members and business members across

 5   New York.    I was just in Buffalo and Utica,

 6   I'm down in Livingston County tomorrow.    And

 7   what I hear from members is, one, while

 8   they're fairly optimistic about the state of

 9   the overall U.S. economy, they're

10   increasingly less optimistic about the

11   economic conditions of New York State in

12   their region, and also their future

13   prospects.

14           And more often than not, they're

15   talking about what I'll call state-imposed

16   headwinds -- requirements, mandates that,

17   regardless of the good intentions of the

18   sponsors, add to the cost of doing business,

19   making it difficult or more challenging to

20   maintain a workforce and a business in

21   New York State.

22           So those are the types of factors we

23   think this -- these committees -- and we talk

24   to Empire State Development about this as

 1   well, that when we talk about economic

 2   development, it's not just programs, it's the

 3   overall business climate.

 4            You've heard about prevailing wage

 5   from a number of commentators already today,

 6   so I'll skip that.   It's obviously a major

 7   concern to us.    But it's not just an economic

 8   development concern.   We think the way that

 9   prevailing wages are calculated and applied

10   in the state should be of broad interest,

11   because these apply to all public works

12   projects in a state that's really desperate

13   for increased spending on infrastructure.

14   This is a major factor in our ability to

15   meet, you know, broad-based public needs.

16            Some other things in the budget,

17   though, that apply to economic climate in the

18   state:    Paid mandatory sick leave, unpaid for

19   the smallest of businesses and paid for

20   larger.

21            You heard earlier, in earlier

22   questioning, about the concern that small

23   businesses get bypassed by state economic

24   development incentive programs, but this is

 1   the type of thing that every employer in the

 2   state is going to have to deal with.     And I

 3   think if you look at small businesses in your

 4   community, between changes over the last

 5   several years on paid family leave and

 6   harassment, whose requirements changed before

 7   even the first year's implementation was

 8   done, potential for new and perhaps complex

 9   administrative requirements of paid sick

10   leave -- if the small businesses in your

11   community are even aware of some of these

12   changes, I know a lot of them aren't, they're

13   really frustrated in trying to keep up.    They

14   typically don't have a full-time HR function

15   on staff, so.

16         And we don't concede that the state

17   will adopt mandatory sick leave, but if there

18   is a consideration, our advice is make it

19   very direct in scope, simple in

20   administration.   I think this could be done

21   in one paragraph, compared to about a 20-page

22   worth of regulatory guidance issued under the

23   New York City law.

24         One other thing I want to talk

 1   about -- again, broad-based business climate

 2   impacts -- we applaud the inclusion of the

 3   small business tax reform package in the

 4   Governor's Executive Budget.    As drafted,

 5   it's fairly limited on the personal income

 6   tax side, which most small businesses pay.

 7   They're pass-through entities, they're not

 8   incorporated.

 9         It's limited to sole proprietors only,

10   and the proportional change, the proportional

11   reduction on the PIT side for small

12   businesses is actually about a third of

13   what's in this budget bill if you're a small

14   business C-corp.   We think that should be

15   looked at.

16         In fact, in the fiscal 2017 Executive

17   Budget, the Executive Budget proposed and

18   actually both the Senate and the Assembly

19   one-house budget resolutions that passed each

20   house had a version of that 2017 far broader

21   small business tax cut in it.   We think that

22   would be a good guide to a broader, more

23   useful tax reform for small business.

24         Beyond that, there's any number of

 1   issues in the budget that impact the state

 2   business climate.    To the good, there's

 3   increased funding for early college high

 4   schools.    To the bad, significant increases

 5   in regulatory authority by DFS and the Public

 6   Service Commission.    And one of the biggest

 7   issues out there, the potential for

 8   significant increased assessments on

 9   private-sector businesses who offer group

10   health plans to their employees.

11            So, again, broad-based business

12   climate's a real concern to us.       We

13   appreciate any questions or comments you have

14   on our testimony.    Thanks.

15            CHAIRWOMAN KRUEGER:      Thank you.

16            We've been joined by Senator Shelley

17   Mayer.    This is her first time today.

18            Senator Hoylman, it might be his first

19   time today.

20            SENATOR HOYLMAN:   No.

21            CHAIRWOMAN KRUEGER:   No?    Never mind,

22   he came back.

23            And Senator Hoylman will be first to

24   ask questions.

 1         SENATOR HOYLMAN:      Thank you.

 2         Just a question for Mr. Pokalsky from

 3   The Business Council.    I wanted just to -- in

 4   your testimony you oppose -- well, it's hard

 5   to see what you don't oppose.    But you do

 6   oppose expanded DFS authority, the Freshwater

 7   Wetlands Program as it's currently written,

 8   the "pink tax" that would prohibit

 9   differential sale prices for consumer

10   products for women.   The ban on polystyrene

11   containers and packaging.    Sexual harassment

12   reporting by state contractors.     The

13   Governor's legislative language on making

14   certain that the internet is free to and fair

15   to use users.    Contributions by

16   foreign-controlled corporations.     And any

17   restrictions on robocalls.

18         What do you support?

19         MR. POKALSKY:     Well, first of all, we

20   think we have a pretty effective wetlands

21   program today.   Those are the headlines, if

22   you will.   If you look at the substance of

23   our testimony, we say we understand and we've

24   supported amendments and improvements to the

 1   state's wetlands program.

 2         One of the key features, though, in

 3   the issue of certainty to both the regulated

 4   community and the public, and actually public

 5   employees who are implementing state laws,

 6   what the language in the Executive Budget

 7   does -- today, we map wetlands in the state

 8   for a purpose.   It demonstrates, it

 9   determines what are regulated wetlands.     And

10   in a --

11         SENATOR HOYLMAN:    How is -- how is the

12   protection --

13         MR. POKALSKY:    Above and beyond

14   that -- above and beyond that --

15         SENATOR HOYLMAN:    How is the

16   protection of wetlands a general business

17   concern?

18         MR. POKALSKY:    Oh, it comes up in

19   development projects all the time.     And it

20   can be a major impediment or delay to

21   investment projects.

22         But the point is we have a program,

23   both DEC and the Army Corps of Engineers

24   regulates wetlands.    We have a robust

 1   program.   But the way it's written today, you

 2   have certainty.    When you're going to look at

 3   a parcel for development, you know what's

 4   regulated, you know what's not.   And under

 5   existing regulations in New York State, DEC

 6   can come out and say because of these special

 7   factors in your site, we're going to expand

 8   beyond what the current maps are.

 9         Under this bill, the maps are

10   informational only.    They have no force and

11   effect of law.    So I'm going to work on a

12   project that I have no idea, from the onset,

13   what's developable and what's not, what I

14   have to do setbacks from.

15         And I don't know what the compelling

16   argument is to dispense with a program that

17   we think has worked well for 30 years.   So I

18   urge you -- and I'll be happy to stop in.

19   For each of the items you cited there, we'll

20   talk about the details.

21         On the DFS regulatory authority

22   provision, for some unknown reason, DFS -- or

23   the budget language is proposing to strike

24   language that says DFS cannot regulate

 1   financial institutions whose exclusive

 2   regulation is under federal law.      I don't

 3   know that it's implementable.      We don't even

 4   understand what the purpose of language like

 5   that is.

 6            We understand and support the overall

 7   purpose of what expanding DFS authority to

 8   what are now unregulated entities and

 9   unregulated types of transactions like payday

10   loans.    But some of the language in there

11   goes way beyond what DFS -- what we

12   understand DFS's intent to be.

13            So each of these, we have, I think, a

14   very detailed, specific set of concerns about

15   how, again, intent may be good, but the way

16   it's being presented here and implemented, we

17   have real concerns about.

18            SENATOR HOYLMAN:    Thank you.   No, I

19   appreciate it.    Thank you.

20            CHAIRWOMAN KRUEGER:    Assembly.

21            CHAIRWOMAN WEINSTEIN:    Assemblyman Ra.

22            ASSEMBLYMAN RA:    Thank you, gentlemen,

23   for being here.

24            I just wanted to go back into where

 1   you concluded your remarks, the small

 2   business tax reform.    And if you have any

 3   numbers on, you know, the percentage of that

 4   sector that is impacted by this proposal as

 5   opposed to the stand-alone piece of

 6   legislation that you mentioned or previous

 7   Executive Budget proposals to help with small

 8   business.

 9         MR. POKALSKY:     Yeah.   I don't have it

10   with me, but -- and we're working on that.

11         One thing we know is the vast majority

12   of small businesses in the state are not C

13   corporations.    So they're all -- most of them

14   pay their tax on their business profits on

15   the personal income tax.

16         So that, you know, 95 percent,

17   90 percent of small businesses -- a small

18   fraction would benefit under the benefit bill

19   as drafted, because it only applies to sole

20   proprietors.    So partnerships, LLCs, sub-S's

21   would not be subject.

22         But we're -- it's hard to get the data

23   on the structure of taxpayers, because the

24   department doesn't report it that way.

 1   That's something we're working on, to

 2   illustrate the scope.    The limited scope, I

 3   should say.

 4         ASSEMBLYMAN RA:    And then the other

 5   piece, obviously, we all know with regard to

 6   our business climate, certainly it's its cost

 7   in taxes, but in many ways it's also time and

 8   regulations.

 9         So any thoughts in that regard as to

10   whether there's anything in this budget or

11   what we should be doing going forward to

12   reduce some of those regulations that take up

13   time and resources from businesses?

14         MR. POKALSKY:     They're not in the

15   budget, but there's other legislative

16   proposals pending.   Like last year there was

17   a bill, we think it was a little narrower

18   than it could have been, to say if you're a

19   small business faced with a first-time

20   regulatory obligation, you make a minor

21   non-public health mistake in compliance, you

22   have a cure period before civil penalties are

23   imposed.

24         Legislation was passed that says

 1   agencies, when adopting regulations with a

 2   significant impact or broad impact on small

 3   business, should issue small-business-

 4   oriented compliance guidance, and we support

 5   that.

 6           Some other legislation pending before

 7   both houses that speak to agencies taking a

 8   little closer look when they're doing

 9   regulations, as to what the impact is on

10   small business and how maybe alternative

11   compliance measures might be available to

12   them, just to companies that are -- would

13   have less wherewithal.

14           So we do think there's ways, short of

15   going back and repealing or modifying

16   underlying regulations, to make the process

17   work a little bit better.

18           ASSEMBLYMAN RA:   Thank you.

19           CHAIRWOMAN KRUEGER:    Thank you.

20           Senator Shelley Mayer.

21           SENATOR MAYER:    Thank you,

22   Madam Chair.

23           Good afternoon, gentlemen.     Nice to

24   see you.   John, nice to see you.

 1            I was pleased to see -- and I know

 2   it's true -- The Business Council of

 3   Westchester strongly supports expansion of

 4   full gaming downstate as soon as possible,

 5   like ideally this year.       Is that correct?

 6            MR. RAVITZ:   Yes.

 7            SENATOR MAYER:   And I think you have

 8   done an analysis of the economic benefit to

 9   the region.    If not yourself, maybe MGM has.

10   But I think it's pretty clear, and I look

11   forward to any documentation you have that

12   helps us in our argument that the sooner

13   these two licenses are given out, the better

14   it will be for Westchester and the downstate

15   suburbs.

16            MR. RAVITZ:   A hundred percent,

17   Senator Mayer.    It's really -- again, the

18   numbers don't lie.     And the potential is one

19   that I think all of us should be very excited

20   about.

21            But let me take another tack in this

22   too, because I think it should all give you

23   hopefully some more confidence in looking to

24   enhance this full gaming license for Empire

 1   City, which is now being owned by MGM Grand

 2   International.

 3         They have made a commitment to the

 4   community.   They have made a commitment to

 5   the community to not just come in and say,

 6   This is what we're building.    They're going

 7   block by block, sitting down with residents

 8   and businesses to say, Talk to us about what

 9   you would like to see.   Talk to us about what

10   your concerns are if we were to expand, if we

11   were to create a hotel or a convention-type

12   center.   How could we work with you to

13   actually participate in that and be able to

14   use these new facilities for your local

15   communities?   That's the right way to do it.

16         SENATOR MAYER:     No, I agree.

17         MR. SILVA:    And so -- so I think

18   again, as you're deliberating this

19   accelerating of the full gaming licenses, the

20   confidence you should have in a corporate --

21   a corporation that gets it and understand

22   what it means to be a good corporate partner

23   in the community is one that we should all

24   celebrate.

 1         SENATOR MAYER:    No, I agree, it's a

 2   very effective model.   Other players should

 3   adopt it.

 4         You know we've had our disagreements

 5   on prevailing wage.   I understood you said

 6   you're producing a report with documentation,

 7   which I think you will agree, last year in

 8   fact the side that opposed prevailing wage

 9   was unable or unwilling or did not produce a

10   document that showed and demonstrated their

11   argument that this somehow would curb

12   economic development in the suburbs.

13         When do you think that will be

14   available, and who is participating in that?

15         MR. SILVA:   We have -- the Weitzman

16   real estate consulting firm that does these

17   type of papers are doing the work for us.

18         We have business organizations from

19   around the state who are participating and

20   sharing data, because one of the things --

21   and you've been a champion of this, and

22   really pressing us -- is to give you real

23   numbers, to give you real data on what the

24   economic impact will be, not just in

 1   Westchester but around the state.

 2            And so we want to get that data, so

 3   we've asked folks in these industries to

 4   really dig in, give us these data so that the

 5   Weitzman folks can really do their job and

 6   come up with an independent assessment that

 7   we can share with all of you.

 8            SENATOR MAYER:   And just -- I know I'm

 9   over my time, but when will we expect that?

