10:30 A.M., EDT
NEW YORK FOREIGN PRESS CENTER, 799 UNITED NATIONS PLAZA, 10TH FLOOR
MODERATOR: We’re really happy to have everybody today, and I’m very, very pleased to introduce Ken Adams, who is Governor Cuomo’s appointee for the Empire State Development Corporation, which is the leading business association for economic development for the State of New York. Ken has worked extensively in the New York area, including a number of high-profile positions for the Brooklyn Chamber of Commerce, MetroTech Business Improvement District, and downtown Brooklyn. We’re really, really pleased to have him today, and I’m glad this is informal so we can get a lot of your questions answered, and we can – hopefully, you guys will all be joining us following this with a site visit. So I’m --
MR. ADAMS: You’re going to Chinatown --
MODERATOR: That’s right.
MR. ADAMS: -- without me.
MODERATOR: You’re welcome to join.
MR. ADAMS: I probably should learn more about our programs.
MODERATOR: I’m going to let you take it away and talk a little bit about New York State and various economic development initiatives that are underway, and then we’ll take some questions if that works.
MR. ADAMS: Happy to do that, and thank you, and just – let’s do the introductions again, and that way also I can be – have a sense of who you are.
So I’m Ken Adams, and I work for Governor Andrew Cuomo. I’m the – I’d give you a card, but I’m the president and CEO of Empire State Development Corporation and also the commissioner of the Department of Economic Development, which is an easier thing to say.
So who are you?
QUESTION: I’m Raymond from Hong Kong.
MR. ADAMS: Okay. Great.
QUESTION: Yeah. (Inaudible.)
MR. ADAMS: Nice to meet you.
QUESTION: Nice to meet you.
MR. ADAMS: Thank you.
QUESTION: Kazukai Fujia with Nikkei, Japanese newspaper.
MR. ADAMS: Great. Yeah, yeah. Of course. Thank you.
QUESTION: (Inaudible) from paper (inaudible).
MR. ADAMS: Great.
QUESTION: Francesa Peiron from Barcelona newspaper.
MR. ADAMS: Yeah.
QUESTION: And Jose DeHaro from Spain, a financial newspaper.
MR. ADAMS: Great. Thank you.
The – so let me, I guess, do a couple of – some --
QUESTION: Hi. Karen. Nice to see you.
QUESTION: Oh, Austin.
MR. ADAMS: This is my colleague, Austin Shafran, who handles our press, and he’s only here briefly. How’d you park your car? It’s impossible. (Laughter.) It’s unbelievable.
MR. SHAFRAN: Very tentatively. I apologize for being late.
MR. ADAMS: You must have press credentials to park around here. And Austin just wanted to meet you all, and may need to leave or may just choose to leave because he’s heard me say this so many times. But also, I wanted you all to have a chance to meet Austin and – just because moving forward, if there are any issues that you want to follow up with us on with respect to New York State and business and economic issues in the state, you can always reach out to me or to Austin.
So the – this is – some of this, I have to say, is new. Austin and I are new. And obviously, our governor, Andrew Cuomo, for whom we work, took over in January and appointed me in late February, so – and I’ve been in this job, then, since, let’s say, March through where we are today.
And what I’d like to do is just lay out some general principles of our approach, the governor’s approach, to economic development in New York State, talk about a couple of our programs briefly but then really, it’s – you’re here, it’s your time, and I want to open it up to your questions. And if there are things that you want to work on, anything that I say, and we can follow up afterwards. Sometimes you have different interests and different questions, and there are some things, again because I’m new, that it might be easier just for me to go and get you the information. We’d be happy to follow up.
So in New York State, economic development for this state really depends on a balance between policies to improve the business climate of the state, and then specific projects, especially work that we’re doing in targeted industries around the state. And the way New York State government works, our legislature, which is 212 members of the legislature that go up to Albany, the state capital, every year for a two-year session, they’re in their legislative session January through June, the six – first six months of the year. And then the remainder of the year, they’re back in their district offices in their communities for the most part.
And in that first three months of the year, January through March, in New York State, everything is about the budget. And then from – and this is what would be the second quarter on a normal calendar – April, May, and June – that’s when legislation is passed. And that’s – we really care, from an economic development standpoint, about legislative reforms to improve the business climate. And again, the governor achieved several of those, which I’ll mention, in that second period. And then from July on, now we’re actually doing a lot of programs from the executive branch – a lot of the things enacted in the budget, a lot of things that we can do programmatically, we work on now at Empire State Development.
So in those – so those are three quick pieces to review. The most important thing about the state budget process this year was that – and you’ve probably all seen this – but New York State has a very big state budget as far as states go in this country. And I think, Austin, the budget this year was – ended up being $137 billion. But the – at the beginning of the year, there was a $10 billion deficit, a $10 billion gap, between projected state revenues and spending obligations. And the governor promised to eliminate the deficit, the state budget deficit, by reducing state spending and not raising taxes. And this was very important for New York because of our competitive position with other states. As the governor said, New York, next to California, has the highest taxes in the country. So for us to attract investment into the state, we have to improve our competitive position against our peer states, against the other large states – California, Texas, Florida, even Michigan, Illinois – you can make the argument Pennsylvania, Massachusetts. So – and the governor said very clearly, at the beginning of the year, New York has no future as the tax capital of the nation.
So again, just state tax policy is very important for economic development in the state. And the governor was able, in working with the legislature, to eliminate that $10 billion deficit without raising taxes or borrowing. And if you follow New York State government, this was – this may sound common sense to you, but in New York State kind of political and governmental history, that kind of discipline, that fiscal discipline, had been very difficult to achieve in the past between governors that fought with legislative bodies, diverse political interests.
So this was an important message. Really, it’s an economic development tool because it was a message of fiscal discipline and order and stability. Even though some of the cuts were difficult to make, it was very important to enact those reforms.
MR. SHAFRAN: And I’m sorry. If I may, just as a point of background information, Ken mentioned that it was not only balanced without taxes or borrowing, but it was on time. It was actually a little earlier than on time.
MR. ADAMS: That’s true.
MR. SHAFRAN: Fewer than five times over the past 30-some-odd years has the budget been on time or, in fact, early. This was a few hours to almost a day early. But just to give you some perspective, it’s easily fewer than five times. I believe it was twice in the last 10 to 12 years and twice more sometime in the early-to-mid ’80s or something like that. But it’s fewer than five times that it’s been done on time. And in any of those periods – excuse me, in none of those periods were they actually facing a deficit to make up for. The times they passed it on time was when the state was flooded with money.
