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As Governor Chases GE, Some Wonder About Cost

October 12, 2015
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As seen in Politico New York;

By JIMMY VIELKIND 5:27 a.m. | Oct. 12, 2015

ALBANY — Paul Rosati turned 50 last week and friends kept joking that his present would be the final closure of the General Electric capacitor plant in Fort Edward where he's worked for 15 years.

He remembers how angry he was two years ago, when the plant's 185 employees were called into a conference room and told the company was closing up shop, opting to expand a plant in Florida where the workers, who are non-unionized, are paid less. He said Local 332 of the United Electrical, Radio and Machine Workers of America, where he is recording secretary, reached out to state politicians after the closure announcement but that none, including Gov. Andrew Cuomo, came.

“Now they're opening their arms for the corporate offices,” Rosati said in an interview from his Fort Edward home. “There's a lot of hypocrisy there.”

It's been four months since New York officials began a multipronged effort to woo General Electric, an industrial conglomerate that was first headquartered in Schenectady, to move its C-suite back to the Empire State from Connecticut. With company officials promising a decision by year's end, there are concerns in New York about the darker parts of GE's history — including the dumping of PCBs into the Hudson River — and whether it is a good idea to cough up more incentives for a gesture that is as much as a symbolic boost as an economic one.

“Given GE's long track record of corporate tax avoidance, shipping jobs overseas and polluting the environment, one can't help but wonder if it makes sense for New York to roll out the red carpet and provide them with even more tax subsidies to get them to relocate their headquarters here,” said Ron Deutsch, executive director of the Fiscal Policy Institute, a labor-backed think tank. "Does a $253 billion company that pays no corporate income tax really need more corporate tax breaks to relocate in New York? This would not be an effective use of state resources when our physical infrastructure is crumbling and we have record child poverty levels in our upstate cities."

Cuomo disagrees.

The first phone calls came days after lawmakers in Connecticut moved forward with a budget that would have imposed a “unitary tax” which could have significant impacts on GE if it kept its headquarters in Fairfield. Company officials denounced the plan and formed a search committee.

Cuomo, a Democrat who has a good relationship with big business leaders, has been pushing every button he can find. He traveled to Fairfield in July to make an in-person presentation to the GE team that is measuring New York against Georgia, Ohio andFlorida. John Mack, the former Morgan Stanley CEO who has been an informal Cuomo assistant on economic development matters, is working the phones. Officials in Westchester County — a short drive for many employees in the current Fairfield facility — began pitching specific sites. During an event in Utica, the state's general service commissioner literally cried as she thanked GE for re-establishing a research presence in a state-built lab.

Even though it has closed plants and shipped off thousands of jobs in recent decades (like most industrial employers in upstate New York), the governor's team sees GE as a major employer that should be thanked — and encouraged. The company has 8,600 employees around the state, including 3,200 in Schenectady — its founding facility and still the headquarters of its Power Generation Products business.

Seth Martin, a company spokesman, said GE was “proud to contribute to the vitality of the state.” The headquarters would mean another 800 high-paying jobs and perhaps spinoffs like law and accounting firms.

“GE was in the state of New York at one time. And they were very, very big. They still have a presence in New York, but they had their headquarters here and they were one of the big founding companies of New York,” Cuomo said that August day in Utica. “I went to GE a few weeks ago, and I said basically, you were right. … But we have changed, and we are different than you remember us.”

Spokespeople for both GE and the state have refused to talk about the specifics of negotiations, citing nondisclosure agreements and the ongoing, competitive process. In Utica, Cuomo said only that he put “a lot of love” on the table.

David Seiden, who advises companies on relocation decisions, said any deal with GE will include more than just incentives on a new headquarters building. It would likely include items that would benefit the company's existing New York operations.

“I think that everything is possible. … GE's got a big presence here in New York with significant operations, so whatever deal would be cut with New York is going to involve more than the 800 people who are sitting in Fairfield County right now,” said Seiden, a partner in Citrin Cooperman. “There's been four or five states where GE management has visited and all of them are throwing a whole bunch of different things. New York has an advantage in terms of pure proximity — a lot of these people could commute — which is huge. So New York has to be a good listener and understand that's a huge factor in their favor.”

What does that mean? How about more state funding for a power electronics research consortium that was announced in 2014? Or a new access way that would let the company load generators and turbines directly from its Schenectady plant onto the Erie Canal?

Or some breathing room about dredging? At the same time Cuomo was courting GE's headquarters, environmentalists, officials in the upstate communities near Fort Edward and state legislators were urging the company to use the infrastructure it built for a six-year, billion-dollar dredging project to perform navigational dredging in the area.

Company officials last week celebrated the completion of their dredging project, which satisfied a 2002 agreement with the federal Environmental Protection Agency.

“Today we have a much cleaner river and we're proud of the work we've done to help get us there,” Ann Klee, GE's vice president for environment, health and safety, said Friday on an Albany radio station. The company will be leaving some PCBs in place, per its agreement.

Klee rebuffed calls for additional work, as has Cuomo who, in September, declined to take a position on the additional cleanup. When the trustees responsible for the cleanup of the Hudson River sent a letter asking GE not to dismantle its dredging operations, the state Department of Environmental Conservation conspicuously refused to sign.Cuomo told reporters in Albany last week that it wasn't his place to weigh in because GE was acting in accordance with a federal ruling and agreement.

The governor said this was not part of “the love” that's on the table.

Assemblyman Kevin Cahill, a Democrat from Kingston, finds that unbelievable.

“The silence coming from state agencies is outwardly inexplicable but we all know what the explanation is: it's clear that we're not holding GE's feet to the fire out of fear that they'll not make their larger corporate presence known in the state of New York,” he said. “But they already have a corporate presence in New York: it's PCBs in the Hudson River that are floating downstream toward my constituents.”