10            MR. RAVITZ:   We were hoping that this

11   might not be in the budget, which gives them

12   a little more time.      But we've told them we

13   really need to have at least top-line numbers

14   in the next three weeks.

15            SENATOR MAYER:   Thank you.

16            CHAIRWOMAN KRUEGER:    All right.   We

17   have -- I'm sorry, I'm having a momentary

18   blank.

19            SENATOR BORRELLO:     Senator Borrello.

20            It's my turn?

21            CHAIRWOMAN KRUEGER:    Thank you, I

22   apologize.

23            SENATOR BORRELLO:   I am still the new

24   guy, it's okay.

 1            CHAIRWOMAN KRUEGER:     Well, you're the

 2   new guy.    And also I was just going to point

 3   out that other than a whimsy of history, it

 4   might be John Ravitz who sat here for 12 days

 5   in a row, instead of Liz Krueger.

 6            MR. RAVITZ:   Well, on behalf of my

 7   family, I'm so glad you're sitting up there,

 8   so --

 9            (Laughter.)

10            CHAIRWOMAN KRUEGER:     Just had to throw

11   that in.    I'm sorry, George.

12            SENATOR BORRELLO:     That's quite all

13   right.    And thank you very much for your

14   marathon oversight of this -- of these

15   hearings.    I can't imagine how difficult that

16   is.

17            Thank you both for being here.    And

18   just as a business owner myself, you know, I

19   see the Governor's war on energy production

20   in New York State continues.      And, you know,

21   my questions to you are what are you hearing

22   from your business leaders when it comes to

23   the CLCPA and the upcoming very aggressive

24   restrictions on carbon and energy production

 1   and how that's going to impact businesses and

 2   further stress business?

 3            MR. RAVITZ:   Well, I can just say for

 4   Westchester County we're in that perfect

 5   storm right now.   We have Indian Point

 6   closing in a year.     We already have a gas

 7   moratorium imposed on the southern part of

 8   the county.

 9            We're all for renewables, and we

10   support the renewable programs that are

11   there, but we're also asking the tough

12   questions of all of you, of the second floor,

13   of NYSERDA and the PSC, is are we going to be

14   ready.    And so that's one of the things that

15   I think all businesses -- as we encourage

16   businesses to come to Westchester County to

17   grow, they're asking those questions.     Are

18   their electric rates going to go up?     Is

19   there going to be issues with being able to

20   have the power that they need to do their

21   day-to-day operations?     There are a lot of

22   answers that we need, and the clock is

23   ticking.

24            SENATOR BORRELLO:   Yeah, if the

 1   question is are we going to be ready, the

 2   answer is no, that's pretty obvious.    So --

 3         MR. RAVITZ:     Then we need to have a

 4   serious conversation and an honest

 5   conversation on what that transition is going

 6   to look like.   And at The Business Council,

 7   we're saying that that transition has to be

 8   how we're going to continue to use gas in

 9   some way, shape or form.

10         MR. POKALSKY:     And the price of energy

11   going forward is a factor as well.    And, you

12   know, I spend -- you know, we started out as

13   the State Manufacturing Association, still

14   have a core membership in the manufacturing

15   world, much of which is still fairly

16   energy-intensive as they're looking to make,

17   you know, capital investments with a five,

18   10, even longer pay-back period.     Looking at,

19   you know, really -- and I know it's early, it

20   just passed, the implementation panel -- body

21   was just impaneled.    A lot of uncertainty, a

22   lot of concern about what the future supply

23   and cost of both electric power and natural

24   gas is.   You know, it's an issue out there.

 1            SENATOR BORRELLO:   Yeah, it's a big

 2   issue.    And, you know, part of the issue is

 3   getting the power from where it's being

 4   generated to where it is needed most, and

 5   that's a huge issue, our aging and failing

 6   electrical grid.    You know, the Governor

 7   wants to blanket upstate New York with

 8   renewables, but there's no place for that

 9   power to be transmitted down to New York City

10   where it's needed.

11            And by the way, upstate New York is

12   already 90 percent renewable to begin with

13   when you include hydroelectric power.    It's

14   New York City that's only 30 percent

15   renewable.    So you kind of need to produce

16   the power where it's needed, unless we're

17   going to spend a lot of money on upgrading

18   our grid, which we should.

19            So it's kind of a plan that's, you

20   know, aspirational, not realistic.

21            MR. RAVITZ:   Well, the other thing

22   that we're going to need everybody's buy-in

23   for is -- because we support renewables, and

24   they're going to need the backup

 1   infrastructure to support it.    We can't even

 2   get a town in Westchester County to support

 3   an application for a solar farm because they

 4   don't want it in where it's placed.

 5           Those types of battles can't happen if

 6   we're going to be where we need to be with

 7   all the changes that are going to happen.

 8           SENATOR BORRELLO:   Agreed.   Thank you.

 9           CHAIRWOMAN KRUEGER:   Thank you.

10           Any other?

11           Then we're going say thank you both

12   very much for being with us today --

13           MR. POKALSKY:   Thank you.

14           MR. RAVITZ:   Thank you very much.

15           CHAIRWOMAN KRUEGER:   -- and set you

16   free.

17           Next up, we have individuals, so I'll

18   call them up.   But then I'll tell you who's

19   up -- oh, I'm sorry, I thought someone was

20   trying to get my attention.

21           The New York Association of Training

22   and Employment Professionals, and then just

23   be close by, the New York Cannabis Growers

24   and Processors Association.    And then to be

 1   close by, Manufacturers Association of

 2   Central New York.

 3         Hi, there.

 4         MS. MACK:     Hi, how are you?

 5         CHAIRWOMAN WEINSTEIN:      One second.

 6   Just before you begin, we've been joined by

 7   Assemblywoman Dickens a little earlier.

 8         Thank you.

 9         CHAIRWOMAN KRUEGER:      Thanks.   Please.

10         MS. MACK:     Hi.   Good afternoon,

11   everyone.   Thank you for welcoming me back.

12   I always seem to get to you right as you get

13   your cup of coffee and your doughnut, so I

14   think that that's probably a good sign.

15         My name is Melinda Mack.     I run the

16   New York State Workforce Development

17   Association, also known as NYATEP, the

18   New York Association of Training and

19   Employment Professionals.    Our members

20   include those who educate, train and employ

21   New Yorkers, which includes our community

22   college systems, our BOCES programs, many of

23   the community-based organizations and

24   programs that really fuel the economy of

 1   New York.

 2         Our members serve around a million

 3   New Yorkers each year in education and job

 4   training and employment services.    And as

 5   you've heard throughout the day today, much

 6   of what we do is undergirding a lot of the

 7   economic development investments that are

 8   happening across the state.

 9         So I'm also not going to read from my

10   testimony.   I have a few key points I want to

11   direct to your attention.   As you heard

12   throughout today, economic development is

13   workforce development and workforce

14   development is economic development.    Yet

15   although talent is a primary category of site

16   selection at this moment in time, the funding

17   that we're getting to support education, job

18   training and employment pales in comparison

19   to the larger economic development

20   investments.

21         Growth is hindered statewide.    There's

22   50,000 open jobs, and they remain unfilled

23   due to the lack of skilled talent.

24         As I said, the commensurate investment

 1   is not there.   And when we think about

 2   education, job training and employment

 3   services, they're really aimed at the

 4   42 percent of New Yorkers that have a high

 5   school diploma or less.   Many of those

 6   pathways that we typically discuss --

 7   community college, four-year degrees,

 8   high-tech positions, many of which the head

 9   of ESD described earlier -- those are a hope

10   and a dream and lot of skill-based training

11   away for the vast majority of the people in

12   our state.

13           I also want to just raise for your

14   attention we also have heard a lot about

15   jobs.   It seems to be the only metric we use

16   to measure workforce development.   It's not

17   about good jobs, it's not about whether or

18   not they're good for New Yorkers or good for

19   neighborhoods, they're really just about

20   whether or not we have a job number.

21           That's a significant issue for us in

22   the field of workforce development.    We

23   really need to be thinking about whether or

24   not these measures take into account employee

 1   retention, advancement, wage growth and

 2   employer investment in upskilling.     Right now

 3   our state primarily basically uses public

 4   money to do workforce development and

 5   investment.   We hold very little through our

 6   economic development investments accountable

 7   to the employer to continue to upskill and

 8   train their workers.

 9         We also heard a bit today about

10   equitable economic development.   And I just

11   would like to sort of take a minute to say

12   the workforce system is often thought about

13   at the very, very end or at the kickoff of a

14   project, not in the development or engagement

15   of a community benefit agreement or even in

16   the negotiation with an employer around what

17   their needs are going to be in terms of a

18   pipeline of skill development.

19         I think we need to have a much deeper

20   relationship and role with the economic

21   development system across the state.    As you

22   heard Ryan share earlier, we work really

23   closely together to bring our memberships

24   together.   But in reality, when it comes to

 1   the big value, big-ticket-item projects like

 2   Amazon, the workforce component is truly

 3   often an afterthought.

 4         And so when we're talking about equity

 5   and inclusion, we're often asked to produce

 6   out of thin air a significant number of

 7   workers well after the fact that we would

 8   have needed a window to train people with the

 9   skills to be able to be successful.

10         I do want to point out a few things

11   that we've indicated in our testimony this

12   year that we think are important.   We

13   strongly encourage that all the Regional

14   Economic Development Council processes

15   require that projects submit a regional

16   workforce development strategy or plan.    So

17   if you have someone asking for state money,

18   that employer should also describe not just

19   the jobs they're creating but the wages,

20   their plans for retention, their turnover

21   rates, and more importantly, how they're

22   investing in their own workforce to make sure

23   they have the skills to compete.

24         As we shared before and I heard Ilana

 1   describe it as well, the vast majority of

 2   jobs in our state pay $32,000 a year or less.

 3   And so if we can't guarantee that folks are

 4   getting upskilled within their employment,

 5   we're really going to struggle to continue to

 6   have the skills we need to be successful.

 7         Two other items I wanted to indicate.

 8   We strongly support removing any of the

 9   unnecessary barriers for those who are

10   eligible to work in the United States to

11   access licensing.    That should also extend to

12   the military professionals as well.   So folks

13   who are coming home from service, we should

14   be able to recognize a paramedic who's a

15   veteran as a paramedic who is not a veteran.

16   We have an opportunity here to increase our

17   skilled workforce.

18         And then lastly, we indicated in our

19   State of the Workforce report many who are

20   low-skill or low-wage -- I should say

21   low-wage, not low-skill -- they often are

22   using unstable banking environments to be

23   able to support cashing their checks.    And so

24   we very much support the Governor's approach

 1   to the Excelsior Banking Network, to make

 2   sure that more low-wage workers are able to

 3   keep more of their income as they're sort of

 4   cashing their checks and getting a leg up in

 5   the workforce system.

 6         So with that, I'll take your

 7   questions.

 8         CHAIRWOMAN KRUEGER:      Thank you.

 9         Senator Borrello.

10         SENATOR BORRELLO:      Thank you.

11         First of all, thank you for being here

12   and giving your testimony.     When I was county

13   executive in Chautauqua County, I went on a

14   crusade to visit 100 businesses in my first

15   100 days of office.   And we got to 107 in

16   100 days.    And the number-one concern --

17   number one actually was that they needed

18   people that could actually pass a drug test

19   and show up to work every day at the same

20   time, which was a challenge.    And number two

21   was people that had the skills to fill those

22   open positions.

23         So one of the biggest concerns was

24   that when it comes to economic development

 1   incentives, these businesses that would be,

 2   you know, hypothetically coming to town to

 3   create more jobs, puts more stress on the

 4   skilled workforce that's already lacking.

 5          So I agree with you that we need to

 6   have a better focus on how we're addressing

 7   that workforce issue.   But from your

 8   standpoint, when it comes to economic

 9   development incentives that are truly judged

10   just on how many new jobs you create, isn't

11   that a bit myopic?

12          Shouldn't we be more focused on

13   ensuring that, number one, we have the proper

14   workforce development resources but, number

15   two, that we're actually ensuring that these

16   businesses can remain here, and resilient,

17   and one of the biggest stressors that they

18   have is workforce development?   I'm just

19   curious.

20          MS. MACK:   No, I completely agree with

21   you.   And not only is it myopic, it's really

22   shortsighted, if we're going to go with the

23   ophthalmology terms, right?

24          We really have some significant issues

 1   with how we think about skilled workers and

 2   skilled labor.   And Chautauqua County, in

 3   fact, you have one of the best local

 4   workforce boards in our state, and they've

 5   really also recognized the need to support

 6   small-to-midsized companies.   It's really

 7   difficult to train onesies and twosies at

 8   small businesses, but it's also the place

 9   where you get the biggest return on your

10   investment in a place like upstate New York.

11         But to your point, I think when we

12   think about the investments that are made,

13   for the vast majority of our state's 25-year

14   history, it's through tax credits.   So you

15   have the work opportunity tax credit, you

16   have other small business tax credits -- very

17   little is actually spent on the actual

18   training and also the administration of those

19   training programs that are critically

20   important to help folks who have opioid

21   addiction issues or other issues be able to

22   access skilled employment.

23         SENATOR BORRELLO:   So as a follow-up

24   to that exactly, you know, what challenges

 1   are you hearing from the current funding

 2   provided through the Governor's budget for

 3   the workforce training initiative through the

 4   CFA process?

 5           MS. MACK:   Sure.   So as was discussed

 6   before, the Governor has presented a

 7   $175 million training fund.    As I shared at

 8   the Human Services Committee, those dollars

 9   have been very slow to flow.     There's only

10   about $3.4 million that have been released to

11   date.

12           I was just with an Industrial

13   Development Agency in Broome County

14   yesterday, and they described their

15   significant challenges to even filling out

16   the application and some of the rigor that's

17   been attached unnecessarily in terms of being

18   able to fill out or apply for the funding.