MR. ADAMS: When it was easy, when there was money.
MR. SHAFRAN: And decisions were easy.
MR. ADAMS: Yeah.
MR. SHAFRAN: So again, that just speaks to the commissioner’s point about showing CEOs and businesses, whether they be from foreign nations or other states, that we’re competing with the kind of stability that they need to know it’s okay to invest in New York, that New York works, that we have a competent state government that’s going to instill confidence in investors like companies in other states, and in other nations, for that matter.
MR. ADAMS: Yeah, that’s right. That’s good. The – so the budget achievement – Austin said it all – was a very important message about fiscal discipline. And then you move to these legislative reforms that came following that, when the focus turns more to legislation. And there were three or four that were really critical that the governor was able to achieve. Again, he’s done a very good job working with kind of both Republicans and Democrats in the state legislature and bringing the legislature in as a partner. He doesn’t fight the legislative body as other governors in New York has. He works with them more as a partner.
And the first thing he achieved with them was establishing a property tax cap in New York State. New York State – I don’t know if any of you live outside of New York City. Actually, even in New York City, property taxes are high. But New York State has some of the highest property taxes in the country. And to give you a sense – let me back up and give you a little, I guess, a sense of scale. New York State – you probably know all this stuff, but just for the background – has 62 counties and over a thousand taxing jurisdictions, which is staggering and problematic, as you can – at the local level. And the – good morning.
QUESTION: I’m sorry.
MR. ADAMS: Hi. And there are about 18 million people in the state. And gross state product, the sort of annual output of the state economy, is a little over a trillion dollars, and in 2009 it was $1.14 trillion, making it – I think it’s probably the – within the top 15 economies. I mean, it’s a very – it’s – $1.14 trillion economy is sizeable, certainly top 20.
So in any event, it is a big, complicated state, and property taxes are levied at the local level – the town, the village, the local property taxing jurisdiction. And for a variety of reasons historically, property taxes were – at the local level were rising just through the roof to levels that were far – on the average, about 70, 75 percent higher than the national average. And in many cases, if you think about it, because nonprofits and hospitals and schools don’t pay property taxes here, the private sector, homeowner – individuals like homeowners, of course, pay most property taxes, but close to 15, 16 percent is paid by industrial and commercial property owners.
So those are companies, businesses all over New York State, that are paying a local levy that in 2009 was about $44 billion, which is – if you think about just taxes in this country, in New York State as a state, the largest tax people – that’s paid is the federal income tax, the income tax we all send to Washington. After that, $44 billion is the biggest levy in the state. That’s the total – again, 2009 data, but that’s the total property tax levy. And again, something like 16, 17 percent is paid – good morning – paid by employers.
So this issue played out politically as kind of a homeowner issue because you – in parts of the state, if you go to Rochester or Syracuse or upstate, the property taxes have risen and home values have dropped, especially now, so people have this terrible problem where if they want to sell their home, a deterrent is these high property taxes that are – and that’s obviously a drag on a lot of home sales and economic activity. In any event, the governor passed a law that capped the annual growth of property taxes all over the state at 2 percent or CPI, whichever is lower. Right now, CPI is running lower than 2 percent, but the point being this law didn’t lower people’s property taxes, but it controlled the annual rate of growth because it had been going at 5, 6, 7 percent annually in kind of this runaway local taxation, that the governor then put this cap in place to control.
So again, while this was widely reported in the media as something important to homeowners, to individual property owners, it was a very powerful message from an economic development standpoint to the business community because they were paying such a big share of the property tax burden and there was no predictability. The school tax, the town tax, things were kind of running away without any control. And to Austin’s earlier point, what the governor is trying to do here is get – basically come up with a framework where, for businesses in the state, there’s more predictability, the state government is stable, and control – the things that are happening are understandable, it’s rational, and it’s an environment that builds investor confidence, an environment that starts to make more sense, because honestly, there was a fair amount of chaos and tumult in the years prior to Governor Cuomo being elected.
So there were two or three other key reforms, and then I’ll – to finish this up – that are important to look at. There was the property tax cap. There was, in the energy world, two energy bills, pieces of legislation in the state that are very important. New York has very high electricity prices. On the other hand, we’re quite a green state because we use a lot of hydroelectric power and we generated a lot of electricity from natural gas, much of it coming from the Gulf of Mexico and a very long way away from here. But point being we are a state that’s part of the Regional Greenhouse Gas Initiative. New York City, for example, has some of – around the lowest carbon – per capita carbon footprint in the world, I mean, so there are a lot of environmental controls in place, which are important, but the result for much of the state is you use more expensive fuel. And our energy is heavily taxed so that electricity rates are the third or fourth highest in the country in many parts of the state.
So energy’s a huge issue in New York State for economic development. On the one hand, there’s a lot of opportunity in renewables and in new energy sectors. But on the other hand, we’ve got to do something to make energy prices, again, predictable and affordable. Business owners that I talk to say all the time, “I know New York is expensive, I know New York State is expensive, but – and I can adjust for that in some cases, but what I can’t adjust for is when things are unstable and unpredictable, and I can’t predict where energy prices are going to be. Or I can’t predict where property taxes will be on my building five or 10 years hence.” So again, having order and predictability is fundamental. And that’s what the governor, with these reforms, has been working on.
The two energy cases I was going to mention, one is a program called Recharge New York. This will come into place, come on line next May. And it’s a program that’ll take 910 megawatts of hydroelectric power that is generated in northern New York, along the St. Lawrence Seaway, in Lewiston, New York and up in – really, in partnership with Canada at the Robert Moses Power Project in Messena. But this hydroelectric power gets allocated to industry, to large industrial users who have big electric bills, right, who are big users of power. And by giving them this lower cost hydroelectric power on a fixed-price contract that can last up to seven years, they get discounted power for their industry at a predictable rate on a long-term contract from the New York Power Authority.
A second – and by the way, this was a program that existed in the past but it had failed to be reenacted by the legislature. Lots of gridlock, lots of fighting, lots of – and nothing was happening. And the governor said no – this was back in April, May – we’re going to fix this, we have to put this in place, we have to come to an agreement. And an agreement was reached and the law was enacted.
