Global Foundries: An expensive lesson that will make your blood boil

Last week, CEJ held a press conference with coalition partners to present solutions to fix our region’s failing economic development programs as detailed in a new report, Generating Waste, by the Partnership for the Public Good (PPG). At the event, several speakers explained how WNY’s Industrial Development Agencies (IDAs) have wasted public money subsidizing corporations that have created low-wage jobs and hired out of state construction firms, which they said ought to make your blood boil.

One subsidy deal granted by the Empire State Development Corporation (ESDC) will most certainly make your blood boil – GlobalFoundries. Five years ago, ESDC gave GlobalFoundries $1.4 billion in public subsidies. The Albany Times Union, addressed this deal by saying it “was one of the biggest taxpayer handouts ever offered to a private enterprise in the United States and the state is taking a huge risk its bet will pay off.”

Under Governor George Pataki, ESDC gave GlobalFoundries $665 million in cash as part of the $1.4 billion subsidy package. The company has promised to create 1,465 jobs – that’s about $1 million per job.

To add insult to injury, “New Yorkers are paying roughly $25 million a year – or a total of $1.5 billion through 2040 – on the debt service for the bonds the Empire State Development Corp. issued to pay for the project,” The Albany Times Union reported.

So, what did GlobalFoundries spend our public dollars on? Well, the company spent $2,691 on t-shirts, $2,198 for Price Chopper gift cards, and paid $5,120 on flat panel televisions from Sam’s Club. GlobalFoundries also spent public money on luxury corporate apartments, catered meals for special events, and on lunch meetings.

Ken Adams, president and CEO of ESDC, says the State has learned its lessons from deals such as the GlobalFoundries one. They’re no longer fronting corporations cash, for one, Adams told the Albany Times Union.

Governor Andrew Cuomo’s Regional Economic Development Councils could be an opportunity to change the way New York State has done economic development, but only if public officials truly have learned from the mistakes of the past. We can ensure the Regional Councils don’t make the same costly mistakes as the GlobalFoundries debacle by getting them right in the first place and instituting performance standards, and accountability and transparency measures from the start, as proposed the Alliance for a Greater New York’s (ALIGN) report, Seizing the Moment: How Regional Economic Development Councils Can Build a Good Jobs Economy.