19           The other big challenge we have is the

20   flexible funding is pay-for-success dollars.

21   Those dollars, as we've heard throughout the

22   last couple of weeks of testimony, seem to be

23   given to everyone.   And so the $69 million

24   that was meant to be for workforce

 1   development now is popping up in the

 2   childcare discussion, in the healthcare

 3   discussion.    And in reality, they're not

 4   flexible.    DOB has designated them as pure

 5   pay-for-success dollars.

 6         SENATOR BORRELLO:    So we need more

 7   flexibility and we need them to obviously

 8   allocate the money sooner than later, so we

 9   can start moving forward on this.

10         MS. MACK:    Absolutely.

11         SENATOR BORRELLO:    Thank you.

12         MS. MACK:    Thank you so much.

13         CHAIRWOMAN KRUEGER:     Thank you.

14   Assembly?

15         All right, actually I do have a few

16   questions.

17         MS. MACK:    Sure, great.

18         CHAIRWOMAN KRUEGER:     Oh, did somebody

19   just say something?   No, sorry.

20         Okay, I have a few questions.     So the

21   Governor created this job creation, job

22   development funding stream 175 million, maybe

23   two years ago.   This year he's talking about

24   220 million.   Maybe you just want to get back

 1   to me later, but did we spend that 175?    Was

 2   it really new, or did we just move deck

 3   chairs on the Titanic?

 4         MS. MACK:   So we certainly moved

 5   mostly deck chairs.   So for the vast majority

 6   of the resources, one bucket was dollars that

 7   were already going to SUNY and CUNY that were

 8   reallocated and brought back in to be put out

 9   through a new process.

10         The second bucket was tax credits, as

11   well as some resources going out for wind

12   energy through NYSERDA.

13         And the last bucket was that

14   $69 million for pay-for-success.   Those were

15   unspent dollars that were intended to be

16   flexible to meet the needs that we've been

17   articulating from the field -- so if we have

18   training dollars and the problem is

19   childcare, we should be able to pay for the

20   childcare to get someone out of the training

21   and into employment as fast as possible.

22         We have not had that outcome.    What

23   we've had is a strict designation of you have

24   to get employment only.   So, for example, an

 1   apprenticeship wouldn't be eligible under

 2   these resources because an apprenticeship

 3   program takes multiple years until you get to

 4   employment, and this program has been

 5   designated as a one-year program.

 6         So it really is sort of -- it -- the

 7   money is there, but it's been very difficult

 8   for our field to spend.

 9         SENATOR KRUEGER:    I did a roundtable

10   down in New York City maybe two weeks ago

11   about older women and the issues they face,

12   and how every day I get women -- I'm going to

13   say 55 and up -- begging me to help them find

14   jobs, talking to me about how they got pushed

15   out of the economy too early.

16         But I also know -- because somebody

17   who was an employment specialist at the

18   roundtable pointed out -- there are

19   300,000 jobs looking for people in my city on

20   any given day.

21         These aren't necessarily people who

22   need a lot of job training.   They've had a

23   whole career, perhaps, of jobs.   What's your

24   advice on how we help -- and I'm not going to

 1   say it's only women.    That was the theme of

 2   my roundtable -- but really age

 3   discrimination and I think companies' desire

 4   to push out the older, perhaps higher-paid

 5   employee for someone else.

 6         Do you have a recommendation on what

 7   we can do about this?    Because I think it's

 8   ubiquitous and a really huge issue in our

 9   society.

10         MS. MACK:   It absolutely is.

11         And I know that Hunter College has

12   done a ton of work around supporting older

13   Americans; I'm happy to connect you with

14   folks there as well.

15         The biggest issue is that when we

16   often think about economic development, we're

17   only thinking about the business interests,

18   we're not actually thinking about who's

19   available in the labor market to do the work.

20         And so for me, I get a little

21   frustrated when I hear language around

22   employer needs.   Well, what about the folks

23   who are in the labor market who need good or

24   better jobs, and how are we making sure that

 1   they're accessing them?    And that includes

 2   older workers.

 3           That being said, I think job training

 4   and upskilling means lots of things to lots

 5   of people.   Right?   And so the challenge with

 6   workforce development, it runs from the gamut

 7   from serving people with really low basic

 8   skills and limited English all the way

 9   through to folks who just need a four- or

10   six-week refresher course.

11           CHAIRWOMAN KRUEGER:    Great.    We should

12   talk more after our hearing.

13           MS. MACK:   Yeah, happy to.     Thank you.

14           CHAIRWOMAN KRUEGER:    Thank you very

15   much.

16           All right, thank you for your

17   attendance today.

18           MS. MACK:   Thank you so much.

19           CHAIRWOMAN KRUEGER:    And our next

20   testifier is, ah, Cannabis Growers and

21   Processors Association.    Are they here?     Yes.

22   Okay, wasn't listening before.     Come on down

23   if you think you're getting close to being

24   called up.

 1            So Manufacturers Association, come on

 2   down and get ready.       Receivables Management

 3   Association International, come on down and

 4   get ready.     And Associated Medical Schools of

 5   New York.

 6            CHAIRWOMAN WEINSTEIN:     Nobody has

 7   moved.

 8            CHAIRWOMAN KRUEGER:     They're not

 9   listening.

10            CHAIRWOMAN WEINSTEIN:     But he's here.

11            CHAIRWOMAN KRUEGER:     I know.   All

12   right, fine, thank you.

13            Hi.   Please start.

14            MR. GANDELMAN:    Hi.   Good afternoon.

15   Thank you for having me here.

16            My name is Allan Gandelman, and I wear

17   many hats in the farming, hemp and cannabis

18   sphere.     I own a certified organic vegetable

19   farm -- and have owned it for the past

20   10 years -- in Cortland, New York, called

21   Main Street Farms.

22            Three years ago we were licensed to

23   grow and process hemp for CBD, and we now

24   have a vertically integrated small business

 1   with 40 employees and sell our CBD products

 2   across New York State at farmers' markets and

 3   large retailers.

 4           Last year I founded and am the

 5   president of the New York Cannabis Growers

 6   and Processors Association, which represents

 7   many of the 500-plus hemp farmers in New

 8   York.   Our mission, as an organization of

 9   cannabis producers, processors and industry

10   partners, is committed to an economically

11   viable consumer-conscious cannabis industry

12   dedicated to the care and well-being of our

13   communities, our environment, and our

14   employees.

15           The association was formed to fill in

16   the gaps around farming, processing and, most

17   important, policy.   The hemp and CBD industry

18   has been growing and changing so fast it has

19   been difficult for federal and state

20   regulators to keep up.   We believe that our

21   industry is strongest when all of our small

22   and mid-scale family farms prosper.

23           Today I'm here to talk about the

24   potential positive and negative economic

 1   development impacts that the Cannabis

 2   Regulation and Taxation Act, the CRTA, will

 3   have on family farms and small businesses

 4   across the state.

 5           Our association stands with the CRTA

 6   as it seeks to create an industry rooted in

 7   social and economic equity, with a thriving

 8   and diverse supply chain that emphasizes

 9   craft producers.    Efforts such as restricting

10   vertical integration to only micro business

11   licenses, allowing on-premise consumption,

12   and granting social equity group status to

13   disadvantaged farmers are critical to our

14   mission of supporting agriculture and

15   entrepreneurs throughout the state.

16           However, the proposal also includes

17   some concerning provisions that are a

18   priority for us to address ahead of a vote.

19   One of them is the proposed tax rates

20   exceeding most other states that have

21   legalized thus far.    Currently the tax on

22   cannabis is a dollar per gram of dry weight.

23   In contrast, California's tax is 35 cents per

24   gram.

 1         This structure could stifle the growth

 2   of small producers and create razor-thin

 3   margins, allowing large operations a

 4   competitive advantage while potentially

 5   driving consumers to illicit market options

 6   where similar products will be available at a

 7   lower cost.   Either we will need a lower tax

 8   rate or a progressive tax, like in our craft

 9   beer industry, where smaller producers pay a

10   lower rate.

11         For us to truly end prohibition, and

12   for the program to work from an economic

13   development perspective, we need to stamp out

14   the illicit market.   In New York, we have the

15   luxury to look at other states as real-world

16   laboratories to see what has been successful.

17   From our lessons in Colorado, it's very clear

18   that the only way to stamp out the illicit

19   market and bring in tax revenue is to have a

20   low starting tax rate so consumers get used

21   to going to dispensaries.   This low rate also

22   lets startup small businesses to get their

23   feet under them in a completely new industry.

24         As the industry develops, we need a

 1   rate that can increase each year as the

 2   market stabilizes and supply and demand are

 3   matched.   If we look at California, after

 4   three years, their tax revenue is only a

 5   third of expected.   There's only 800

 6   operating licenses, of the expected 6,000,

 7   and 80 percent of the cannabis market remains

 8   illicit.

 9         When looking at the balance between

10   tax revenue and small business growth, our

11   position is that the tax revenue in the first

12   year or two of the program should only be

13   looked at as a means to stand up the program

14   and the Office of Cannabis Management.    Our

15   goal as an association is to create a

16   thousand million-dollar companies instead of

17   one billion-dollar corporation.

18         Many studies have been done on

19   cannabis taxes and revenue as related to

20   economic development, and they have seen that

21   the true win comes in job creation, local

22   sales tax revenue from equipment dealers,

23   hard good suppliers, and services related to

24   cannabis, but not directly from cannabis.

 1         Aside from taxes, the next piece that

 2   directly affects the economic development is

 3   licensing structure and canopy size.    This

 4   directly determines if New York farmers and

 5   small businesses will be viable and

 6   successful.   By New York's own estimate, the

 7   state will require 1 million pounds of

 8   cannabis per year to meet demand.

 9         As an example, a micro license with a

10   limit of a 5,000 square foot canopy can

11   produce between 500 and 1,000 pounds of

12   cannabis per year.   With these production

13   numbers, we will need to give out 1,000 to

14   2,000 cultivation licenses.

15         The potential for incubating small

16   business is huge.    Currently the CRTA does

17   not put a number on how many licenses of each

18   class will be given out, or the size of those

19   licenses.   Our association would like to see

20   a baseline structure so we could estimate the

21   true economic development impact.

22         We currently have over 500 hemp

23   farmers in New York, many of them with the

24   existing infrastructure to meet the demand,

 1   not to mention the thousands of other

 2   operating farms.   Prioritizing these farms

 3   for cannabis cultivation licenses will help

 4   meet New York's demand from day one, create a

 5   steady and safe supply chain, and inject

 6   millions of dollars into our upstate farming

 7   communities.

 8         CHAIRWOMAN KRUEGER:    Thank you.

 9         Senator Diane Savino.

10         SENATOR SAVINO:   Thank you,

11   Senator Krueger.

12         Good afternoon.   I had an opportunity

13   to meet with some of your colleagues

14   yesterday.   So you guys are currently in the

15   hemp industry in New York State.

16         MR. GANDELMAN:    That is correct.

17         SENATOR SAVINO:   Right.   And that's

18   the newly created hemp industry.   And so one

19   of the challenges we're seeing with hemp, and

20   we have seen in other states with the

21   legalization of cannabis for adult use, is if

22   you don't do it correctly, you don't have

23   regulations that people understand and that

24   are easy to interpret, you wind up with two

 1   competing markets -- the illicit market,

 2   which is thriving in New York State right

 3   now, and the legal one.

 4         So if you go into neighborhoods you

 5   see -- I actually saw a dispensary in Staten

 6   Island labeled "CBD Dispensary," including

 7   the little green, you know, symbol to make it

 8   look like it was a pharmacy.

 9         So there's almost no enforcement of

10   the regulations.   And so are you at all

11   concerned, as we roll out hemp, that that

12   same environment will exist with respect to

13   marijuana?

14         MR. GANDELMAN:    We're not concerned

15   about that if it's done correctly.    And so

16   that's the part we're trying to get ahead of

17   right now.   I mean, we promote having as many

18   dispensaries in as many neighborhoods as

19   possible so people have access, which is the

20   only way we'll get rid of the illicit market.

21         If there is only dispensaries in the

22   rich suburbs of the state, that will --

23         SENATOR SAVINO:     They don't want them.

24         MR. GANDELMAN:    And they don't even

 1   want them, but the way the laws are

 2   currently, that might be the only people that

 3   could afford to purchase from a legal

 4   dispensary, and everyone else will be stuck

 5   in the illicit market.   And that's just what

 6   we don't want to see.

 7         SENATOR SAVINO:    I'm glad that -- I

 8   think Senator Krueger's bill and the

 9   Governor's new proposal specifically prevent

10   vertical integration.    It was not a

11   requirement in the medical program; that was

12   done through the regulatory process, and it

13   has created all sorts of problems there.

14         But what I would hope that you guys do

15   is spend a lot of time talking to members of

16   the Legislature in both houses.   Some of them

17   don't realize that people smoke marijuana in

18   New York State right now.   It comes as a

19   shock to them.

20         (Laughter.)

21         SENATOR SAVINO:    They don't realize

22   that it is as easy to get as ordering a

23   sandwich and, you know, anything off Amazon.

24   There are apps -- there are apps for the

 1   illicit market.   You can have anything

 2   delivered to your house, and the illicit

 3   market looks incredibly like the legal one.

 4          So I would hope that you guys see your

 5   role here as educators to members who don't

 6   seem to really understand why it's important

 7   that we get this done right and we don't

 8   overtax it.   Otherwise, we will wind up just

 9   like California did, with a thriving illicit

10   market that makes more money than the legal

11   one.

12          MR. GANDELMAN:   Right, correct.   I

13   agree 100 percent.

