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Audit: New York’s Economic Development Programs Need More Oversight

Posted on Oct. 20, 2021

New York state's economic development agency should examine whether the programs it administers are accomplishing their objectives of growing the economy and creating jobs, according to a recent audit by the state comptroller.

In an October 18 audit report, State Comptroller Thomas P. DiNapoli determined that Empire State Development (ESD) is responsible for administering 57 economic development programs with over 5,000 projects. The agency plays "an important role in helping New York’s economy grow and create jobs, especially now as we work to recover from the COVID-19 pandemic,” DiNapoli said in an October 18 release.

DiNapoli noted in the release that the agency provides approximately $1.8 billion a year in financial aid to projects and companies in the form of tax credits, grants, and loans. He also noted that state law compels the agency to evaluate some of the programs it administers but said that the failure to evaluate all the programs creates "uncertainty about program effectiveness."

The audit report noted that ESD has completed evaluation reports on the effect of the film industry on the state economy. The agency found that the state's film industry tax credits yielded $1 billion in additional revenue through increased spending by the industry in the state. 

The report recommended that ESD conduct periodic evaluations of its economic assistance programs to verify that they meet their stated goals. The ESD, however, disagreed with the audit finding that, with a few exceptions, it has not conducted evaluations of its economic assistance programs. It argued that the state comptroller focused on a small number of evaluations that are mandated by law, and that it "regularly engages in both project-level and program performance evaluations and routinely reports the results to the public."

The audit report also recommended that ESD identify additional programs that could be moved to a central project tracking softwareMicrosoft Dynamics, which was implemented by ESD to allow for increased information sharing and simplified reporting.

DiNapoli’s office and the ESD did not respond to a request for comment by press time. 

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