Department of Economic Development

The enacted budget makes the following changes to the proposed Executive Budget:

• Denies the proposed merger of Department of Economic Development and Empire State Development Corporation into a new Job Development Corporation. 
• The enacted budget increased the All Funds appropriation by $21.95 million to the Executive Budget, reflecting the rejection of the merger.  The All Funds appropriation was reduced by $11.75 million, or (-30%) from the SFY 2009-10 enacted budget All Funds appropriation.
• The Personal Service appropriation is decreased by $2.39 million, or (-15.6)% from the SFY 2009-10 enacted budget, including $752,000 in the Administration Program and $823,000 in the Economic Development Program.
• The Contractual Service appropriation is decreased by $8.03 million, or (-45.9%) from the SFY 2009-10 enacted budget, including $1.7 million in the Economic Development Program and $4.2 million in consultant services for tourism marketing.
• Creates the Excelsior Jobs Program which will replace the expiring Empire Zones Program.  This $250 million, statewide program will create and retain jobs by offering tax credits to businesses that meet particular job creation and/or investment criteria.  Businesses entering this program will be held to a high standard, and must create jobs and/or make investments before they receive State funds.  A portion of the funds (25 percent or $62.5 million) is dedicated to capital investment projects that will lead to retention of jobs that might otherwise be eliminated or shifted out of the state. The program is intended to encourage the expansion in and relocation to New York of business in growth industries such as clean-tech, broadband, information systems, renewable energy and biotechnology.
• Extends the general loan powers of the New York State Urban Development Corporation through July 2011.

The Senate recommends (analysis as of March 23, 2010):

• Rejects the Executive’s proposal to eliminate two economic development agencies (UDC & DED) and move the associated statutory programs and funding into the JDA.

• Senate proposes streamlining and improving the delivery of economic development services by restructuring programs and function within the existing entity’s and eliminating or spinning off functions not critical to the entity’s core mission.

• Modifies Executive’s proposed funding for the International Trade Program by a $1.5 million reduction.

• Rejects $2.2 million for contractual services pending from revenue earned from licensing the State’s iconic I LOVE NY brand.  The Senate proposes using these funds to restore funding to tourism programs.

The Executive Budget recommends (analysis as of January 20, 2010):

Proposes merging the Department of Economic Development and Empire State Development Corporation and create the Job Development Corporation. The merger would streamline service delivery, achieve performance improvements, create organizational efficiencies, and provide cost savings through the elimination of duplicative functions. (2010-11 Savings: $4.7 million; 2011-12 Savings: $4.7 million)

·         The Job Development Corporation will have a workforce of 406 FTEs in 2010-11.  This staffing level reflects the transfer of 168 staff from DED and 238 staff from ESDC.  The workforce impact summary report indicates that there are 178 FTEs, 10 FTEs are vacant.

·         Because the proposed Job Development Corporation is a public benefit corporation, most appropriations would be off budget and are not identified in the budget, i.e., the reduction in Personal Services of $15.3 million is not an accurate reflection of the true change in appropriation, but that information is no longer available.  Similarly, the attached spreadsheet shows the enacted and proposed appropriations, listing the appropriations as they occur in the new agency budget.  Restructuring of programs does not lend itself to consistent comparisons between the SFY 2009-10 enacted appropriation and the proposed 2010-11 appropriation.

·         The DED employed an estimated 81 employees under consultant contracts in SFY 2009-10 at an approximate cost of $18.6 million and anticipates that the consultant employee figure will drop to 44 for SFY 2010-11, the cost will remain the same.  These employment numbers are not calculated on an FTE basis, so it is difficult to draw conclusions about the costs.

Proposes the following Article VII legislation:

·         Part L – Consolidate the State’s Economic Development Agencies. 

This bill would eliminate the Department of Economic Development and the New York State Urban Development Corporation, and transfer certain functions to the New York State Job Development Corporation. All current DED employees and most new NYJDC employees will have civil service and collective bargaining rights and benefits. This includes the right to transfer under civil service law and layoff protections including agency reduction transfer list, preferred list and reemployment list rights. These rights would not apply for those job titles which are identified pursuant to a personnel plan filed by the NYJDC President and approved by the Commissioner of Civil Service. Enactment of this bill is necessary to implement the 2010-11 Executive Budget. This restructuring would save $4.7 million in State taxpayer dollars.

• Part P - Make permanent the general loan powers of the New York State Urban Development Corporation.