14          And it's just the taxes, it's the

15   licensing structure, how many licenses there

16   are, who's allowed to participate in the

17   program and where those businesses operate.

18          So I think we have to look at it as a

19   holistic solution and not just like it's only

20   a tax issue or it's only a licensing issue.

21   But there's many, many pieces to this that we

22   would like to see worked out potentially in

23   the CRTA right now so we don't have to worry

24   about them being worked out later.

 1            SENATOR SAVINO:   I would encourage you

 2   to read the MRTA as well.

 3            MR. GANDELMAN:    Yes, I have, many

 4   times.

 5            CHAIRWOMAN KRUEGER:     Thank you.

 6            Assembly?

 7            CHAIRWOMAN WEINSTEIN:    No.

 8            CHAIRWOMAN KRUEGER:     Senator Borrello.

 9            SENATOR BORRELLO:   Thank you again,

10   Madam Chairman.

11            And thank you for being here.

12            So if I'm hearing you correctly,

13   you're very concerned that New York State

14   might overregulate and overtax your industry?

15   Welcome to New York State.

16            (Laughter.)

17            MR. GANDELMAN:    It seems to be the

18   theme of today, I guess.

19            SENATOR BORRELLO:   Yeah.   Yeah,

20   that -- so as a business owner, yeah, welcome

21   to the club.

22            So -- but my concern is this.        You

23   basically -- I just want to make sure I got

24   this correct.    And I agree with you that the

 1   taxes that are being proposed are excessive.

 2   And you mentioned the dry-weight tax of $1

 3   per gram versus California, 35 cents, and

 4   that complicates things further.

 5         But I think what I'm hearing you say

 6   is you're suggesting that New York State only

 7   set the rates so it generates enough revenue

 8   merely to cover the cost of the

 9   administration.   There should be no tax

10   revenue for the state to go into the General

11   Fund beyond that, is that what you're

12   suggesting?

13         MR. GANDELMAN:   I think that's what

14   we've been seeing when you're starting a

15   program like this, is not to look at it as a

16   huge tax revenue marker that you're using in

17   other places, but just to create a really

18   robust program.

19         Once it matures in, you know, two or

20   three years, then you slowly can increase the

21   taxes and now have tax revenue for the rest

22   of your state.

23         In states like Colorado, they actually

24   don't even spend their tax revenue from that

 1   year, they hold on to it for a whole year to

 2   wait because it's so unpredictable right now

 3   that they don't want to all of a sudden have

 4   a huge shortfall because they were relying on

 5   cannabis taxes that next year aren't there.

 6           SENATOR BORRELLO:   Well, it is going

 7   to be unpredictable because of that same

 8   fact.   Because, you know, we decriminalized

 9   marijuana here, and I don't know how you tell

10   the difference between legal marijuana and

11   illegal marijuana.

12           And in all the other states that have

13   legalized it, the black market is booming.

14   And that's part of the challenge that we face

15   here in New York.

16           But also where I live, in Western New

17   York, we have several Native American

18   territories.   They've all indicated that if

19   it's legalized here, they're going to sell

20   it.

21           So how do you propose that a legal

22   distribution, which is probably going to be

23   30 to 50 percent more than, say, the Seneca

24   Nation is selling it, how are they going to

 1   be able to survive with that kind of distinct

 2   economic difference?

 3            MR. GANDELMAN:   Well, it doesn't have

 4   to be 30 to 50 percent more.     And the way it

 5   will be 30 to 50 percent more is if

 6   automatically it is taxed more.      Right?

 7            SENATOR BORRELLO:   So you're saying in

 8   order for this to be viable, New York State

 9   has to price this -- or has to tax this at a

10   point where we're not going to make any

11   additional net revenue to the budget.       Is

12   that what you're saying?

13            MR. GANDELMAN:   Correct.   Yes.   We

14   need to fund the program, which has a number

15   on it --

16            SENATOR BORRELLO:   So we're going to

17   legalize marijuana, we're going to deal with

18   all the social issues, all of the law

19   enforcement issues, and make no money to help

20   cover those costs, so that your business can

21   thrive.

22            MR. GANDELMAN:   Well, here's the

23   thing.    You're already dealing with all the

24   social issues.   People are driving all over

 1   the place, they're driving to Massachusetts,

 2   there's a huge illicit market.

 3           From all studies that have -- from

 4   other states, once they have legalized, they

 5   have not seen tremendous increases like

 6   projected here in New York on --

 7           SENATOR BORRELLO:   You're right.

 8           MR. GANDELMAN:    -- you know, from the

 9   sheriff's departments and everything else.

10   So --

11           SENATOR BORRELLO:   Well, the AAA just

12   came out with a report saying that there's a

13   70 percent increase in fatalities with people

14   having THC in their blood in the State of

15   Washington.   So I would probably challenge

16   that.

17           MR. GANDELMAN:    Well, THC stays in

18   your blood for 30 days, so I think we would

19   have to look at some more studies than just

20   that one.

21           But I think how -- all of the things

22   that we have that you think will be problems

23   with the legal market are currently problems

24   with an illegal market.     And for the first

 1   year or two, those taxes just need to hold up

 2   the program.

 3            After that, yes, there will be a lot

 4   of tax revenue, just like in craft beer.

 5   That's created over 20,000 jobs in New York

 6   State.    We can do the same thing for

 7   cannabis, but instead we're not doing that.

 8            CHAIRWOMAN KRUEGER:   All right, I'm

 9   going to cut this off.

10            SENATOR BORRELLO:   Thank you.

11            CHAIRWOMAN KRUEGER:   Although I'm

12   going to throw in my two cents, since I carry

13   a similar bill to the Governor's.

14            The gentleman's right, we do not want

15   to overtax any of these products, because we

16   want to close down the illegal market.     And

17   if you overtax it, people will stay in the

18   illegal market where you don't know who

19   they're buying from or what they're buying.

20            As opposed to a legal product that's

21   licensed and is literally reviewed for safety

22   from seed to sale, so it's a better product

23   or mix of products to be selling.

24            The gentleman is also right that over

 1   time, you can grow your prices as you've

 2   established your industry, as with lots of

 3   other new kinds of businesses that start.       I

 4   don't agree with him that there's no money

 5   originally.    We are looking at how each state

 6   that has legalized already has moved forward,

 7   avoiding their mistakes and hopefully coming

 8   up with the I guess what I want to call the

 9   sweet spot for pricing cannabis, so to speak.

10            And we can talk about -- not in the

11   hearing today, George, but I'll be happy to

12   give you more material than you will ever

13   want about cannabis, its safety or lack

14   thereof.    It is not a perfect product, I

15   don't encourage people to use it.      But it is

16   far, far safer medically, from a driving,

17   from any measurement, to alcohol.      And we

18   seem to enjoy having legal alcohol in this

19   state.

20            So I want to thank you very much for

21   your testimony.

22            Did I cut off any Assemblymembers?

23   Okay.    Thank you very much for being here.

24            MR. GANDELMAN:   Thank you.

 1         CHAIRWOMAN KRUEGER:      All right, my

 2   staff will get you immediately large

 3   quantities of not marijuana, but material

 4   about it.

 5         (Laughter.)

 6         CHAIRWOMAN KRUEGER:      The Manufacturers

 7   Association of Central New York.    Hello.

 8         MR. WOLKEN:   Hello.     Thanks for having

 9   me today.

10         My name is Randy Wolken, I'm president

11   and CEO of MACNY, the Manufacturers

12   Association.   And our trade association

13   represents over 300 members with over

14   55,000 employees in a 26-county region.      I'm

15   also the president and CEO of the

16   Manufacturers Alliance, which represents

17   seven regional manufacturing associations

18   statewide with 2400 members.

19         We're dealing with increasing

20   challenges for our members because of the

21   competitive global environment, and they

22   continue to be forced or at least have to

23   consider shutting down and relocating either

24   overseas or to different parts of the country

 1   because of incentive packages or lower

 2   production costs, cheaper wages and lower

 3   taxes.

 4            But we continue to work with you here

 5   in Albany to help lessen some of these

 6   impacts and to allow manufacturers to thrive

 7   here.    Manufacturers want to be in New York

 8   State, they truly want to do business here.

 9            One of the most significant things

10   that you could do in the State of New York

11   right now would be to eliminate the corporate

12   franchise tax for all manufacturers.      I want

13   to thank Assemblyman Stirpe and Senator

14   Kaplan for introducing legislation that would

15   do just this.

16            As you know, in 2014 the State

17   Legislature and the Governor enacted a zero

18   percent corporate franchise tax for

19   manufacturers who were C-corps -- these are

20   the large manufacturers -- and immediately we

21   were propelled into the top ten states in the

22   country for pro-manufacturing income-tax

23   climates.

24            We think and we believe it would do

 1   the same for small and medium manufacturers.

 2   In fact, that's the largest number of

 3   manufacturers in the State of New York:     Over

 4   75 percent of manufacturers are of this type.

 5         What this allows them to do is make

 6   investments in things like inventory, capital

 7   equipment, complex machinery, buildings,

 8   research and development, as well as IT and

 9   software.

10         And the C-corps right now have this

11   advantage to invest in these areas and grow

12   their businesses.    We believe the small

13   businesses and medium-size manufacturers

14   should have the same benefit.

15         You know, there's this misconception

16   that these tax distributions will somehow

17   pass through to the owners.   If that were the

18   case, C-corps would actually want to be

19   pass-through entities.   That's actually not

20   the case.    What small and medium

21   manufacturers pay in New York State is the

22   second-highest individual tax rate in the

23   country.    So inadvertently, what we've done

24   is put these small and medium-size

 1   manufacturers at a competitive disadvantage.

 2           Also we've put them at risk to being

 3   lured to other states.   In fact, there's a

 4   significant amount of pressure we're hearing

 5   from companies to locate to other states.

 6   Governors, economic development officials are

 7   actually calling them aggressively and trying

 8   to incentivize them to leave.    Now, these are

 9   locally owned manufacturers, and they have

10   strong ties to New York State.    And we'd like

11   them to stay.

12           The Manufacturing Research Institute

13   of New York State commissioned a study to

14   look at analyzing the impact of extending the

15   zero corporate tax rate to small and medium

16   manufacturers.   The Beacon Hill Institute in

17   2019 found that if you did this, you could

18   increase private-sector jobs by more than

19   5,000 in the first year, and over 6200 by

20   2024.   You'd see a rise in investment of

21   $150 million by 2024, real disposable income

22   would increase by $365 million in 2020 and

23   surge by $524 million by 2024.

24           You'd make a solid investment in our

 1   economic future, and that would cause more

 2   jobs, more investment.   And you'd send a

 3   strong message to manufacturers that the

 4   current manufacturing community is valued and

 5   that you want them to be here, and you'd

 6   actually put us on an even keel for being a

 7   major competitor in the international space.

 8   This would make a very positive impact for

 9   existing companies and make us even more

10   attractive to manufacturers.

11         So I'll stop there.      And I thank you

12   for your ongoing support of manufacturers,

13   and I'll take your questions.

14         CHAIRWOMAN KRUEGER:      Thank you.

15         Senator Borrello.

16         SENATOR BORRELLO:   Thank you again.

17         Thank you for being here and giving

18   this testimony.

19         So manufacturing, where I'm from in

20   Chautauqua County, is still very strong.    And

21   the challenge is workforce.    So I understand,

22   you know, the impact -- you're saying we can

23   create more jobs.   But, you know, we have to

24   fill the jobs that we have right now, and

 1   that's really the challenge.

 2         And I'm just wondering, you know, what

 3   the Manufacturers Association is doing to

 4   kind of, you know, support the idea of being

 5   able to return the skilled workforce that we

 6   need in order to support those manufacturers.

 7         MR. WOLKEN:   So a favorable tax

 8   climate obviously helps support existing

 9   jobs, to include these jobs that are open as

10   well as create future jobs.    It makes us

11   competitive.

12         In terms of a talented workforce, we

13   actually have, through the Manufacturers

14   Alliance and MACNY, a really robust

15   apprenticeship program which now has expanded

16   statewide to hundreds of companies.   Dozens

17   of career pathways are being created.    In our

18   community alone, over 50 companies have done

19   it with close to 200 new apprentices being

20   created.

21         So we think the "earn and learn"

22   approach is one of the best approaches.

23   Start with an existing employee, while you're

24   earning, and continue to expand over the next

 1   three years.   You'll go from entry-level wage

 2   to $25 to $30 an hour, with benefits.     In our

 3   communities, such as yours and ours in

 4   Central New York, it's the highest-paying

 5   jobs.

 6           So we believe the earn-and-learn

 7   approach is probably the best, and we're

 8   actively engaged in doing that statewide.

 9           SENATOR BORRELLO:   And there's

10   really -- then there's no debt, either,

11   associated with that learning process.

12           MR. WOLKEN:   No.   No, it's the best

13   way, actually, to learn and earn.

14           SENATOR BORRELLO:   I agree.   And, you

15   know, in our region most of the small

16   entrepreneurs who are manufacturers, in that

17   industry, are folks that started out with

18   those type of programs and then went on to

19   own their own business or buy the business

20   that they're working for.    So if you wanted

21   to be a small business owner, getting into

22   the skilled trades is probably one of the

23   best ways in upstate New York.

24           MR. WOLKEN:   It really is the

 1   post-high school approach to really earning,

 2   learning and not having a significant debt.

 3   And there are literally thousands of job

 4   openings, everything from welders to

 5   mechanical techs, that we absolutely have to

 6   have to be viable.

 7         SENATOR BORRELLO:    Yeah, I mean, I've

 8   said that before, if we had a hundred welders

 9   tomorrow, we could have a hundred jobs for

10   them tomorrow.

