Outrages & Insights

Missing in action

There's been a lot of talk about business the State Legislature didn't take care of this session: IDA reform, stricter laws for teen drivers, property tax relief.

Let me add this to the list.

A lot of people in the know, including many local economic development officials, have been saying for a couple of years that there's a need to modify the criteria used to determine how the New York Power Authority allocates low-cost electricity to local industry. I did an investigative project 14 months ago that documented how the power is being squandered, and followed up with a piece in September that outlined how it could be put to better use.

The criteria is established by the Legislature, and thus far, no one has submitted a bill, much less gotten it acted on.

Several weeks ago I detailed how the Power Authority is selling low-cost hydropower earmarked for local industry and making a big buck off it. Very little of the money comes back to Western New York. There's hardly a peep out of our local delegation, much less legislative action to change things.

A couple of years back, a commission put together by then Gov. George Pataki and legislative leaders made a series of sweeping recommendations on how to make better use of nine power programs administered by NYPA to promote economic development across the state. The Legislature -- you guessed it -- has done nothing with the report.

Albany's inaction on economic develop reform extends to the state's two other major programs.

IDA reform again stalled this session. Reform of the Empire Zone program hasn't gotten past the talk stage, despite a series of investigations over the past five years by The News and Syracuse Post-Standard.

These subsidy programs involve hundreds of millions of dollars a year in Western New York alone. Alone, they're not going to revive the upstate economy. But used well, they could help.

Which begs the question -- where is our local delegation on all this?

Aside from Sam Hoyt pushing for IDA reform, they have shown no initiative. A year ago, the excuse, for hydro, anyway, was that the Legislature was waiting on Gov. Eliot Spitzer to present a comprehensive bill. Two sessions and another governor later, they're still waiting.

Western New York is in the eye of the subsidy storm. We've got six IDAs in Erie County alone, more than any county in the state. Buffalo, in terms of geography, has more acres of Empire Zones than any city in the state. And the region's share of discounted hydropower may represent the richest subsidy program in the entire state.

Isn't this reason enough for our delegation to show some initiative? In fact, given that these programs are rooted in state law, isn't it their job?

   

   

Back by popular demand

I've been blogging more than 2 1/2 months and still figuring out what people want to read. I wrote a post Sunday about off-shore drilling not expecting it would make the best-seller's list. But it generated more traffic and reader comments than almost anything I've written. Go figure.

So, I offer up another off-shore drilling ditty, this one courtesy of the New York Times. It's a smart read on the politics behind the issue, and the issue itself.

"Republicans want to end the 27-year ban on offshore drilling along much of the nation’s coastline, while Democrats want to force companies to speed up exploration in certain offshore areas that they already control ...

"But oil experts say that neither approach will give drivers any relief in the short run from prices that stood Wednesday at nearly $4.07 a gallon, on average. They say the simple reality is that no one knows how much oil is to be found offshore, how difficult producing it would turn out to be or how many years that might take.

"And oil companies, amid a global drilling frenzy, are stretched so thin they will be hard-pressed to take on big new projects anytime soon. More than 400 major drilling and production projects are competing for engineers, rigs, seismic equipment and steel to build platforms, and the costs of doing the work have skyrocketed."

Meanwhile, if you're hellbent on finding gas for the cheapest price, try this site. Among the thing you'll find out is we're paying, on average, $4.25 per gallon, vs. $4.07 nationwide. Our prices range from $3.91 on the Seneca reservation to $4.39 at a Mobile in Blasdell. Me, I'm sticking with the gas station a couple of blocks from my house. No matter what, we're going to get abused at the pump; no purpose in going out of the way to pony up.

IDA reform dead for now

The IDA reform bill did not pass the State Legislature this session. Whether the issue is dead for good depends on who you talk to.

Much of the recent press coverage focused on provisions of the bill that would have required the payment of prevailing wages on IDA projects. There was a lot more to the bill. The consolidation of the six IDAs in Erie County into one. The imposition of penalties on companies that fail to meet their job-creation commitments. More transparency in the granting of IDA benefits.

Assemblyman Sam Hoyt, prime sponsor of the bill, says there was room for compromise.

"There wasn't a single part of my bill that wasn't open for negotiation," he said Wednesday.

The Assembly passed a reform bill several months ago. A companion bill wasn't introduced in the Senate until a few days ago. Serious talks involving the governor's office and Senate and Assembly leaders didn't ensue, Hoyt said.

"There were discussions. but there were no three-way negotiations," Hoyt said.