And likewise, the second energy policy that was important for the state is called Power New York, and this was a new law – again, enacted this past spring under the governor’s leadership – to create a regulatory path or a regulatory framework for the siting of new electrical power plants. And why does that matter? In New York, if you try to build a big power plant – when I say big, anything over 80 megawatts of electrical generation – local governments – if a local government is going to permit that, there is often so much opposition to – on environmental and other issues that you can go on years and years and years to get your license, to get your permits. And so the state has a – used to have, until 2003; it had expired, and now Governor Cuomo restored this – again, he calls it Power New York, but it’s a state law that says for power plants over 80 megawatts, the state can do a streamlined permitting process and, in effect, override local governments if they are blocking the construction of a major generating facility.
And this is very important for a variety of reasons, not the least of which is to have more reliable – to have cleaner energy, we need to be more – we need to do new plants. We can’t rely – we don’t, as a state, want to rely on imported electricity that’s coming from states that burn a lot of coal. New York burns very little coal now. As I say, our fuel mix is environmentally very well regarded, becoming even more and more green through things like the Renewable Portfolio Standard.
So these are just some examples. I guess, Austin, I’ll do one more. The governor also enacted ethics reform. Now again, this may seem like only in New York sort of situation, but we have had a history of – how shall I say this – dysfunctional government in our state capital, complete with problems of corruption, problems of – basically a loss of the public trust in state government, and scandals and corruptions and problems in our state government. And the governor is very clear that you have to have a government that works for people, that produces results for people, and that you have to have certain – that the government has to have transparency and accountability, and you have to rebuild the public trust. So he worked with the legislative leaders and they passed a law that works to do that. And in some ways, for example – this may sound like common sense to you all – but for example, the law requires now that members of the legislature have to report their outside income fully.
There are 212 members of the state legislature, and the state constitution permits them to have other jobs because it’s considered a part-time job. For many of them, it’s a not a part-time job, but the law allows them to be lawyers or sell real estate or work here or there. And before, the public didn’t know what company they might work for or what they were doing. And many worked with law firms and their clients did business with the state. It was murky. It was tricky. And so now, the governor’s new law says no, if you’re going to have another job, the public has a right to know what it is, how much you make, and who is paying you.
And the – another example in this law is that he created a new commission above the government to investigate allegations of corruption or wrongdoing, Before, the investigatory body was part of the legislature, so it was like asking the fox to watch the henhouse or something. It was too close to the government. It wasn’t really independent. So he created a new independent investigatory body to respond to that. And again, the end result here, coming back to an economic development issue, is working to – the governor, Governor Cuomo, working to create a government in Albany that everybody can trust, a government that is – the people can trust, run by people you can trust, with this disclosure, with accountability, with a legitimate investigatory body, so that we don’t have these problems, and at the end of the day, again, from a business standpoint, so that we can increase investor confidence in New York State.
So some energy – two energy reforms, the ethics reform. I started with the budget reform, which – the elimination of the deficit without raising taxes just by cutting wasteful spending. And even broadly speaking, the property tax cap, well, that was an act of state government to control local taxation in – right – in towns and villages and their runaway property taxes. But this was a series of reforms that many people thought the governor talked about during his campaign but he would never get them done.
You could – this perhaps is less of a consequence directly in terms of economic development, but he also passed the historic Marriage Equality Act in New York State, making New York State the largest big state now – and this is old news in Spain and old news in other countries, but now New York State, of course, recognizes gay marriage. And this, again, was another – politically, people said, “Well, he’s going to say it but he won’t be able to do it,” because there was resistance in the legislature. But it’s just another example of making a commitment to something and getting it done, and even in that case helping the economy in the sense that there’s no – we can compete for employees regardless of the relationship they’re in when we’re trying to bring workers to the state. We were becoming a state surrounded by other states that had marriage equality – had gay marriage in other states and not New York. It made no sense. So that was done as well.
But this was a consistent message this spring and through the summer of producing results for New Yorkers, completing promises that were made, some of them during the campaign last year, some of them more recently. But all in all, they send a powerful message to the business community that the government is working again and it’s getting things done, and the environment is consistent and predictable, and much, much more stable.
So I said it’s policies, and those are some of the policies I wanted to mention, but also economic development. Our job, day to day, is very much oriented to projects, so we work with companies all across the state. There are about 500,000 employers in the state, half a million companies in New York across those 62 counties. And we do – at our agency, we do three things. We do retention and expansion projects, where we – a company is here and wants to grow, and we, in certain conditions, can apply tax credits and other forms of assistance if they’re going to create new jobs. The governor’s commitment, above all else, especially in this difficult economy, is to take the steps, through the policies and through the projects, to create new jobs – as he always says every day, it’s jobs, jobs, jobs – create new jobs all across the state.
And on the project side, so we first work with those existing companies that are here on helping them expand, again using largely – a particular tax credit program we have called Excelsior. We also do work to attract new companies to come to New York State as part of the governor’s message that we’re providing a better environment, a more stable environment, and we want your investment. And to that end, we – when we have a company that’s looking at New York State as a location, we can also use certain tax incentives and other forms of assistance to help them come here.
And I just want to make – I’ll tell one story. We’ve worked on probably a hundred projects this year so far, and they’re in all sectors. Although we do a lot around manufacturing, we’ve done some interesting things in renewable energy, in biotech and life sciences, so there are a variety of sectors where it’s a lot of exciting things happening. But one story is interesting because it’s big and it’s sort of multinational. And some of you, I’m sure, maybe all of you, saw this. It was announced about a month ago at an event with President Clinton and Governor Cuomo up in Albany.
The project involves a consortium of semiconductor manufacturers led by IBM, Intel, Global Foundries – which used to be AMD – several others, so I think it’s five or six companies in total. And these semiconductor companies are competing to build the technology to develop the next round of microprocessing chips. Current manufacturing of these chips is done on a 300 millimeter wafer, and the next generation will be a 450 millimeter wafer. And these companies generally compete around the world for this, but increasingly they come together because it’s just – they find ways to do it economically, especially sharing the R&D component of the work.
And so these companies have committed to spend $4.4 billion in New York State over the next 10 years to ramp up – to do the research and then the production and the manufacturing of the next generation of micro-processing chips.
And what the state did as an incentive was rather unique. The governor didn’t do the typical here’s some money or here’s a tax break. The state is making an investment of $400 million, so a little less than a tenth of the company’s investment, into the University at Albany, into the state university system, State University of Albany, into specifically a center there called the Center for Nanoscale Science and Engineering. And by investing in the research capacity, that attracts the private sector companies who want to share in that research and work together with SUNY-Albany.
Now, there’s a back story to this. It didn’t happen overnight. The capital region – if you’ve been up to Albany, we’ve been – the state’s been investing for years in this particular aspect of SUNY-Albany, the State University of Albany. And so IBM and Intel and Globalfoundries are already there doing a lot of this work on earlier generation technology. And so they already have their, in a sense, critical mass. There’s already something happening there, and this is just building out at the next level.
