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Hochul’s Vow to Fix Albany’s Culture Finds an Unexpected Foe: Herself

Gov. Kathy Hochul said she would usher in a “new era of transparency.” But critics, including the state comptroller’s office, said she has failed to do so.

Gov. Kathy Hochul was faulted by the state comptroller’s office for giving herself nearly unfettered control of $11 billion in state funds.
Credit...Cindy Schultz for The New York Times

July 11, 2022, 5:00 a.m. ET

ALBANY — In the last days of the 2022 legislative session, as the State Capitol was abuzz with frenzied pushes to strengthen gun control, abortion rights and environmental regulations, New York lawmakers received a jolting email.

Gov. Kathy Hochul was asking them to fast-track legislation authorizing billions of dollars in corporate subsidies to lure semiconductor plants to New York, according to the message from Democratic leaders in the State Senate.

The chip subsidy bill, which would designate $10 billion iin state tax breaks over 20 years for microchip makers, was passed by the Senate on its last scheduled day after Ms. Hochul invoked emergency procedures, known as a “message of necessity.” The Assembly quickly followed suit.

No public hearing, where criticism might be aired and taxpayer safeguards contemplated, was ever given to the matter.

“There’s really no one with a straight face who could look at anybody in the state and tell them that this new program was debated out in the open and there was a proper public and professional analysis done,” said State Senator James Skoufis, who, like Ms. Hochul, is a Democrat. “That sunlight did not exist in the room where this program was cooked up.”

Ms. Hochul’s approach to the subsidy package seemed to fit a pattern familiar to long-term observers of Albany, where the flow of billions of taxpayer dollars can be directed, redirected or shut off in negotiations far from public view.

Ms. Hochul had vowed to change that culture, promising “a new era of transparency.” She said that the “days of three men in a room” — shorthand for the star-chamber-like decision-making in Albany — were over. There would be “accountability and no tolerance for individuals who cross the line,” she said. An ethics watchdog in Albany with “real teeth.” Even term limits for her and other statewide elected officials.

“To me, it’s very simple,” Ms. Hochul declared in her inaugural address in August, taking over from her predecessor, Andrew M. Cuomo, who resigned amid scandal. “We’ll focus on open, ethical governing that New Yorkers will trust.”

Yet as Ms. Hochul faces her first general election challenge as governor in November, her promises of transparency and a changed culture appeared to have fallen short.

Term limits were never considered. The chip subsidy bill and another large government giveaway — the public subsidy of a new football stadium for her hometown team, the Buffalo Bills — emerged from her office after private negotiations.

Her focus on “ethical governing” took a hit after her lieutenant governor, Brian Benjamin, resigned after his arrest on federal corruption charges. Ms. Hochul later acknowledged that the vetting process that led to Mr. Benjamin’s appointment was flawed. (Mr. Benjamin has since been replaced, in office and on the ballot — thanks to a legislative maneuver that critics called an abuse of power — by Antonio Delgado, who resigned from Congress to assume the state post.)

And in Ms. Hochul’s first state budget, she exempted a huge swath of money from independent oversight by the state comptroller’s office and from competitive bidding rules — amounting to an astonishing $11 billion of the $220 billion state budget, according to the state comptroller.

Much of the $11 billion is slated for coronavirus expenses and “unanticipated emergencies,” but can be moved to other uses at the pleasure of the governor and her budget director, officials said.

The office of the comptroller, Thomas DiNapoli, expressed concern over the governor’s “lack of transparency,” cautioning in its official review of the state budget that the control of the $11 billion was left “almost entirely to executive discretion.”

In an email to top Hochul aides, Mr. DiNapoli’s first deputy, Pete Grannis, conveyed disappointment that “little was done to fulfill the promise to ‘promote transparency and take steps to restore New Yorkers’ trust in government.’”

The Legislature’s proposed budget would have restored to state statute some of the comptroller’s pre-audit powers, which had been removed under Mr. Cuomo; Ms. Hochul’s budget stripped it out.

Hochul aides say the spending rules are consistent with practices under past governors and still allow the comptroller to audit payments and executed contracts.

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Credit...Cindy Schultz for The New York Times

Ms. Hochul and her aides defended her efforts to make Albany more transparent and accountable, pointing to what a spokeswoman, Hazel Crampton-Hays, described as 200 years’ worth of “unethical behavior” in a state capital that has never had a woman at the helm.

“In less than a year in office, New York’s first female governor has taken on the entrenched, centuries-old status quo,” said Ms. Crampton-Hays, pointing to policies aimed at ensuring a workplace free of harassment and discrimination along with the release of the governor’s tax returns and daily schedules.

Elsewhere, aides note Ms. Hochul’s success in replacing the troubled Joint Commission on Public Ethics, which held its last regular meeting the day she clinched her party’s nomination. The new ethics group, called the Commission on Ethics & Lobbying in Government, will, for the first time, be subject to open records laws and be overseen by appointed commissioners that must be vetted and confirmed by an independent panel of law school deans.