Carrie Brunk of Jobs With Justice, an advocate of IDA reform, said there were indications as late as Monday that a deal was in the works. But the surprise announcement by Joe Bruno that he was stepping down as majority leader of the Senate ended that, as the scramble over who would succeed him took precedent.

Hoyt holds out hope that a deal can be reached in the future, but Jim Allen, executive director of the Amherst IDA, doesn't sound interested.

"I can't see any basis of a compromise," he said.

He listed what he considered several deal killers, including prevailing wages on construction and living wages for workers employed by companies based in IDA-financed.

"The stuff the unions want, we can't live with," he said.

The proposed consolidation also raised Allen's ire.

"We don't want to consolidate, and if we do, we'll let you know," he said.

"Let's move on, let's collaborate, let's cooperate," Allen added.

Beats me what happens from here. But for the foreseeable future, the stalemate leaves non-profits unable to use IDA benefits for their projects. Some $2.5 billion of work hangs in the balance.

Brunk, of Jobs With Justice, said reform advocates will stay the course. (This post includes links to newspaper coverage on the issue from around the state.)

"We'll continue the fight and expect a resolution," she said.

The last refuge of a scoundrel is a tax break

Some 9,400 American corporations operate foreign subsidiaries. They don't pay U.S. taxes on their earnings overseas so long as they keep the money stashed overseas. There's a whole lot of stashing going on. Topped $800 billion by the middle of this decade.

If and when corporations bring their profits stateside, they usually pay the normal corporate tax rate of 35 percent. But Congress in 2004 passed a one-time tax break: corporations that brought their money to the U.S. during 2004-06 would pay a rate of only 5.25 percent.

Some 843 corporations took Uncle Sam up on its offer -- and saved $265 billion.

This at a time when the country was at war and dealing with record budget deficits. But bet your bottom dollar all those CEOs are wearing their flag pins on their lapels.

Read all about it in The New York Times. Comment below.

Insights into Kaleida-ECMC deal

I struck up a lunchroom conversation Tuesday with Henry Davis, our medical reporter, on the deal struck between Kaleida Health and Erie County Medical Center. I had two questions: what broke the stalemate, and is it a good deal or just an expedient one?

Henry's take:

A core of veteran doctors working for Kaleida or ECMC -- or both -- were the catalysts. About 10 of them, respected veterans, persuaded State Supreme Court Judge John Curran to insert them into the lawsuit ECMC and Erie County government had filed against the state Health Department.

"The doctors used their influence to move both sides from their hardened positions," Henry said.

Would there have been a settlement without their involvement?

"Very unlikely," he said.

A good deal?

"I would call it a potentially good deal," he said, "but it also raises questions about whether the original purpose of the Berger Commission was satisfied." And that purpose was to reduce the number of hospitals and hospital beds in the Western New York market."

So, hurrah for the docs, and let's keep an eye on the details as they are sweated out in the months ahead.

George Carlin's power of words

A lot of people are mourning the death of Tim Russert. Me, I spent a hour last night watching YouTube clips of George Carlin, who spoke more truth to power than any beltway pundit.

I found one clip of particular relevance to my job as a journalist, a funny rant on how language has been "softened" to obfuscate its meaning. Carlin starts out by musing about how "toilet paper" has become "bathroom tissue," and takes off from there.

It's all around us. For example, there's a brief in The News this morning about a power "outage" at Waterfront School. Used to be called a power "failure. Still is, when I'm doing the writing.

Then there are the words of Byron Brown, who could not bring himself to say he demanded  Rich Tobe's resignation was because he was unhappy with his job performance. No, the mayor insisted, Tobe has done a "good job."

“It’s not anything that he did that was wrong. It’s that I want to see more things done,” Brown said.

Your tax dollars at work

The developers working to renovate the Dulski Building held a press conference Monday to draw attention to their project. Let me do my part.

The first seven floors of the 15-story office building on Delaware Avenue will be an Embassy Suites hotel, which will compete with the taxpayer-subsidized Hampton Inn on Delaware Avenue, which competes with the taxpayer-subsidized Comfort Suites a couple of blocks away on Main Street. They all compete with the Hyatt Regency Buffalo, which has been getting subsidies since Jimmy Griffin was mayor.

Floors eight through 12 will be offices, two floors of which will be occupied by the law firm of Damon & Morey, which will move from taxpayer-subsidized space on Main Street, presumably adding to a downtown office vacancy rate of 10 percent.

The top three floors will be condos, selling for $350,000 to $1 million.The project -- which developers on Monday renamed "Avant," French for forward -- costs $71.4 million. Taxpayers are footing a significant portion of the bill.