But I use the example because it’s positioned New York State as a global leader in the semiconductor industry. And it was done this – last time we did this, a couple years ago – more, five or six years ago – the state made a very big cash investment to attract Globalfoundries to Malta, New York and to build a $6 billion facility that Globalfoundries – then it was AMD, now it’s Globalfoundries. And it was by putting cash on the table, big grants. And the Cuomo administration – Governor Cuomo has made it clear he would not have done the deal that way. The new deal is invest in the education, invest in research on the school campuses, and let that attract – that’s an asset we need to build, and have the higher education, the research, have that be what attracts the companies. So it’s a new way to structure the partnership, and it’s very exciting that, in this case, it’s worked.
So the last thing – that’s just an example of a project. Some of you have heard about this, and I know it was in the notes. The last thing I’ll mentioned is the governor’s new system of guiding economic development resources in the state, which are regional councils, the regional council system. And we’re just introducing this right now. We’ve been working on it all – since the summer. Past governors of New York have tried to do upstate, downstate, New York City, up – you remember some of these stories. It doesn’t work. It’s too big an economy, as I said. It’s too diverse an economy. You have agriculture upstate and tourism and nanoscale science and biotech and lots – you have a lot of different industries.
You have an aging manufacturing infrastructure. There are cities in upstate New York that have gone through, like many cities in North America, but especially in the Northeast, in the old sort of industrial part of the country, this very, very painful transition of losing the steel mills, losing the sort of the post-war manufacturing. Even going back, look at Kodak, look at companies that we’re once giants of industry that are either very different or certainly have largely changed their footprint in New York State. IBM may be headquarters in New York State, but last I checked, probably 60 percent of its sales is around the world, outside of the state, right. Same is true of – when you think Rochester is the home to Kodak, Bausch & Lomb – was Xerox, though Xerox was really in Connecticut, but Xerox was founded by someone who walked out of Kodak one day and started his own company. You have a host of these – what I call – iconic New York State companies that are really – to survive obviously, they’re global companies, and they may still be headquartered here, but they don’t have manufacturing facilities for the mass production of low-cost consumer goods, not in New York State. That’s not going to happen. So we’ve got these empty factories and really economically devastated formerly manufacturing communities in upstate New York that pose a lot of challenges.
In any event, that means that all across the state, there’s very different regional economies and regional differences. So the governor has asked us to take our – we have ten regional offices, and we map the state into ten distinct regions, as does the State Department of Labor. So instead of one plan for New York, which is folly and would never work, or an upstate/downstate plan, which also makes no sense, we’re working on ten regional plans for ten economic regions of the state. Each plan is being developed by a group of volunteer, 20 to 30 people, all pulled from business and higher education and labor and community organizations. So there’s one for Long Island, there’s one for western New York, for the Finger Lakes, for the North Country. And each region is supposed to create their own – chart their own economic future and be honest about their economic history, their economic assets, their economic goals, and in preparing these plans, compete for $200 million that we have ESD for this kind of planned competition, which will be announced by the end of the year, and then ultimately to have access to another $800 million of economic development resources from nine agencies of state government.
So the – each council has to do three things: plans, projects, and policies, right at the local level. Governor’s idea here is the priorities have to be set at the local level; the plans will come from the local level, through these regional councils. The projects that matter the most, because we don’t have enough money; we can’t do it all – so the priority projects, they will be ranked, this one, this one, this one, this one, for each region. So Austin and I and our colleagues – we are the government bureaucrats; we don’t decide. The region decides the priority in terms of the projects. And finally, each region will identify policy solutions to make its regional economy more competitive.
And again, I could tell you, for example, in the Finger Lakes we have nine counties. Remember, I said it’s 62 counties, right, so every – some of our regions are small – or Long Island has a lot going on, but it’s two counties. But the Finger Lakes, out of Rochester, our Finger Lakes region has nine counties. Out of Buffalo, western New York, there’s five counties, so they’re big upstate. North Country is very big. But you can imagine the Finger Lakes group has both these questions about industrial – the industrial future or the high-tech future of a place like Rochester along with agriculture. And all of the companies that are coming to New York now to do Greek style Chobani Yogurt and things like that – we got all these yogurt so – because we have a lot of cow, a lot of agriculture. So the New York City plan – no cows, no agriculture. That’s the beauty of it. Every plan will be different. They are being turned in in two weeks. November 14th the plans are due. And then from those plans we’ll be able to allocate state resources in a way that’s efficient and driven by these local priorities.
So that’s the last thing I’d think I’d say, just in terms of the governor’s approach. The broad policies I mentioned earlier are to improve the business climate of the state to make it more welcome to new investment and to recognize that we have to compete against other states, we have to compete in a global economy, and to do that we need a more supportive, receptive business climate, including, as I say, budget and fiscal and tax policy, right. And then you’ve got the projects that we do at Empire State Development, with the careful allocation of our resources, more and more in line with these regional council plans, which, as I say, in the next couple weeks, the plans get turned in, and then people apply for the funding, and we’ll start to make sure all the work that we do will be guided at the local level by those plans.
So that’s, I hope, a helpful overview. It’s a big economy with lots of interesting challenges, a great economic history, and one that’s going through, like many other states in this country, a difficult transition as a post-industrial economy into an economy where new industries have to emerge, and which, by the way, introduces a host of issues: education, work force, the environment, energy, as I say. But it’s – Austin and I have a lot of fun. We love our jobs. It’s exciting. We’re working for a governor who is very focused, very driven, on a mission here, and making a lot of very positive changes for the state.
So, questions? Yes.
MODERATOR: State your name and your –
MR. ADAMS: You’ve got to go?
MR. SHAFRAN: With that, I apologize, I’ve got to leave early.
MR. ADAMS: You’ve heard this before.
MR. SHAFRAN: This much I’ve heard.
MR. ADAMS: Did I do okay?
MR. SHAFRAN: Full faith and credit (inaudible) --
MR. ADAMS: He worries I might say something crazy.
MR. SHAFRAN: (Inaudible) all the questions. I’m actually going to leave a little small stack of my business cards. If anyone needs anything, if they’d like to be added to our press list, for anyone who hasn’t –
MR. ADAMS: That’s a good – yeah. That’s a good idea.