Ms. Hochul has also instructed agencies to stop routing their Freedom of Information Law requests through the governor’s office, a Cuomo administration practice that often kept damaging state records out of public reach, sometimes for years.

And her administration has begun moving out requested records more quickly, and has required state agencies to submit transparency enhancement plans that were then published on the internet.

Diane Kennedy, who lobbies for open government and press freedoms as president of the New York News Publishers Association, which represents the state’s newspapers (including The New York Times), gave Ms. Hochul credit for ensuring public meetings remain accessible during the pandemic. She said it was also nice to be treated with respect after years of bullying tactics by many Cuomo officials.

“To me this seems like a much brighter day,” Ms. Kennedy said, adding that “people are still kind of traumatized” by what they experienced under Mr. Cuomo.

“They would call and scream at people at all hours of the day and night for perceived slights,” Ms. Kennedy said. “The Hochul administration is night and day.”

Yet even as the tone in Albany has changed, the culture of back-room deals has not.

The most glaring example of Ms. Hochul’s inclination to conduct business in secret came in April, when the governor privately negotiated a deal to give the Buffalo Bills the most generous outlay of public funds for a pro football facility ever: a new $1.4 billion stadium that relied on $600 million from the state and another $250 million from Erie County. Long-term maintenance costs will push the taxpayer commitment north of $1 billion over the next 30 years, state records show.

Polls show most New Yorkers dislike the stadium deal, which Ms. Hochul struck with the billionaire Pegula family and the N.F.L. — and Ms. Hochul’s rivals in both parties have pilloried her for it, as have government watchdog groups.

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Credit...Libby March for The New York Times

The fact that her husband’s current employer, Delaware North, has been selling pricey beer and hot dogs at the stadium’s concessionaire since 1992 has only added fuel to the fire. (Ms. Hochul has recused herself from dealings related to Delaware North, which was not a party to the stadium negotiations. And aides say the company has walled off the governor’s husband, William J. Hochul Jr., the general counsel for Delaware North, from all of its New York-related business operations.)

“Given the pronouncements that Hochul made when she took over, about these profound changes in transparency and ethics in Albany, it’s very hard to see her being sincere about any of that,” said John Kaehny, executive director of the watchdog group Reinvent Albany. “It’s a different kind of politics, but it’s still the exact same result, which is the governor is working for extremely powerful interest groups that are the same ones that were prevailing under Cuomo.”

Ms. Hochul adopted an unapologetically pro-business posture from the start, saying she opposed tax hikes and wanted New York — which experienced one of the biggest population losses in the country in 2021 — to be “the most business- and worker-friendly state” in the country. She often returns to that posture when critics question corporate subsidies.

The chip subsidy bill she pushed at the end of the session garnered far less attention than the stadium deal, despite having a taxpayer price tag that’s 10 times higher.

Ms. Hochul has defended both deals, saying they would help invigorate the upstate economy — and, in the case of the chips subsidies, would only cost taxpayer money if chip makers decided to build facilities in New York and met job targets.

“Both projects you referenced are about creating jobs,” Ms. Hochul said at an early June news conference. “I will continue to focus in any way I can to lift New Yorkers up, making sure people have good paying jobs with dignity. And that’s what both those initiatives are all about.”

Hochul aides also say said input from legislators strengthened taxpayer safeguards in the bill.

Mr. Skoufis was one of three Democrats to defy their party’s governor and vote against the deal.

“Look, we all want to create jobs. Find me a politician that’s not pro-jobs,” the senator said. “But it’s also about protecting taxpayers.”

The author of the bill, State Senator Jeremy Cooney, a Democrat from Rochester, said he also favored a more deliberative and open process. But given the population losses in upstate New York, and the recent loss of semiconductor deals that went to Texas and Ohio, he said lawmakers had to do something big because “we’re not competitive as a state right now.”

But State Senator Liz Krueger, chair of the Senate Finance Committee and another Democratic “no” vote on the chip subsidy bill, said matching subsidies from counties could eventually double the advertised price tag for taxpayers. She called it “the biggest economic development tax giveaway the state has ever seen — maybe any state has ever seen.”

“We did try to negotiate some structure and transparency into the language and some limits,” Ms. Krueger said. “I lost on that.”

Ms. Hochul will soon have another opportunity to make good on her pledge to usher in a new era of transparency. A bill that would return the comptroller’s statutory power to oversee certain contracts awarded through SUNY, CUNY and the Office of General Services passed the Legislature with overwhelming support in the final hours of the session that ended in early June.

Ms. Hochul has not committed to signing it.

State Senator Elijah Reichlin-Melnick, the author of the bill, applauded the governor’s pledge to create a more open administration and said “there’s clearly a better commitment to including legislators and public input than there was in the prior administration.” Then again, he may change his assessment of Ms. Hochul if she does not sign his bill.

“Then I would probably feel differently about where she’s standing on the transparency,” he said.

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