11         MR. WOLKEN:     Absolutely.

12         SENATOR BORRELLO:    And that's the

13   absolute challenge that we face.    And with

14   every other difficult climate in New York

15   State, if we could solve the workforce

16   problem here, that would probably overcome a

17   lot of those other challenges of doing

18   business in New York State.

19         MR. WOLKEN:     Absolutely, it would help

20   tremendously for our members and so many

21   throughout upstate.

22         SENATOR BORRELLO:    Thank you.

23         CHAIRWOMAN KRUEGER:     Thank you.

24         Assembly.

 1            CHAIRWOMAN WEINSTEIN:    Thank you.

 2            Assemblyman Stirpe.

 3            ASSEMBLYMAN STIRPE:     Hi, Randy, how

 4   you doing?

 5            MR. WOLKEN:   Good seeing you.

 6            ASSEMBLYMAN STIRPE:     You know, we've

 7   worked together on a lot of things over the

 8   years.    And I remember back in I think 2013

 9   doing a survey, and as everybody has talked

10   about, the number-one issue was workforce and

11   not finding people.

12            I'm just wondering if you feel that

13   the attitude of the employers has changed at

14   all over the years.     Because when we first

15   started looking into this and you had said,

16   Well, what kind of a worker do you want, of

17   course they wanted a 15-year experienced, you

18   know -- you talk to them a little bit longer

19   and they want a unicorn, basically.       And they

20   expected you to just deliver that to them.

21            I remember years ago, like at General

22   Electric and places, they'd give you $500 if

23   you found your cousin and would go to work

24   and then they would train them.

 1         Have companies realized that they have

 2   a responsibility in the training area also,

 3   and not really expecting government to solve

 4   every problem that they have?

 5         MR. WOLKEN:   Well, I think that the

 6   success of the apprenticeship program is

 7   justification and speaks to this.   I mean,

 8   they're willing to hire and train through an

 9   apprenticeship approach, which actually is

10   great for everybody.   The individual ends up

11   being an approved apprentice, a registered

12   apprentice, they can use that whatever they

13   need to go, it makes them more viable.

14         Our experience in standing up this

15   program in about 18 months would suggest that

16   it's real and that employers now know they

17   have to get engaged.

18         I'd also say a lot of our members are

19   getting engaged now at the high school level

20   and even the middle school level.   We have

21   hundreds of companies in our region, as you

22   know, that are actively engaged in showing

23   people what those jobs are like for the

24   future, and that changes people's

 1   perceptions.

 2          Specifically at home, oftentimes

 3   parents will say, you know, I don't want my

 4   child to be necessarily a welder -- which is

 5   a fantastic job, by the way.    So I think the

 6   opportunity to both educate and learn at the

 7   business side, we've been actively engaged

 8   in.   And I agree with you that the whole

 9   attitude's changed.   They have to invest, and

10   they see it.

11          ASSEMBLYMAN STIRPE:     You know, the

12   other thing, as I've gone around the state

13   hosting small business roundtables and

14   talking to people -- you know, it's been

15   spoken about earlier, transportation and

16   childcare are like big issues that -- we have

17   low unemployment, we need to draw more people

18   into the workforce, and the only way we're

19   going to do that is somehow get women to go

20   into maybe some of the nontraditional jobs in

21   manufacturing and construction and things

22   like that.

23          And I know that you're also working

24   with Early Childhood Alliance and those

 1   people.     Are you seeing much progress being

 2   made?

 3           MR. WOLKEN:   I'm seeing a basic level

 4   of general awareness now that we need to

 5   invest in childcare, figure out ways to solve

 6   that at a community level.     I think you're

 7   right there, that and transportation are

 8   probably the two main barriers that we have

 9   to solve.    And I know the latest round in our

10   region, funding some transportation solutions

11   will help, I think, in a meaningful way.

12           But we do have to address them, and

13   it's critically important that New York State

14   be a partner in doing that.    We have to

15   create a better market.     Those are

16   lower-paying jobs in childcare.

17           In fact, we're introducing in our

18   region at least a look at creating

19   apprenticeship pathways in that space

20   because, quite frankly, the pay is too low to

21   keep quality childcare workers in the space.

22   So we're going to have to come up with some

23   innovative solutions.

24           But you're right, those are two big

 1   problems.

 2            CHAIRWOMAN WEINSTEIN:      Thank you.

 3            ASSEMBLYMAN STIRPE:     Thank you.

 4            CHAIRWOMAN WEINSTEIN:      Assemblyman Ra.

 5            ASSEMBLYMAN RA:   Thank you very much

 6   for being here today.

 7            So the study about eliminating the

 8   franchise tax for the small and medium-size

 9   manufacturers, those numbers are in New York

10   State?

11            MR. WOLKEN:   Yes.   We actually have

12   them broken down by county and the number of

13   employees and by businesses.      And this would

14   affect the entire state.      It would be an

15   immediate shot in the arm, we believe, to

16   manufacturers throughout the State of New

17   York.

18            ASSEMBLYMAN RA:   Great.    Because I

19   know, you know, over recent years there has

20   been an increase I believe of about a million

21   manufacturing jobs nationwide, but we've lost

22   manufacturing jobs in New York.       So obviously

23   that would be a very clear way to reverse

24   that trend.

 1         Are there other things that you can

 2   recommend that would also help, along with

 3   the tax structure?

 4         MR. WOLKEN:    Yeah.   The reason why we

 5   think tax structure is a good place, it

 6   levels the playing field for everybody.    You

 7   don't have to apply for a program, you're a

 8   part of that.

 9         Beyond that, we've talked about

10   workforce.   Not having enough people to fill

11   open positions is a significant challenge.

12   That in and of itself could expand production

13   and actually allow growth.

14         I think we have to be concerned about

15   any kind of legislation and/or requirements

16   that make a larger burden on businesses.    So

17   we should be looking, you know, intelligently

18   at our implementation.   Sometimes even the

19   best-laid programs end up causing us

20   significant heartburn at the manufacturing

21   level because it's quite frankly competitive

22   internationally.

23         So I think looking at the business

24   climate will always help.    Training is

 1   absolutely critical.    And then of course

 2   we've seen the impact of changing the tax

 3   rate for C-corps; we need to do that for

 4   small and medium manufacturers.

 5           ASSEMBLYMAN RA:   Great.    Thank you.

 6           MR. WOLKEN:    Sure.   Thank you.

 7           CHAIRWOMAN KRUEGER:     Thank you very

 8   much for your attendance today.     We

 9   appreciate it.

10           MR. WOLKEN:    Thank you.

11           CHAIRWOMAN KRUEGER:     Thank you.

12           All right, our next participant is

13   Donald Maurice, outside counsel, Receivables

14   Management Association International.        No

15   doubt I'll learn what that is.

16           MR. MAURICE:    Good afternoon.

17   Chairpersons Krueger and Weinstein and

18   distinguished members, it is an honor to

19   address you this afternoon.

20           My name is Don Maurice, and I am

21   outside counsel to the Receivables Management

22   Association International, also known as

23   RMAI.   It's a nonprofit trade association

24   representing over 550 companies that purchase

 1   or support the purchase, sale, and collection

 2   of performing and nonperforming receivables

 3   on the secondary market.

 4         RMAI fully supports licensure of debt

 5   collectors as is proposed by the Governor's

 6   budget bill.   Licensure protects consumers

 7   and creates significant barriers to bad

 8   actors.

 9         While much contained in the Governor's

10   budget proposal is consistent with licensing

11   requirements designed to protect consumers,

12   it contains several provisions that are

13   highly problematic and harmful to consumers.

14   Let me explain how this occurs.

15         As proposed, debt collectors would be

16   limited to two communications with a consumer

17   in a seven-day period.   When commencing

18   communications with a consumer for the first

19   time, debt collectors typically make two

20   collection contacts in the first seven days.

21   Usually this consists of a telephone call

22   followed by a letter.

23         Under the proposed restriction, if the

24   consumer calls the collector in response to

 1   either communication within that seven-day

 2   period, the debt collector is prohibited from

 3   communicating with the consumer.

 4            Imagine a consumer who is facing the

 5   repossession of her automobile.    She has

 6   already received a letter from a debt

 7   collector stating that an immediate payment

 8   is required to avoid repossession.     And she

 9   notes, when looking at the caller I.D. on her

10   telephone, that the same collector has

11   already called but that call was not

12   answered.    Concerned and wanting to avoid

13   repossession, she immediately calls the debt

14   collector in the hope of working out a lower

15   payment.    This bill would prohibit the debt

16   collector from answering that call.

17            The letter and unanswered call

18   mentioned in my example are the totality of

19   communications that are permitted within the

20   proposed seven-day cap.    No other

21   communication is permissible, absent the

22   consumer's prior written consent or a court

23   order.    The result does not bode well for our

24   hypothetical consumer.    We see no reason why

 1   honest, hardworking consumers should suffer

 2   such harsh results.

 3         Consumers seeking to resolve their

 4   delinquent accounts to avoid embarrassing

 5   judicial and nonjudicial collection efforts

 6   should not be hamstrung from communicating

 7   with their creditor's agents.

 8         The second provision of the budget

 9   proposal that we're concerned with is

10   electronic communications.   And it's almost a

11   total restriction on electronic

12   communications between debt collectors and

13   consumers.

14         Let me start with this.     Electronic

15   communications benefit the disabled, persons

16   for whom English is a second language, and

17   afford consumers greater control when

18   interacting with debt collectors.   But the

19   proposal provides that these electronic

20   communications can only occur when the

21   consumer has given his or her prior written

22   consent directly to the debt collector.   Even

23   if that consent was given to the creditor on

24   whose behalf the debt collector is acting,

 1   the communication is not possible.

 2         But to be sure, these electronic

 3   communications mean far more to those

 4   challenged by physical disabilities.      For the

 5   physically disabled, a trip to a mailbox can

 6   be difficult.   And for the visually impaired,

 7   electronic communications make communications

 8   more accessible and less costly.    For

 9   example, consumers suffering from visual

10   disabilities can use any widely available

11   email program to convert text to speech.     And

12   if English is not the consumer's primary

13   language, electronic communications can be

14   easily converted to any language.

15         The proposed law relegates

16   communications to those common in the early

17   20th century.   We know that communication

18   technologies have changed, and we also know,

19   as I pointed out in my written testimony,

20   that consumers prefer electronic

21   communications to phone calls and letters

22   because of that control.   And aside from this

23   immediate harm, we also know that we are

24   concerned that these technology barriers may

 1   deny New Yorkers from future innovative

 2   technologies.

 3         We know these issues can be resolved,

 4   and we are ready to work with you and all

 5   stakeholders to correct them and achieve the

 6   bill's intended result.

 7         Thank you for your time.

 8         CHAIRWOMAN WEINSTEIN:     Thank you.     We

 9   have no questions.   We have your written

10   testimony; we have no questions at this time.

11   Thank you for being here today.

12         MR. MAURICE:     Thank you.

13         CHAIRWOMAN WEINSTEIN:     Next we hear

14   from Jonathan Teyan, Associated Medical

15   Schools of New York.   And he will be followed

16   by a panel of the Motion Picture Editors

17   Guild, Louis Bertini, and Theatrical

18   Teamsters Local 17, Thomas O'Donnell.

19         Please begin.

20         MR. TEYAN:     Thank you, Chairwoman

21   Weinstein.   And good afternoon to all the

22   distinguished members.

23         My name is Jonathan Teyan.    I'm the

24   chief operating officer of the Associated

 1   Medical Schools of New York.     AMSNY is the

 2   consortium of the 17 medical schools in the

 3   state.     We have more medical schools than any

 4   other state in the nation.     We educate more

 5   physicians, we train more medical residents.

 6            When most people, I think, think of

 7   medical schools, they tend to think of

 8   educating physicians and providing clinical

 9   care.    I actually want to talk a little bit

10   today about the third leg of the stool, which

11   is biomedical research and the importance of

12   state investment in life sciences to spur

13   further growth of our bioscience sector.

14            Just to give a bit of context, by far

15   the largest funder of biomedical research,

16   particularly basic science research, in the

17   U.S. is the National Institutes of Health.

18   New York is the third-ranked recipient of NIH

19   funding.     In 2019, $2.9 billion flowed into

20   New York in NIH funding.    Sixty-seven percent

21   of that went to the medical schools.

22            We've actually, fortunately, seen an

23   uptick in the total NIH budget in the last

24   five years, but for more than a dozen years

 1   prior to that, NIH funding had been

 2   absolutely flat.    And when you adjust that

 3   trend for inflation, we actually saw that

 4   there was a 25 percent decline in the

 5   purchasing power of an NIH dollar.       And in

 6   that vacuum, many other states stepped in and

 7   started very large-scale investments in their

 8   own bioscience sectors.

 9         As an example -- several examples,

10   actually -- California launched a $3 billion

11   STEM cell program.    Texas launched a

12   $3 billion cancer program -- in fact, Texas

13   just authorized an additional $3 billion

14   investment in that.    Massachusetts invested a

15   billion and a half in life sciences.      We've

16   seen this around the country, that there are

17   very large investments over the long term to

18   grow the bioscience sectors in each of those

19   states.

20         One of the consequences of that is

21   that the competition for scientists became

22   quite overheated.    And New York in

23   particular, because we have some of the best

24   academic research institutions in the

 1   country -- in fact, in the world -- we became

 2   where many of those states came to to go

 3   shopping, go shopping for scientists.    And in

 4   the first few years after Texas launched its

 5   multi-billion-dollar cancer program, we lost

 6   more than a dozen scientists because we were

 7   unable to match the sorts of offers that

 8   Texas institutions could make.

 9         And so what we had proposed and what

10   the Legislature and the Governor wisely

11   recognized was that the state should support

12   the recruitment and retention of world-class

13   scientific talent in New York.   And this took

14   the form of a $20 million appropriation that

15   was part of the larger $620 million life

16   sciences initiative.