MR. SHAFRAN: (Inaudible) any of our cards, we’d be happy to add you guys to the –
MR. ADAMS: And if you want to get the governor’s – you may get the governor’s press releases, but --
MR. SHAFRAN: -- the governor’s stuff, whatever it is, just use me as a resource. If there’s any projects or anything you have specific – or policy matters where –
MR. ADAMS: You’ve got – we made new cards?
MR. SHAFRAN: We finally did, because people didn’t believe that I worked –
MR. ADAMS: State service now. Not a lot – you know that budget deficit.
So for people who arrived late, I’m Ken Adams. So I’m the commissioner of economic development for New York State. That’s Austin Shafran, our vice president of public affairs, with the cards. And as I said earlier, if any of you want more information about the state or – we would like to be a resource for you, I guess, is the point. We would like to help you if you need to talk to businesses or anybody or anything we can do to help, Austin and I would be pleased to do that. So there you go.
MR. ADAMS: Yeah.
QUESTION: Jose DeHaro from El Economista. I just want to know the role that international companies, not U.S. companies, play in all these projects, if you also give benefits to them to attract them to have their operations here in New York State.
MR. ADAMS: Yes. Absolutely. The incentive programs that we have are really triggered by investments in New York that create new jobs. What we don’t do is – if you’re a company that’s here and you simply are having a hard time economically and you want our help, but you’re not growing, you’re not creating jobs, it’s very hard for us to help you. But on the sort of more positive side, for example, we’re working with – I’ll give you some examples – a number of European-owned food – large food companies have made very big investments in New York State in the agricultural sector.
And like I mentioned, Chobani in western New York, and there’s another one. But this is interesting. There’s a fair amount of – what’s the – Arrow, the food service giant, owns Beech-Nut for example, makers of industrial quantities of baby food. So for example, just in sort of food and agricultural sectors, New York has a lot – the state has a lot of resources, and these dairy products and that farming – I mean, these are transitions we’re going through. But yeah, the point is international firms look at New York because of the power of the New York City regional market. If you do a 50-mile radius around New York City, it’s probably the most powerful regional market in the world, and companies want access to that market. So sometimes what happens is that New York State – they can be near New York City and the market without having to be in it, because we’re a big state, and so we’ve got firms on Long Island, firms in – we’re working with some globally competitive – I mean, I’m trying to think – I’m not sure even who owns them anymore.
But we still have a lot of defense and military contracting in New York State and subcontracting. So for the aviation industry, we have companies in upstate New York. And it’s interesting to me, because I live in Brooklyn and I’m from the city, and I think I know the state pretty well, but I’ll travel to a little tiny town, and you sort of go down to the town, and – boom – there’s like a factory that’s been there for a really long time making super high-tech, very competitive electronic components for aviation, for example. Or in western New York, in East Aurora, outside of Buffalo, there’s a company that’s been there for probably 80 years that makes servo-controlled devices for the aviation industry.
But the answer is absolutely. And we’re seeing investments, as I say, in agriculture, in food, in life sciences, in biotech, in – and in renewable energy. We’ve worked with a Chinese company Linuo, who’s building a solar panel manufacturing facility on an old IBM site in the Hudson Valley. So you take an old – they’re not making computers there anymore, but now they’ll be making solar panels. And the example I gave in nano – in the semiconductor industry is full of – that coalition includes quite a few international partners. The governor’s actually about to launch a new ad campaign called, “New York Open for Business” and part of what we need to do is get the message out that we’re very serious about foreign investment and we can help companies come here.
And you know what? I don't know if you all would agree with this or not, but I think a lot of people – my friends who are from abroad think of New York – you say New York, they think New York City. And the story of the state is pretty impressive. Like my job is to tell the broader story, to help the governor tell the story of the whole state. It really is amazing – I mean, you see what’s in – things are – good things are happening in Syracuse, in Rochester, in Buffalo, but it’s new. It’s not what people expect. There’s a – it’s interesting. There’s a good workforce upstate because there’s this long history of manufacturing. So you have these generations of families that worked on production lines.
I was at event for GM Holdings Company, where they are – they did an expansion of a carburetor plant that was around since the 1930s. It used to be Rochester Carburetor. It’s GM Holdings, and they were competing to have basically the next generation fuel injection technology for all the GM cars, and they were competing against this – a rival plant in Illinois, in Michigan, like that. And we gave some incentives, a small amount of incentives, and they built a clean room. It’s the first time I’ve been to an automotive plant with a clean room for making really sensitive fuel injection equipment. So from the street you wouldn’t see it. Even if you were in Rochester, that’s impossible. But you go inside, you see it, it’s fantastic.
QUESTION: My name is Louise With form the Dagbladet newspaper in Denmark, business and finance.
MR. ADAMS: Great. Hi, Louise.
QUESTION: Hi. These image problems that you were just talking about and this whole idea that the state wasn’t working well --
MR. ADAMS: Right.
QUESTION: -- and this whole new effort and the ad campaign and all that – have you seen that in numbers as well? Hasn’t this been dropped? Why this effort now? Like, why is there a need for that?
MR. ADAMS: The – that’s a great question. So the numbers bear out – New York – look, New York is – New York, as part of the broader U.S. economy, has suffered, obviously, in many of the same ways that other states have suffered during the recession and then in the sort of post-recession really low-growth period that we’re in. So employment in New York State remains high and new investment, yeah, has been – I mean, I can tell you good one-off stories, but generally, especially upstate, we’ve had a loss of companies, a loss of jobs, and a loss of population.
One of the most – things are a little more stable now, but for – at least prior to the recession – even prior to the recession, we were losing companies from upstate that were moving to lower-cost states that – where labor is cheaper or the southern states that are, quote/unquote, “right to work” non-union states. And so less for the city because of the power of the financial services sector and other sectors here. It’s amazing to me. It’s a whole ‘nother story like how the New York City economy has done during this period. It’s really incredible, right? And I think Mayor Bloomberg gets a lot of credit for really pushing to diversify the city economy beyond financial services, if you think about all the other industries that are here.
So what I say is that sometimes – again, because they’re both called New York, so people see the relative success of the New York City economy, nationally and globally, and don’t realize that the rest of the state has not fared as well, right? And so while the data for the city is not bad, the data for upstate anyway – Long Island has lost some major companies as well. The northern suburbs are picking up. Westchester – the Hudson Valley has at least 70 biotech companies now, I mean new companies, small companies, startups, and then bigger ones like Regeneron and – but so, yeah, the trend for upstate – and if you wanted to get technical, remember I said it’s 62 counties? So the New York City – New York City is part of the New York City kind of transit – or it’s called the commuter district of 12 counties that the MTA, the metro – the transportation system serves 12 counties: the five counties of New York City plus the two counties of Long Island, Nassau, and Suffolk, plus five countries going north in what are the northern suburbs – Westchester, Putnam, Duchess, Rockland, and Orange. So those are the northern suburbs. That’s five countries. You’ve got the two countries of Long Island. That’s seven, plus the five of New York City is 12.