The state has pledged a $7 million grant. The developer has also submitted a $19.2 million package of property, sales and mortgage tax waivers to the Erie County Industrial Development Agency. There's also an application pending for Empire Zone benefits; the developers won't say how much it is worth. I wouldn't be surprised if the total package tops $40 million.

Redeveloping the Dulski Building is a good thing. It was a vacant hulk. The question is whether the nation's second-poorest city should use its economic development resources to help build million-dollar condos and a well-heeled law firm jump from one subsidized building to another. Another question: Do developers need subsidies of this order to make projects work?

What do you think?

Tobe is out

Long in the making, as I reported in this blog in April, Rich Tobe is out as the city's  commissioner of Economic Development, Permits and Inspection Services.

Mayor Byron W. Brown asked him for his resignation Friday. Initially part of the inner circle, Tobe has been on the outs for some time, and his fate seemed to  sealed when Brian Reilly was brought on board in February as the city's chief economic development officer.

The false promise of off-shore drilling

OK, OK, gasoline is expensive. I spent the weekend outside Pittsburgh and almost felt like I was getting a bargain paying $3.99 a gallon (there's a lower state gas tax south of the border).

The high prices have given Bush 43 a pretext to call for a major relaxation of restrictions put in place when Bush 41 was president on drilling off both the Pacific, Atlantic and Gulf coastlines. High gas prices have some of the public, as well as the politicians who pander to it, saying that perhaps it's time to start drilling where no man has gone before. After all, it will mean lower gas prices. Right?

Wrong.

But don't take my word for it. Let's hear from Dubya's own Department of Energy, in a report issued by its Energy Information Agency.

"Access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017."

So, that means no help for another nine years. Well, at least then, we'd have a lot more oil, right? Well, actually not. Domestic production would increase only 7 percent by 2030, the agency said.

Yeah, well, even that increase would have to help drive down gas prices, right? Not really.

"Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant."

Further examination shows that much of the rest of the argument for offshore drilling also doesn't hold up.

There's the claim it would help make America less dependent of foreign oil suppliers. No, we're beyond hope in this regard. The. U.S. has 2 to 3 percent of the world's known oil reserves, but we consume 25 percent of its oil. You do the math.

Then there's the claim that the tree huggers in Washington have cut energy companies off at the knees in their efforts to find more domestic supplies. The Center for American Progress notes in a nifty checklist of myth-busters that the number of drilling permits issued by the federal government jumped by 361 percent between 1999 and 2007. Moreover, energy companies are sitting on some some 4,000 undeveloped oil and natural leases in the Gulf of Mexico alone.

Critics believe the debate over offshore drilling diverts the attention away dealing with real solutions, which involve energy conservation and development of alternative energy supplies.

As the San Jose Mercury News said in an editorial over the weekend:

"We can't drill ourselves out of this mess."

Moreover, it would be a waste of money if we could, the Merc said:

"The billions of dollars it would cost to pull finite supplies of oil from the bottom of the sea instead should be invested in renewable energy sources."

A New York Times editorial last week last week was even more dismissive: 

"This is worse than a dumb idea. It is cruelly misleading. It will make only a modest difference, at best, to prices at the pump, and even then the benefits will be years away. It greatly exaggerates America’s leverage over world oil prices. It is based on dubious statistics. It diverts the public from the tough decisions that need to be made about conservation."

The outcome of this debate - keep looking for more oil or step up the effort to develop alternative energy resources - has particular import for Western New York, as parochial as that may sound.

We're well positioned to be a renewable energy center, particularly if the national government decides that alternative fuels are the way to go. We're already good to go with hydropower. We rank as the 4th windiest urban region the nation, which would make us a significant player in the wind-power industry. The major local chemical companies produce a lot of hydrogen, which could be the basis of a hydrogen industry if someone was to take the initiative. And the planned opening of the Globe Metals plant in Niagara Falls next year could make us a hub for the production of solar panels.

How others view us

Al Jazeera English, a worldwide news satellite network aimed at the West, has broadcast a story about Buffalo, part of its ongoing "Frontline USA" series. Our rank as the nation's second-poorest city brought al Jazeera here.

It's a pretty interesting piece. I found things things of particular note:

— Al Jazeera interviewed a number of people in the trenches, such as Aaron Bartley of PUSH and Alison Duwe of the Coalition of Economic Justice.

— Mayor Byron Brown is still spouting his discredited claims that the city is in the midst of an unprecedented $4.5 billion building boom.

The clip is 15 minutes. Watch and weigh in.