17         This $20 million is for a program

18   called NYFIRST, and what it does is it

19   provides up to a million dollars for a

20   medical school to recruit or retain, you

21   know, the very best star scientists.    And

22   we've actually seen that this has proven much

23   more effective than we even anticipated.

24         So this program was launched in 2017.

 1   The first round of funding was made in 2018.

 2   We had three awardees, one at the University

 3   of Rochester, Columbia University, and

 4   Mt. Sinai School of Medicine.

 5         When those recruits were brought into

 6   the state, they brought with them labs that

 7   function effectively as small businesses

 8   within the medical schools.   Each of these

 9   labs employs at least eight to 10 people.

10         And in fact, in this first round we've

11   seen that just in the first year, those three

12   labs have created 40 jobs.    We anticipate

13   that they will create 100 jobs in the first

14   three years of the program.   And in addition

15   to that, they have brought in $16.5 million

16   in additional outside funding.

17         And so what we are looking for and

18   hoping that you will support is, firstly, the

19   reappropriation of the unspent funds for the

20   NYFIRST program in the current budget and a

21   new appropriation of $20 million so that we

22   can keep our institutions competitive for the

23   very best scientists in the world.

24         Thank you.   Thank you for the

 1   opportunity to testify.

 2         CHAIRWOMAN WEINSTEIN:    Thank you.

 3         We have a question from Assemblywoman

 4   Hyndman.

 5         ASSEMBLYWOMAN HYNDMAN:   Hi, Jonathan.

 6   Good to see you.

 7         Two quick questions.    You're saying

 8   that we have 17 medical schools in the State

 9   of New York, but we're recruiting individuals

10   from outside the State of New York.   How many

11   of our medical schools are growing these

12   scientists and keeping them in the State of

13   New York and not losing them to California

14   and Texas, is my question.

15         MR. TEYAN:   So this program actually

16   would do both, and in fact is doing both.

17         So the idea is that we both want to be

18   able to recruit scientists, you know,

19   regardless of where they're from, and we also

20   want to develop our home-grown scientists.

21         But at the same time, we have had many

22   scientists at the medical schools who have

23   had offers from outside New York, and we

24   would like to prevent them from leaving, if

 1   we can, if we can match the offer.      And so

 2   the NYFIRST program does that.    We actually

 3   can apply for funds through the program so if

 4   there's a bona fide offer from an institution

 5   outside of New York, we can try to make a

 6   counteroffer and keep them here using state

 7   funds to help that.

 8          ASSEMBLYWOMAN HYNDMAN:    So do you

 9   break down the number of women that are in

10   biomedical sciences, that become scientists?

11   Do you break down the number of women,

12   minorities, black, Latino?

13          MR. TEYAN:   It's an excellent

14   question.   And this program doesn't require

15   that and doesn't do that.    It is a very large

16   focus of our organization and of the medical

17   schools.

18          I will say that in the first round of

19   funding there were three scientists brought

20   in.   One of them is a woman who is just a

21   leader in her field, cancer genomics.

22          And we actually are very focused,

23   through other programs, on developing

24   underrepresented folks coming into the

 1   sciences.   We think that's really important

 2   both for the composition of the workforce but

 3   also to help drive the science into the

 4   places that it needs to go.

 5           And so this program doesn't address

 6   that specifically, but the medical

 7   schools are very much committed to addressing

 8   that.

 9           ASSEMBLYWOMAN HYNDMAN:    Okay.   Thank

10   you.

11           MR. TEYAN:   You're welcome.

12           CHAIRWOMAN WEINSTEIN:     Thank you.

13   There are no other questions.

14           MR. TEYAN:   Thank you.

15           CHAIRWOMAN WEINSTEIN:     So next, as I

16   mentioned, we have Motion Picture Editors

17   Guild and Theatrical Teamsters Local 817, to

18   be followed by Protect the Adirondacks, to be

19   followed by Reinvent Albany.

20           MR. O'DONNELL:   Good afternoon,

21   Chairwoman Weinstein and distinguished

22   members of the Senate Finance Committee and

23   the Assembly Ways and Means Committee.      My

24   name is Tom O'Donnell.   I am president of

 1   Theatrical Teamsters Local 817.   In addition

 2   to Local 817, I also present this testimony

 3   on behalf of the entire film community and

 4   labor community.

 5         Thank you for the opportunity to

 6   describe the unparalleled success of the

 7   Empire State Film Production Tax Credit and

 8   for your long-term support of this

 9   manufacturing industry, the manufacturing of

10   content.

11         In the 2020 legislative session the

12   union's top priority is ensuring the

13   continuity and stability of the tax credit.

14   We testify today in support of including a

15   five-year extension of the program in the

16   State Budget.   Additionally, we also testify

17   in support of revising the minimum spend

18   requirements in furtherance of the Governor's

19   objective to improve the efficiency and

20   sustainability of the state's program.

21         In 2017 alone, New York saw

22   $3.9 billion in local spending, a fivefold

23   increase from 2004.   Jobs have shot up

24   55 percent since 2004, compared to 24 percent

 1   nationally, and growing at a rate four and a

 2   half times faster than the overall state

 3   economy.    The credit supports 48,300 and

 4   $6.7 billion in economic activity across the

 5   state, in addition to countless non-qualified

 6   activities supported by the critical mass of

 7   local talent and infrastructure that the

 8   credit has enabled.

 9         The average annual wage for workers in

10   these credit-supported jobs is approximately

11   $90,000, and the state saw approximately

12   $780 million in fiscal revenues earned from

13   qualified productions in 2017.

14         This tax credit is first and foremost

15   a union program.   We fight to ensure high

16   wages, full benefits and robust protections

17   for the growing number of workers in the

18   industry.    Local 817 alone has seen an

19   increase of 250 percent in membership, with

20   an increase in wages and benefit

21   contributions from $70 million to

22   $380 million.    And the Teamsters are just a

23   sliver of this employment pie.

24         With increased demand for labor, we

 1   can now point to the many new pathways to

 2   opportunities provided regardless of race,

 3   gender, or educational attainment.

 4            The unions have invested millions of

 5   dollars, engaged in comprehensive outreach,

 6   and proposed legislation to continue

 7   diversifying the industry's talent pipeline

 8   in both above-the-line and below-the-line

 9   jobs, 44 percent of which do not require a

10   four-year college degree.

11            One out of every three jobs added to

12   our new sector is created in New York,

13   representing 18.3 percent of the national

14   share.    We're in a golden age of television

15   production, hosting a record number of

16   episodic series in 2017, with 91 series and

17   pilots were supported by this tax credit.

18            A long-term extension of the tax

19   credit incentive is critical for episodic

20   television, which relies heavily on the

21   budgeting predictability that a stable tax

22   credit program affords.

23            This is a global competition, and the

24   argument that New York will always have its

 1   fair share of film work due to its locations

 2   and creative appeal is a fallacy.     A

 3   production does not have to be physically

 4   present in New York to film a New York story.

 5            The currently proposed one-year

 6   extension, coupled with the reduction of the

 7   rebate percentage, will heighten concern and

 8   weaken confidence in the program.     New York

 9   needs to show its commitment to our industry

10   by extending the program an additional five

11   years.

12            That is not to say that proposed

13   reforms weaken the program.   In contrast,

14   they acknowledge New York's success and the

15   state's determination   to ensure a

16   well-calibrated program into the future.     One

17   of these proposals includes requiring a

18   minimum spend of $1 million on downstate

19   projects and a minimum spend of $250,000 on

20   upstate projects in order to access the

21   credit.    After careful consideration, we

22   unions collectively recommend that downstate

23   projects must instead spend $1.5 million for

24   eligibility and that upstate projects must

 1   spend $1 million.

 2         In addition to increased savings, the

 3   purpose of raising these minimums is to

 4   ensure that projects receiving the benefits

 5   of the tax incentives are paying fair wages

 6   and benefits.    In our collective experience,

 7   projects with budgets below these thresholds

 8   improperly treat crews as independent

 9   contractors.    It is inappropriate to allow

10   productions to avoid paying taxes and

11   benefits to collect a taxpayer-funded

12   subsidy.

13         In summation, New York is now a world

14   hub for film production, creating thousands

15   of high-paying union jobs.    It is the tax

16   credit that has made the difference, and our

17   trajectory is dependent on its extension.

18   Because of these reasons, myself and my

19   brothers and sisters in the labor movement

20   urge you to include a five-year extension of

21   the tax credit in the State Budget, and we

22   urge you to increase the proposed minimum

23   spend thresholds to facilitate projects into

24   the program.

 1            I thank you for your time, and I look

 2   forward to answering any questions.

 3            MR. BERTINI:   Good morning, Chairwoman

 4   Weinstein and members of the Senate Finance

 5   Committee and Assembly Ways and Means

 6   Committee.

 7            You have my report, so I will just

 8   read a brief summary.     I'll start by

 9   seconding everything that Tom has just told

10   you, absolutely.

11            I am Louis Bertini, the eastern region

12   vice president of the Motion Picture Editors

13   Guild.    I am also an editor and a working

14   member of my guild.     And I thank you for this

15   opportunity to provide testimony and urge the

16   extension of this program for five years.

17            We have experienced a boom in episodic

18   projects because of this incentive.       In 2019

19   we hosted over 100 television series, and we

20   provided postproduction workers and services

21   for most of them.    These projects require

22   multiyear budgeting and the stability of a

23   venue's tax credit plays a significant role

24   in the budget planning.    Without a five-year

 1   extension, producers will be hesitant to

 2   bring their work here.

 3         The incentive is a proven job creator.

 4   Over 10,800 people currently work in the

 5   field in postproduction and production, with

 6   an average income of $83,400.   The program

 7   creates opportunity for all New Yorkers

 8   regardless of race or gender or sexual

 9   orientation, and a diverse talent pool breaks

10   down barriers to opportunity.

11         To sum up, this program is an

12   overwhelming success.    These credits have

13   supported the creation of thousands of jobs

14   and billions of dollars of wages and economic

15   opportunity.   We respectfully request the

16   inclusion of a five-year extension of these

17   credits in the state's budget to ensure a

18   continuation of the growth and vibrancy of

19   this industry throughout the state.

20         I thank you for this opportunity and

21   look forward to any questions you might have.

22         CHAIRWOMAN WEINSTEIN:     Sure.   We go to

23   Senator Borrello.

24         SENATOR BORRELLO:    Thank you very

 1   much.   Thank you both for being here.

 2           You know, this is obviously a

 3   challenging budget year for us, and I'm sure

 4   you've heard that from a lot of folks.     You

 5   know, my concern really -- and I will say, in

 6   full disclosure, that we were very fortunate

 7   to have a major motion picture filmed in my

 8   district, in Chautauqua County, and for the

 9   first time ever.    So I understand that these

10   credits do help enhance that.

11           But 93 percent of the films are done

12   in New York City.    And New York City

13   eliminated their credit that they were

14   offering.   So they really don't have any skin

15   in the game anymore, yet they kind of gobble

16   up 93 percent of that credit.

17           You know, in an era right now where we

18   are looking at trying to close a $6 billion

19   budget gap, how do you justify hundreds of

20   millions of dollars for a city that had many,

21   many films and episodic television done

22   before because people want to film in

23   New York City?   That's the bottom line.   They

24   want to film in New York City.    So how do you

 1   justify that when the city itself doesn't

 2   even have any more skin in the game?

 3         MR. O'DONNELL:    Well, I think it's a

 4   two-part answer to that question.   First off,

 5   Buffalo is turning into a mini-production

 6   center.   I have a $30 million Universal show

 7   going there.    I was talking to one of the

 8   brothers, they want to do a whole episodic TV

 9   series there.

10         Production is -- there's a vibrant

11   independent film community in Syracuse.

12   Hudson Valley is exploding with work.

13         Now, to answer the question about

14   people want to be in New York.    Now, I've

15   worked in the industry, I've been

16   representing this industry for 30 years, and

17   I'm also the motion picture director for the

18   Theatrical and Trade division for the

19   International Brotherhood of Teamsters for

20   North America.   I'm intimately familiar with

21   the industry, with the history of film tax

22   credits, with its construction and its

23   impact.

24         Even though creatively people want to

 1   be in New York, they would not be in New York

 2   without that film tax credit.    The only state

 3   in this country that could sustain having no

 4   film tax credit is California.    And even

 5   California had a 40 percent reduction in

 6   production until they instituted a film tax

 7   credit.

 8           So that's my answer to why we need

 9   this.

10           SENATOR BORRELLO:   Well, and again, I

11   think -- you know, you mentioned Buffalo and

12   upstate New York areas, and I agree, that's

13   where an influx could be helpful.    I just

14   think, you know, it's not -- the playing

15   field is not level at this moment, with 93

16   percent going to New York City --

17           MR. O'DONNELL:   Well, you do know that

18   there's a 10 percent labor rate on for

19   upstate New York, which has helped -- you

20   know, which has helped communities like

21   Buffalo and Syracuse and Hudson Valley

22   blossom.

23           SENATOR BORRELLO:   Well, yeah, I just

24   think it's a tough budget year and it would

 1   be nice to see the city have some skin in the

 2   game again, since they get the major -- the

 3   lion's share of the benefit.   That's my major

 4   concern.

 5         MR. BERTINI:    Let me just add

 6   something interesting quickly to that, just

 7   to the overall picture.

 8         When I started out, a long, long time

 9   ago, most of the people in my area came from

10   the film schools at NYU and Columbia.       I am

11   from NYU.   What I'm seeing now is something

12   very different.   Many of the young people

13   coming in are all coming from the state

14   universities and Syracuse and Ithaca and

15   places like that.    My assistant, my own

16   assistant came from Ithaca.