If you take the 50 counties that are not the – what I call the MTA region and define that as upstate, and you look at the data, you have stagnant personal income growth or falling – actually, I don’t want to tell you too much of this because it’s really a bad story. I don’t like to tell bad stories. (Laughter.) But the trends – let’s just say the trends were not good. The trends were not good. So many governors, before Governor Cuomo said, oh, we have to have an upstate strategy. It didn’t work. It’s too complicated. It’s too diverse an economy. And Governor Cuomo said no, wait a second, there’s 18 million people, 500,000 companies, there’s no one strategy for upstate – for those 50 counties. Let’s do the regional system and let’s let – let’s divide the state into these regions.
And by the way, I go back to this – it’s interesting – each regional council that’s doing these plans is chaired by two volunteers. One’s a business leader and one’s a university president at every single one, because the governor’s vision is that higher education is – and especially the network of colleges and universities across upstate – is the platform for an innovation economy, that investing in SUNY – the state university system we have in New York, 64 colleges and universities – CUNY in the city, 19 – and there are about 130, 140 private independent colleges and universities all across the state – that that, compared to other states anyway, is a very powerful higher education infrastructure. And if you invest in the campuses where the – where research is happening in competitive sectors, you link that to economic development. So every region – I’ll give you examples, but every one of those 10 regions – our North Country Regional Council – and that’s the Adirondacks – and if you ever go up to the Adirondacks, beautiful, I mean, six million acres of forest. It’s incredible, right? Economically, kind of quiet. It’s the woods. You go to ski at Whiteface, right?
But seriously, so that region, the vice chair is a guy named Tony Collins. He is the president of Clarkson University, which is an engineering school, a really, really good engineering school in the North Country in Potsdam. And so he’s paired with a business leader from Plattsburg, which is several hours – it’s like a long drive. But at every one of the councils, someone who runs a public or a private major university – on Long Island, Stu Rabinowitz was from Hofstra. Here in New York City, it’s Matt Goldstein, the chancellor of CUNY – is the partner for the planning of the regional economy, because – and we really believe that is a strategic asset. Our higher education institutions, these universities, especially the research campuses, are a strategic asset that needs to be leveraged for economic development in the state.
MR. ADAMS: Yes, please.
QUESTION: I want to know trend of kind of EB-5.
MR. ADAMS: Yeah.
QUESTION: They’re attracting foreign capitals with giving green cards.
MR. ADAMS: Right.
QUESTION: Could you give me some recent trend or examples in New York State?
MR. ADAMS: I’ll give you – yes, but I have to follow up and get you the latest numbers of EB-5. But we have a project, for example, that’s been helped by EB-5. If you know in Brooklyn, Atlantic Yards, which is the construction of a major – it’s a $5 billion development that includes an arena for the NBA basketball team, the Nets, and then a series of residential and office developments – it’s a very big site. And the developer – many other developers would have fallen apart financially when the financial crisis hit. This developer is called Forest City Ratner Companies. But they went into the EB-5 market and raised capital for their project for that – and that’s one of the projects that we are helping with.
So – but if you shoot me an email or we’ll – I can give you other examples of where the EB-5 visa program is helping. We don’t administer it, but we watch where – the projects that benefit from the EB-5.
QUESTION: (Inaudible) with Bloomberg Media. I was sort of laughing when you talked about the Atlantic Avenue project kind of traffic. It’s a bottleneck in that area.
MR. ADAMS: So you live near there, right?
QUESTION: Well, for a long time (inaudible).
MR. ADAMS: I do, too.
QUESTION: So I can imagine what’s going to happen out there. My question is actually on the manufacturing sector in New York City, because I remember about a decade and plus ago, manufacturing in the garment district was very vital to New York City and it’s gradually sort of just (inaudible), I mean, dead. It’s totally dead. I mean, I’m not (inaudible) dead. I know that a lot of these designing takes place in New York, manufacturing probably take place mostly in China. So I’m just wondering for the small business owners in that sector in New York City, is there any – or an update of what might be happening in terms of helping to grow their business?
MR. ADAMS: There was an effort to create kind of a manufacturing space protected by zoning and regulations for small garment district manufacturers that would have required rezoning some buildings in the garment district. And it didn’t – actually, it didn’t work out. And it’s an interesting story. And EDC – do you know the Economic Development Corporation, Seth Pinsky? They commissioned a couple – at least one study. There was an effort – there’s another group called the Design Trust for Public Space that was very involved in this. And there’s also the Fashion Center BID, Barbara Randall, the – do you know Barbara? So they can give you more on this than I can.
The hope was to save at least things that are closely allied to the design community, so pattern making, fashion accessories, and very – and the small-volume production of high-priced goods that you – where you need just-in-time and you need – there’s smaller volumes. But anything that’s larger volume and low-cost and you’re going to buy in Wal-Mart isn’t going to be made in Manhattan. Pretty hard to imagine. So the idea was, well, what parts of the industry – because you’re right; there’s a great history in New York City of the fashion and garment – what parts of the industry could still compete here and what sort of support would they need? And so the – I would turn you to ED – Barbara knows a lot about it at the BID, Design Trust for Public Space, and New York City EDC were more involved.
We’re involved in the diamond industry right now, another traditional and global industry, of course, in the sense that there is an effort to build a building called the Gem Tower on 42st Street. It’s – actually, the steel’s going up. It’s in construction. And we’re providing financing assistance to diamond manufacturers that want to locate there so we can keep a thriving, competitive sect of the diamond industry, right, as a small and specialized but very, very lucrative and very important to the economy, and we want to keep those companies here. So there is an attempt by a private sector developer to put up a special building, get a certain number of tenants in there, and have it be a center right there on 47th Street.
But you’re – you raised a question about approaching certain sectors of the economy, and so it sort of would depend on the sector and depend on who’s working on it. That was a good question. It’s very hard for New York City.
QUESTION: But I mean, I actually (inaudible) in terms of manufacturing at large. I mean, I don’t know what’s happening. All the manufacturers said that New York City (inaudible) --
MR. ADAMS: Again --
QUESTION: -- or New York State, for that matter, but --
MR. ADAMS: In the city, I think you still see companies, smaller specialty manufacturers, that are serving a local market, and often with a more refined or high-end product. So like if you – have you – any of you seen the Brooklyn Navy Yard?
MR. ADAMS: It’s incredible, right? And there’s a guy there named Andrew Kimball. It’s really interesting because this goes back a couple hundred years. It was a place where they built ships in the American Civil War and then they built big battleships, World War II. It was a shipyard, and it was owned by the federal government and it was turned over to the city, and this – he said, “What do we do with a shipyard? We – the city is not going to build an aircraft carrier.”
And over time, they made it into a safe haven for industry, literally. I mean, it’s walled off from the community, it has security, it has – you have zoning, that – a regulatory environment for heavy industry. And then you have now all different types of companies from Steiner Studios, where they make TV – movies and television shows to companies that make green products and – for the construction industry. There’s a fish guy that I know there. But there’s this incredible diversity of mostly industrial uses.
And I think you’d find – there’s a high-end furniture maker there – the manufacturers that you see there aren’t making low-cost consumer goods. They’re making specialty goods for this market. And I think you see that around the city in general. One – you have a big concentration of ethnic and specialty foods in Queens, in parts of Brooklyn, obviously – and some of that, frankly, reaches a size where you can’t – we’ve had Kosher companies in Brooklyn that we lost to New Jersey because the costs were too high, the regulations were too – so companies do get to a certain – now, what I do in my new job is say, “No, no, don’t go to Jersey. Come to upstate New York if we can find you a building or -- ” again, there’s New York and there’s New York State – New York City, New York State. So we’ve got north and east, lots of opportunities for companies.
QUESTION: (Inaudible) Mayor Bloomberg’s project about – there’s a whole flyer (ph) science (inaudible) --
MR. ADAMS: Right.
QUESTION: -- to attract universities to New York City. Stanford and Cornell applied that project.
MR. ADAMS: Mm-hmm.
QUESTION: So is there any similar project in New York State to attract university outside New York to (inaudible)?
MR. ADAMS: There isn’t yet, but I think we’ll look very carefully at the success of this. It’s a very good model and I know I – now are you all familiar with this? It’s – again, part of what the mayors tried to do to diversify the city economy. And they – the city did a request for proposals, really, from engineering schools – I mean, mostly the focus is engineering, right – from around the world to – and basically said if you bring your engineering school here – now, we have engineering here, but this was to have more and have – and the city will provide certain incentives.
So the state is not involved in that project because it’s the city – it’s a City of New York project led by the mayor. But it’s turned into a very serious competition. Right, Stanford is actually now partnering with CUNY, City University. Cornell is partnering with Technion from Israel. And you see these partnerships are forming and this – I think this decision is in the next few weeks, I think pretty soon.
QUESTION: This deadline was last Friday.
MR. ADAMS: Yeah, so they are – this is Seth Pinsky, Economic Development Corporation, a guy named Bob Steel, who is the deputy mayor for economic development. So the state is not involved in this, but we’ll watch it, and I think if there’s a good example there, then maybe we could see if it makes sense. I don’t know. That’s up to the governor, but I know we’ll watch it and be supportive and then see what happens. The – it’s a helpful approach.
MODERATOR: Just so you guys know, Seth is coming November 21st.
MR. ADAMS: Excellent.
MR. ADAMS: No, well, Seth’s a good friend --
MR. ADAMS: -- and Seth can answer better than I can these questions about New York City manufacturing, the applied sciences research. That’s what Seth does all day. I worry – he worries about the city, I worry about the rest of the state, but we’re partners.
QUESTION: I’ve just come back from North Carolina last week. They also have very ambitious plan. They want to be a emerging manufacturing state. And compare their plan with your plan, New York State plan. I cannot find too much difference. So how to compare it with other states? And will you provide more privilege to (inaudible) investor, just like tax deductible and other – so --
MR. ADAMS: It’s a great question and we worry about this a lot. I mean, competition is good but it also can be a problem. So we – it gets back to this approach that the governor has been leading these reforms to improve the business climate for all investors, right? I mean, you can’t just focus on one company or one sector and just go – I mean, when government does that and doesn’t look at the broader economy, it often makes a mistake.
And so the economic reforms around getting taxes under control – if not lowering them, but certainly getting tax growth under control, providing a regulatory environment that meets all the important regulatory goals but is at least transparent and clear and stable, the rules aren’t changing all the time, the energy reforms that I mentioned, so you can at least – even if your power’s expensive, you can predict the cost and make plans in your energy planning.
Providing that kind of regime of stability and predictability, even in what’s generally a high-cost environment, those reforms are really important. And again, as I say, since there are 500,000 companies in the state, the macro reform helps everybody. The one project for one company helps that company. And so I would say that if you just focus on particular companies and doing projects with them, and we do some of that, that’s retail. It’s one customer at a time, one company at a time, one industry at a time. But when the governor does the budget reform, the property tax cap, the energy reform, and other reforms he’ll be doing next year, you’re improving the business climate for everybody, and government’s not betting on one sector. Government’s not betting on one industry.
So it’s – you’ve got to do both. To make the statement competitive, we – again, this is a high-cost state with high taxes and a lot of regulation, and very complicated regulation. And we make things complicated that shouldn’t be so complicated, in licensing, in permitting. And this happens at the city as well, and it happens because we also have federal, state, and local jurisdictions, local government. And then in New York, for historical reasons, we have a lot of local government – a lot – and it becomes very, very difficult for companies.
And so making – creating a rational and stable and supportive environment for everybody is really critical to improving our competitive position. If this state says – let’s say you’ve got a company and you’re going to make computer chips and this state says, “Look, I’ll give you $10,” and then she says, “Well, I’ll give you $12,” “Well, I’ll cut your taxes,” it starts to become --
QUESTION: A race to the bottom?
MR. ADAMS: A race to the bottom. It’s not – I mean, you have to be very careful. I think you don’t – first of all, it’s taxpayers’ money. It’s not our money. I always say it’s – these are scarce resources for economic development, and you have to apply them in situations where you get a lot of leverage for every dollar you invest.
So as an example, at ESD, in my agency, we usually get at least $10 directly for a dollar of incentives we put on the table. So if we’re doing a capital – if a company’s buying equipment or building a building and that’s going to create jobs and they qualify for our program, we look for at least a 1-to-10 leverage ratio. You can’t give me a dollar and get a dollar back, but if you spend – if I give you a dollar, spend $10 on the factory; then we can talk, right? So we have to make sure that – because otherwise, if it was a dollar for dollar, just reduce your taxes.