17         The reason I think why this is

18   happening is because many of our senior

19   members, the senior members of the Editors

20   Guild, are now teaching programs in the State

21   University system, and they are helping their

22   students to enter the field.   So there is a

23   benefit in that way going to the younger

24   people, and I think that helps.

 1         SENATOR BORRELLO:     Thank you.

 2         CHAIRWOMAN KRUEGER:      Thank you.

 3         Assembly.

 4         CHAIRWOMAN WEINSTEIN:     Just one quick

 5   question, or really more.   As I read what you

 6   testified to, it would be important to have a

 7   longer extension, not just the one-year

 8   extension of the tax credit, and also to

 9   increase the minimum spend level of a

10   production in order to receive the credit.

11   That's correct, you'd like those two changes

12   to be made?

13         MR. O'DONNELL:   Yeah, they -- so much

14   of the work today is episodic television,

15   whether it's network or streaming.    And they

16   make the assumption that every show is almost

17   going to be a hit.   So when they're looking

18   to locate a production, they're looking three

19   to five years down the road.

20         So -- and I know that it's -- there's

21   -- the law says it's in place, but there's

22   concern about the future allocations and the

23   program's been so wildly successful.     And

24   that's why we're asking for a five-year

 1   extension.

 2         And we do believe that having the

 3   minimum spends, it both -- it also reduces

 4   the burn rate.   And a lot of these shows,

 5   like I said, you know, our experience is that

 6   they're paying them minimum wage or treating

 7   them as independent contractors, not paying

 8   benefits.    And back in 2002 when we were

 9   hemorrhaging feature films and television

10   shows to Canada and elsewhere, we still had a

11   vibrant, independent film community.    So I

12   don't feel that that would be necessary to

13   include that in anything less than a million.

14         CHAIRWOMAN WEINSTEIN:     Thank you very

15   much for your being here today.    Thank you.

16         MR. O'DONNELL:    You're welcome.

17         MR. BERTINI:    Thank you.   Thank you

18   very much.

19         CHAIRWOMAN KRUEGER:     Thank you.

20         Our next panel, Protect the

21   Adirondacks and Reinvent Albany.    Maybe we

22   can reinvent the Adirondacks and protect

23   Albany.

24         (Laughter.)

 1          CHAIRWOMAN KRUEGER:   Oh, you're right,

 2   you were not a panel.   Excuse me, Peter, it's

 3   just you.

 4          MR. BAUER:   Thank you, Senator.    Thank

 5   you.

 6          CHAIRWOMAN KRUEGER:   Thank you.

 7          MR. BAUER:   And the members of the

 8   Senate and Assembly.

 9          Protect the Adirondacks is here today

10   to talk about the Regional Economic

11   Development Council program in New York and

12   some of the shortfalls for how this program

13   works for small rural communities in the

14   Adirondacks and other places upstate.

15          The Regional Economic Development

16   Council approach to economic development is

17   not working for many places in the state.

18   While it's politically expedient and popular,

19   it fails to accomplish its two central goals,

20   to assist private businesses to expand or

21   start up, and to strategically support

22   communities to build social amenities that

23   will attract new population and will attract

24   investment.

 1         Year after year we see big dollar

 2   awards in the Regional Economic Development

 3   Council, but when you actually look at the

 4   money that actually makes it to small

 5   communities, less than 20 percent is actually

 6   funding real economic development activities.

 7         These are tough times in rural

 8   America.   The Adirondack Park occupies a

 9   landscape of a population with about 14

10   people per square mile.   That's a landscape

11   of rural America that occupies about

12   60 percent of the country but only has about

13   6 percent of the population.   It's pretty

14   extraordinary.

15         Across rural America, there are still

16   fewer jobs than there were before the Great

17   Recession, while the metropolitan and urban

18   areas not only gained -- regained all the

19   jobs lost during the Great Recession, but

20   they added 12 million more.

21         A recent study by the State

22   Comptroller said that of New York's job

23   gains, over 600,000 jobs gained since the

24   Great Recession are in New York City alone,

 1   and the rest, another 600,000 were in the

 2   city and suburbs of Long Island, Westchester,

 3   Rockland and Orange Counties.    The job growth

 4   is not making it upstate.

 5         For the Regional Economic Development

 6   Councils, the proof is really in the

 7   puddling.   In 2019 there was $67 million,

 8   67.9 million that was allocated to the

 9   North Country.   But when you strip away how

10   that money was actually spent, it tells a

11   different story.

12         Thirty-five million dollars was

13   awarded through the federal Industrial

14   Development Bonds program.     It's rarely

15   accessed in the North Country, it's rarely

16   accessed in the Adirondacks.    Another

17   $3 million was in Excelsior job credits --

18   again, rarely accessed in the North Country,

19   rarely accessed in the Adirondacks.

20   Fifty-six percent of the REDC award for 2019

21   isn't even applicable to the region.

22         Another $13 million went for a variety

23   of worthy projects, but they're culvert

24   replacement and upgrades, they're salt shed

 1   storage facilities.   They're stormwater

 2   projects.   They're municipal water and sewer

 3   projects.   Again, worthy programs, but I

 4   don't think you would actually call these

 5   economic development programs.

 6         When you actually strip away, only

 7   about 25 percent of the $67.9 million awarded

 8   in 2019 went to economic development programs

 9   for planning, for strategic planning for

10   local governments, for rural economic

11   development, helping to build local

12   institutions, amenities, parks, streetscapes,

13   viable businesses and so forth.

14         Rural America needs these programs.

15   The rural communities of the Adirondacks need

16   this type of investment.   Half of all

17   counties, over a thousand across the country,

18   are losing population in rural America.     The

19   Adirondack communities, the rural communities

20   of the Adirondacks, are in competition with a

21   thousand other counties across the country

22   who are looking to recruit businesses,

23   looking to recruit population, looking to

24   build dynamic communities.

 1            We badly need these investments, but

 2   unfortunately the REDC is falling short.         So

 3   I would urge the legislators to take a hard

 4   look at the accountability of this program,

 5   which is really a signature program of the

 6   Governor's, to really see how it's working

 7   well for upstate and where it's falling

 8   short.    Because in the Adirondacks, when you

 9   look at this program, it's falling short and

10   it's not meeting our community needs.

11            Thank you.

12            CHAIRWOMAN KRUEGER:     Thank you.

13            Any questions?

14            CHAIRWOMAN WEINSTEIN:     No.

15            CHAIRWOMAN KRUEGER:     We appreciate

16   your being here with us.

17            MR. BAUER:   Thank you.

18            CHAIRWOMAN KRUEGER:     Next year we want

19   to make sure you get into the Parks hearing

20   instead of the Economic Development hearing.

21   Thank you.

22            Okay.   Next up is our Reinvent Albany.

23   And then after Reinvent Albany will be our

24   last panel for this hearing.       So if those

 1   people are here and want to get themselves

 2   ready, this will be the final panel of this

 3   hearing.

 4         MR. SPEAKER:    Good afternoon, Chairs

 5   Krueger and Weinstein and members of the

 6   Legislature.   My name is Tom Speaker, and I'm

 7   a policy analyst for Reinvent Albany.

 8   Reinvent Albany advocates for open and

 9   accountable government.

10         Thank you for the opportunity to

11   testify today on economic development issues

12   related to the fiscal year 2020-2021 budget

13   and legislative session.   Today I'm going to

14   read a summary of the longer testimony that

15   was submitted.

16         We call on the Legislature to sharply

17   reduce business subsidies, collectively

18   costing New York State and local governments

19   $10 billion a year, and to follow the

20   commonsense step of proving subsidies are a

21   good investment.   New York States should not

22   be providing $4.5 billion in subsidies to

23   businesses while the state is running a $6

24   billion deficit.

 1         The consensus of independent experts

 2   across the political spectrum is that

 3   business subsidies do not work.   Over the

 4   last decade, a large body of evidence has

 5   been presented showing that subsidies are a

 6   poor use of taxpayer funds and are motivated

 7   more by politics than demonstrable results.

 8         For instance, in 2018 Tim Bartik at

 9   the W.E. Upjohn Institute collated 30 studies

10   that together show subsidies impact business

11   decisions, at best, 25 percent of the time

12   and, at worst, 2 percent of the time.

13         It will not be easy to cut wasteful

14   business subsidies, because nobody wants to

15   give up free government money.    But you need

16   to start somewhere, and we suggest by taking

17   the 10 following steps.

18         Number one, hold a hearing after the

19   budget on business subsidies inviting experts

20   from across the nation.   We name some of them

21   in this testimony.

22         Number two, eliminate the state and

23   local capital gains tax benefit for the

24   federal Opportunity Zones business subsidy.

 1   The Opportunity Zones program, established by

 2   the Trump administration, has been derided in

 3   both the New York Times and the Wall Street

 4   Journal for being poorly designed and

 5   ineffective at boosting lower-income

 6   communities.   Opportunity Zones have actually

 7   been shown to benefit favored developers and

 8   investors far more than any other group.

 9         New York State should reject this

10   giveaway, as four other states already have.

11   The Legislature can act by passing the

12   original version of Senator Mike Gianaris's

13   Bill S3401, which will restrict the subsidy

14   by not providing relief for the state capital

15   gains tax.

16         Number three, wean Hollywood from New

17   York State taxpayers by reducing the $420

18   million spent on the film tax credit by at

19   least 5 percent annually for the next decade,

20   then assess the results.

21         Reinvent Albany strongly supports

22   reducing the size of the film and TV tax

23   credit, as the evidence does not justify a

24   subsidy this large.   Thirteen states have

 1   eliminated their film tax credit altogether

 2   since 2009, since it has proven so costly and

 3   generated so little return for the

 4   investment.   A study by USC professor Michael

 5   Thom found the tax credit in New York State

 6   had no effect on employment whatsoever.

 7         Number four, end hundreds of millions

 8   of dollars in subsidies to the oil and gas

 9   industry before imposing new assessments on

10   those companies.   Reinvent Albany urges the

11   Governor and Legislature to cut subsidies to

12   the oil and gas extraction and distribution

13   industry.   The Governor proposes in his

14   Executive Budget enabling NYSERDA to levy an

15   assessment on gas and electric corporations.

16   It makes no sense for New York to both

17   subsidize and tax the oil and gas industry.

18         The Legislature should instead examine

19   curbing subsidies like airline fuel,

20   residential energy and the portion of fuel

21   costing more than $2 a gallon.

22         Number five, reduce the number of IDAs

23   and LDCs and make them more accountable,

24   including by passing legislation recommended

 1   in the State Senate Investigations and

 2   Governmental Operations Committee's report on

 3   this issue.   We highlight particular bills we

 4   support in our written testimony.

 5         Number six, increase the budget of the

 6   Authorities Budget office, a crucial subsidy

 7   watchdog, to at least $3 million and maybe

 8   even more than $4 million.   The Senate

 9   Investigations and Governmental Operations

10   Committee report issued in December called

11   for an increase in the budget for the ABO,

12   recognizing that the office's skeleton crew

13   of 11 employees can't possibly oversee 583

14   state and local authorities collectively

15   spending $51 billion a year and holding $282

16   billion in public debt.

17         Number seven, reform the IDA tourism

18   tax credit in New York State General

19   Municipal Law.

20         Number eight, reduce benefits and make

21   changes to the proposal extending the

22   Excelsior Tax Credit Program and enhancing it

23   for green projects.

24         And then numbers nine and ten, reject

 1   reauthorization of the Department of Economic

 2   Development's administration of the Empire

 3   State economic development funds and reject

 4   reauthorization of DED's general loan powers,

 5   as detailed in our submitted testimony on

 6   Parts EE and FF of the TED Article VII budget

 7   bill.    We will not support reauthorizing the

 8   funds without greater transparency of these

 9   economic development projects.

10            Thanks for the opportunity to testify

11   today.    I welcome any questions you might

12   have.

13            CHAIRWOMAN KRUEGER:     Okay.

14            CHAIRWOMAN WEINSTEIN:    Thank you.

15            CHAIRWOMAN KRUEGER:     Anyone else want

16   to ask --

17            CHAIRWOMAN WEINSTEIN:    No.    No.

18            CHAIRWOMAN KRUEGER:     We appreciate

19   your testimony today.    Thank you.

20            MR. SPEAKER:   Thank you.

21            CHAIRWOMAN KRUEGER:     All right.    And

22   our last panel, Center of Excellence, Center

23   for Advanced Technology, Norma Nowak, Ph.D.;

24   I believe a group or company called Athenex,

 1   James Clements; and Enhanced

 2   Pharmacodynamics, Stephen Keegan, former

 3   student.

 4            I don't know, you have to give your

 5   companies names I can say.

 6            DR. NOWAK:    Well, we call it EPD for

 7   short.

 8            (Laughter.)

 9            CHAIRWOMAN KRUEGER:      Welcome.

10            DR. NOWAK:    Thank you to the chairs of

11   the committee, Senator Krueger --

12            CHAIRWOMAN KRUEGER:      I'm sorry, we're

13   going to do 10 minutes for the three of you.

14   Okay?

15            DR. NOWAK:    Okay.   Thank you.

16            CHAIRWOMAN KRUEGER:      Three for each

17   and then -- okay?

18            DR. NOWAK:    Perfect.

19            CHAIRWOMAN KRUEGER:      Thank you.   Only

20   because we're three hours or two hours off

21   our --

22            (Laughter.)

23            DR. NOWAK:    Thank you to the chairs of

24   the committees, Senator Krueger,

 1   Assemblymember Weinstein, Assemblyman

 2   Schimminger, and Senator Kaplan, and members,

 3   for the opportunity to testify today.     And

 4   thank you for your support of the COEs and

 5   CATs.

 6           I am Dr. Norma Nowak, and I lead the

 7   University at Buffalo Center of Excellence in

 8   Bioinformatics and Life Sciences, as well as

 9   the UB Center for Advanced Technology in Big

10   Data and Health Sciences, and I am here on

11   behalf of my friends and colleagues at the

12   CATs and COEs across the state.

13           The CATs and COEs are among the

14   highest-performing economic development

15   programs in the state, and under the

16   Governor's current proposal, funding for the

17   program would be cut by 27 percent and all 29

18   CATs and COEs would have to be consolidated

19   and compete for a reduced pool of funds.

20           The COEs and CATs are both focused on

21   driving innovation across New York in a

22   multitude of industry sectors.    The COEs were

23   established to take advantage of regional

24   strengths and talent, and the CATs are

 1   designated for their ability to address

 2   specific emerging technologies identified as

 3   state priorities.

 4         The COEs provide an environment to

 5   foster and nurture collaboration between

 6   academia and industry.   In fact, several of

 7   the COEs were designated and received a

 8   capital investment in buildings, including

 9   Buffalo's.   The COE facilities provide

10   technology experts and staff, student talent,

11   and state-of-the-art infrastructure that are

12   critical to the success of companies such as

13   Athenex, who you will hear from shortly.

14         We have made significant progress in

15   New York to grow an innovation economy via

16   these important NYSTAR programs.     By

17   eliminating the COE program, New York will be

18   breaking a critical pipeline to industry

19   growth.

20         The CAT program cuts across many

21   technology sectors and was developed to

22   encourage greater collaboration between the

23   private sector and universities in the

24   development and application of new

 1   technologies.   New York's technology sector

 2   is growing at one of the highest rates in the

 3   nation and is one of only three states that

 4   has seen growth over 25 percent.

 5         For the past three years, the CATs

 6   have been responsible for 2300 jobs created

 7   and/or retained, and $1.5 billion in economic

 8   impact.    The COEs have created and/or

 9   retained 5700 jobs, with $1.1 billion in

10   economic impact.

11         I have with me two individuals who

12   reflect the success of UB's COE and CAT.

13         Dr. James Clements is the director of

14   project management for Athenex, a global

15   pharmaceutical company focused on improving

16   treatments for cancer that began 15 years ago

17   as a University at Buffalo startup.    And we

18   all understand, life sciences companies

19   require a much longer path to achieve

20   success.   Athenex underwent an IPO in 2017,

21   now employs 581 individuals -- with 172 in

22   Western New York -- reached a market

23   capitalization of $1 billion, and raised

24   another $100 million in 2019.

 1          Mr. Stephen Keegan is an employee with

 2   Enhanced Pharmacodynamics, also known as EPD,

 3   a University at Buffalo faculty-founded

 4   startup based in our Center of Excellence

 5   which applies computational model-informed

 6   drug development strategies for cancer

 7   therapy.    Stephen was awarded a funded

 8   internship through our Center of Excellence

 9   Career Experience Program, and as a result of

10   that internship he was hired full-time by

11   EPD.

12          Having lost my husband to cancer when

13   we were 38 years old, it has been very

14   rewarding to be part of the growth of two

15   companies focused on treating such a

16   devastating disease, which I assure you will

17   someday touch all of our lives.

18          Now I'm going to turn it over to my

19   partners.

20          CHAIRWOMAN KRUEGER:      All right.   Thank

21   you.   Hello.

22          DR. CLEMENTS:   Hello.    And thank you,

23   Dr. Nowak.

24          My name is James Clements.     I am the

 1   director of project management at Athenex.

 2   I'm very happy to be here, very humbled to be

 3   here today.     And I certainly appreciate

 4   everybody's time.

 5         I have actually been with Athenex

 6   almost since the start, for 12 years now.

 7   And I have witnessed firsthand how the Center

 8   of Excellence and the Centers for Advanced

 9   Technologies work hand in hand and how

10   they've been able to sustain our early

11   development in clinical programs and in many

12   ways have contributed to the establishment of

13   Buffalo, New York, as the North American

14   headquarters for Athenex.

15         As a small company with limited

16   resources when we started out, being

17   co-localized with a Center of Excellence

18   allowed us unique opportunities to extend our

19   R&D efforts and gain unique insights into

20   multiple aspects of our platform

21   technologies.    Proximity and access to the

22   Center of Excellence in Bioinformatics and

23   Life Sciences and the Center for Advanced

24   Technology played a big factor in our

 1   leadership's commitment to remain in Buffalo,

 2   New York, despite the perceived advantages of

 3   relocating to other biotech hubs, which we've

 4   touched on today.

 5         Our medicinal chemistry efforts, which

 6   are central, the core of our drug discovery

 7   efforts, are currently housed in the UB

 8   Center of Excellence, where our chemists have

 9   immediate access to state-of-the-art

10   equipment and, probably more importantly, the

11   innovative and creative staff and faculty

12   that make up the COE.

13         Based on previous, existing and

14   potential new collaborative relationships

15   with investigators at the Center of

16   Excellence, we are actively planning to

17   expand our activities in Buffalo.    And even

18   as I speak, we have a new collaboration set

19   to begin which is actually ideal for the CAT

20   funding program.    It's a highly innovative

21   project born from UB that can benefit

22   directly, we think, from our established drug

23   development and clinical trial experience.

24         A loss or reduction in the capacity of

 1   the Center of Excellence to function at its

 2   fullest potential is expected to really

 3   hobble our capacity to continue our R&D

 4   efforts which are so important to advancing

 5   our current pipeline candidates and expanding

 6   our programs into additional therapeutic

 7   areas.

 8            Our hope is that Buffalo will continue

 9   to attract startup companies that can take

10   advantage of facilities like the Center of

11   Excellence and programs made available

12   through the CAT program and, in return, like

13   Athenex, it is anticipated that a number of

14   these companies will establish their roots in

15   an environment that enables and fosters and

16   supports innovative technologies and

17   collaboration between academic and private

18   industry -- and also, importantly, provide

19   current and future access to a highly trained

20   workforce.

21            Both the Center of Excellence and the

22   programs supported by the CAT have proven

23   instrumental to the early success of

24   Athenex -- then we were Kinex -- and our

 1   continued ascension as a global

 2   pharmaceutical player dedicated to improving

 3   the lives of cancer patients and their

 4   families throughout the world.

 5         Thank you so much.

 6         CHAIRWOMAN KRUEGER:    Hi.

 7         MR. KEEGAN:   Hi.

 8         As an undergraduate at University of

 9   Buffalo I was studying chemical and

10   biological engineering, and I always had an

11   affinity towards data-driven science, in

12   particular the life science area.

13         I didn't know that I was able to

14   continue doing this type of premier research

15   in Buffalo.   I totally thought my career

16   would end up in Boston or San Francisco,

17   because that was the only two places that you

18   could do it at the time.   Or so I thought.

19         And then I took a course, which was a

20   computational elective that told us all about

21   the great resources that UB has to do --

22   through these premier life science companies.

23   And through there I got an internship with

24   the UB Career Experience Program.   It was a

 1   funded internship, and I was able to be paid

 2   to do work at Enhanced Pharmacodynamics.

 3         After I had an internship there, they

 4   offered me a full-time position, so I'm now a

 5   data scientist.   I work on validating novel

 6   and on-the-market drugs.    I do all types of

 7   data mining processes in terms of collecting

 8   data for some of our own in-house models.

 9         And in conclusion of being -- staying

10   in Buffalo, I was able to leverage my

11   relationships with my department, and I am a

12   master's student at UB.    So I thought as soon

13   as I graduated I was going to have to ship

14   off somewhere, and now I get to stay within

15   two hours from home and go home and ski with

16   my parents on the weekends, and I just get

17   to -- it's really nice to stay in Buffalo and

18   not have to go to either side of the coast

19   and work there.

20         So having this kind of program is

21   allowing me to do premier research while

22   maintaining a relationship with people that I

23   spent four years as an undergrad and now as a

24   graduate student, so I can really harness

 1   these relationships that I have with these

 2   professors, continue to do top-notch

 3   research, and really perform at a high level

 4   in terms of the computational data-driven

 5   sciences that I enjoy doing.      And I really

 6   hope to keep doing it, so it's a lot of fun.

 7          CHAIRWOMAN WEINSTEIN:      Assemblyman Ra.

 8          ASSEMBLYMAN RA:   I'm going to ask you

 9   a question that might be somewhat rhetorical,

10   but maybe you have some information on it.

11          There's tons of economic development

12   programs we're aware of that New York State

13   has.   We've heard about many of them today.

14   Your programs seem to be far and away

15   delivering results, in particular in parts of

16   the state where we're struggling for economic

17   development.   Why are you a target for being

18   potentially cut and not having those

19   resources to invest in these types of

20   technologies and industries?

21          ASSEMBLYMAN SCHIMMINGER:     Ed, let me

22   just answer that question.

23          (Laughter.)

24          DR. NOWAK:    Thank you.

 1         CHAIRWOMAN WEINSTEIN:     Okay,

 2   Assemblyman.


 4   program, the Centers of Excellence program,

 5   the Centers of Excellence program and the CAT

 6   program have been around a long time, and

 7   their handicap is that their origins predate

 8   this administration.

 9         (Laughter.)

10         CHAIRWOMAN KRUEGER:     I'm going to go

11   for the Senate.

12         So actually, according to their

13   testimony, you are not correct.

14         ASSEMBLYMAN SCHIMMINGER:    Pardon?

15         CHAIRWOMAN KRUEGER:     You are not

16   correct.   The Governor, this Governor, signed

17   legislation written by Donna Lupardo in --

18   oh, no, that was updating, in 2011.

19         ASSEMBLYMAN SCHIMMINGER:    Yeah, that

20   was merely a codification of the program.

21         CHAIRWOMAN KRUEGER:     Sorry.    Sorry,

22   sorry, sorry.

23         DR. NOWAK:     They were created in the

24   early 2000s.    And we were one of the first

 1   centers.

 2         CHAIRWOMAN KRUEGER:     Thank you.

 3         I was going to ask you a similar

 4   question to my Assembly colleagues.    So what

 5   kind of trouble have you gotten into?

 6         DR. NOWAK:   Pardon?

 7         CHAIRWOMAN KRUEGER:     Well, I mean many

 8   economic development deals and projects have.

 9   And you cite an Office of the Comptroller

10   study that I gather is saying good things

11   about your outcomes, when earlier today I was

12   reading Comptroller studies showing bad

13   things on other programs.

14         So as far as you know, you've gotten

15   yourselves into big legal problems?

16         DR. NOWAK:   No.

17         CHAIRWOMAN KRUEGER:     No.   Just doing

18   your work.

19         ASSEMBLYMAN SCHIMMINGER:      Your return

20   on investment is awesome.    The investment of

21   state dollars is relatively small.     And

22   unfortunately, for the past several years the

23   funding has been proposed to be cut in the

24   Executive Budget but restored in the finally

 1   adopted budget.

 2         It's a program which really does a lot

 3   with less.   And if it ain't broke --

 4         DR. NOWAK:    It does a lot with less,

 5   Assemblyman Schimminger.   But what it also

 6   does is we work not only within the

 7   university, but we reach out into the

 8   community.   We have K-12 programs, I go to

 9   BOCES and we work with BOCES programs.   We

10   are really trying to not only just have a

11   reach, which starts -- because if you don't

12   reach the minds when they're in middle

13   school, it's going to be too late.

14         And you have to turn them on to the

15   science.   And we go in and show them, here

16   are the cool things you can do.   And I tell

17   them, I started a company.   Someday, that

18   could be you.   You don't have to go and work

19   for someone, you can be the someone.

20         And you make these kids believe that

21   they have a great path in front of them, and

22   you show them the way down the path.

23         And when Stephen, you know, was at UB,

24   we got him an internship through this Career

 1   Experience Program.   He earned it.   And he

 2   now has a full-time job.    And he gets to stay

 3   in New York, his family is in Syracuse.    What

 4   parent doesn't like to hear a story like

 5   that?

 6           ASSEMBLYMAN SCHIMMINGER:   The Centers

 7   of Excellence that strike me are the classic

 8   original anchors for the development of

 9   clusters.   Case in point, the Buffalo Niagara

10   Medical Campus.

11           DR. NOWAK:   The whole -- so this was

12   UB's first footprint in downtown Buffalo.      So

13   that was in the early 2000s.    The building

14   opened in 2006.   And if you think about it,

15   the Buffalo Center of Excellence really was a

16   catalyst for the transformation of downtown

17   Buffalo and the growth of that medical

18   campus.

19           CHAIRWOMAN KRUEGER:    I want to thank

20   you all for being here.    I think you have

21   lifted our spirits with a positive story at

22   the end of the Economic Development hearing

23   for this year.

24           DR. NOWAK:   Well, we really appreciate

 1   your support.   And it was -- I'm -- you know,

 2   we were -- I think if you want to say save

 3   the best for last.    But being able to sit

 4   here and listen has been -- it's been a

 5   really good day.   Thank you.

 6           CHAIRWOMAN KRUEGER:     Thank you.

 7           DR. CLEMENTS:   Thank you.

 8           MR. KEEGAN:   Thank you.

 9           CHAIRWOMAN KRUEGER:     I believe this

10   ends the Economic Development hearing this

11   year.

12           And we are now moving to our last

13   hearing for the budget this year, and I am

14   handing over the keys to the car to my

15   colleague -- no, I'm not leaving, but the

16   next hearing is the Assembly's hearing.      So

17   as the Office of Tax walks in and takes their

18   seats, I'm handing the keys to the car over

19   to Assemblywoman Weinstein.

20           (Whereupon, the budget hearing

21   concluded at 3:10 p.m.)