Now take the – like this billion dollars in the CFA – I’m sorry, the – for the regional councils. Someone said to me the other day, “Well, Ken, why don’t you just take the billion dollars and give it back to the people?” We could do that. In fact, part – we should do some of that. But if we take the billion dollars and invest it at a 1-to-10 – in each project, it’s making projects that wouldn’t otherwise happen, and those companies are creating jobs and spending $10, the billion’s turning into 10 billion, and that doesn’t even measure the actual residual effect of the investment, right – in payroll taxes and in whatever, all the other impact.
So you got to be very, very careful and seek a high – and so when you get into the race to the bottom, I call it time-out when it’s – you’re starting to do something that doesn’t make economic sense. And some states, frankly, have – even though this is a big state, there are other states that have – in certain programs, they have bigger economic development programs than we do, and just politically, they give their commissioners more discretion. Like the programs I have are in statute, they’re in law, right? I can’t make it up. I can’t say, “Oh, you’re a nice guy. Here, $10 million.” Can’t do it. It’s in the law. Whereas other states, it’s not so clear. The – they have more – an ability, I’m sure, and like other countries, right? The government says, “We want to do this,” they take the taxpayer money, they’ll do it.
Here, we have a lot of controls. In fact, if you don’t – in our programs now, if you promise to create certain jobs and you don’t, you don’t get the money because we don’t pay it up front. You earn the tax credits over time, and if you don’t meet your job targets, you don’t get the credit. So we put controls in place. It’s – those are just some – I think some important principles about – we want to compete, but we have to do it in a rational way, and the one that always protects the taxpayer.
MODERATOR: (Inaudible) last question.
MODERATOR: Maybe this will be --
MR. ADAMS: I’m – yeah, I mean, my office is four blocks from here, so you guys have to go. You’re going to Chinatown, right?
MODERATOR: We are. We are, so --
MR. ADAMS: All right.
MODERATOR: -- we can take a little bit more.
QUESTION: My question is budgets – state of budget. Are you – you are talking about, like, reducing the gap, $10 billion.
MR. ADAMS: Yeah.
QUESTION: So we get lots of program in the – California, Illinois, or New Jersey. What’s the difference between your – New York State and other struggling states? Could you give me a detail of the – how you are reducing the gap – the budget?
MR. ADAMS: The – I’ll do it – so there are two pieces that are the biggest pieces, healthcare spending through the Medicaid program and education spending. And then also, just the cost of government with respect to the public employee unions, the public – the government workers like me, the – in the sense that on the first two, other states – well, we have a very, very big Medicaid program in New York State, very big, $43 billion a year. And Medicaid, right, serves people – healthcare – it’s health insurance by government for people who are poor, and it’s a – in New York State, it’s a very big and very helpful program to many, many people. Actually, one in five people, I think, in New York State now is on Medicaid. And then Medicare, of course, is for people 65 and older. So --
QUESTION: One in five on Medicaid?
MR. ADAMS: Mm-hmm, 20 percent, I believe.
MR. ADAMS: Yeah. So the --
QUESTION: Excuse me. Is that a big difference between state and the city or is it mostly --
MR. ADAMS: Mostly in the city.
QUESTION: Mostly in the city.
MR. ADAMS: Yeah. Because also you have the population here, right? Half the population is downstate or more. You could go on the Department of Health website and get the specific numbers, but during this economic downturn, Medicaid enrollment – right – people who are poor who need health insurance has increased significantly and --
QUESTION: (Inaudible) lost their jobs.
MR. ADAMS: Right, and – yeah, and so – and that’s the social safety net we have in this country, and in New York in particular. New York – the New York program is more generous as a program in terms of eligibility and services than other states. And so it – we pay more for it. But in any event, what – the approach that was different that Governor Cuomo took – other governors, you see, they get into a fight with the legislature or they get into a fight with the unions or they get into a fight with the hospitals – right – or the pharmaceutical companies.
And what Governor Cuomo did early on is he said, “Here’s my number,” and I forget what it was. It was maybe 2 billion or – it was some portion of the 10. And he named people to a group called the Medicaid Redesign Task Force. So he got the union guy, the hospital owner, the healthcare – the – got all these different constituents and he said, “You go and bring me back the savings. This is the number that I need, and you all figure it out because you’re involved in the system. Bring me the savings. If you don’t bring me the savings, I’ll do it myself, and you don’t want that because then -- ”
So he gave them an opportunity for the industry to work together, and the legislative – and people watched it, and it was public and you could see – right? And they came up with the savings themselves, which particularly took the unions – the healthcare unions and others who were affected by the cuts – it wasn’t like – they were from – in part of the discussion so they can negotiate how to do it and share – basically share the pain all around. And with a host of other issues, that’s what the governor, Governor Cuomo, does. Instead of having a fight and saying, “It has to be like this,” he very carefully picks the people, he’s very careful about who the people are, and then says, “Here’s the result we need. You figure it out. If you don’t want to play, don’t play,” but people say, “Okay,” and they came back.
And so they made significant cuts to Medicaid, but they were managed and shared and spread around the system, and they made some cuts. The state school aid is a big part of the budget, but what that is is it’s money that goes from the state to local school districts, because New York State doesn’t run the school system K through 12, right? It runs universities, but the school system is run by local school districts at the local level, but the state provides a big subsidy to that. But he knew that the school districts had reserves. They had money. And he could do a certain cut at least last year, and they could – they complain, they complain, they complain, but again, he worked with educational leaders, they figured out a way to do it.
So the budget – there will be a budget deficit next year for New York State, maybe $2.5 billion, which is a problem, but it’s not $10 billion. And that’s also – it wouldn’t be such a problem if we’d start to see state revenues increasing. But state revenues, as they – the first two quarters of this year, calendar 2011, they were increasing, but then over the summer they dipped again, and now we have to see fourth quarter what happens to state revenues. The state’s fiscal year starts April 1st, so they’re working on the budget for next year now and they’ll put that in place. As I say, January, the governor delivers a budget message. He presents the budget to the legislature and then they go back and forth, back and forth, January, February, March. Like Austin was saying, April 1, this is when the budget’s supposed to be presented and enacted, and then it’s the spending plan for the next 12 months.
So that was – what I’d say in terms of other states, other states you have these terrible political fights. And here, Governor Cuomo has worked well, both sides of the aisle – Republicans, Democrats, upstate, downstate. He engages people very carefully, and so they work on the problem together.
MODERATOR: Thank you.