DAVID: Welcome to this month's edition of "The Capitol Pressroom".

We'll talk about reining in local tax breaks for business proposals, highlight an effort by utilities to develop power plants, and consider stricter protections for our online health information.

All that and much more coming up next.

This program is brought to you by the members of WCNY.

Thank you.

Support comes from O'Donnell and Associates, a public affairs firm providing strategic guidance to businesses and nonprofits on navigating government policy and regulatory issues.

More information is available at Odonnellsolutions.com.

Intelligence guided by experience.

♪ DAVID: I'm David Lombardo, and you're watching "The Capitol Pressroom", a collection of interviews with political leaders, policymakers, advocates, and journalists covering all of it.

Up first, we're going to explore the development of new data center projects, which are on hold in New York as a result of a one-year moratorium on permitting imposed by Governor Kathy Hochul, so that the administration can roll out guardrails and requirements for Future proposals.

For more on which landscape could look like, like, including the experiences of communities that have been targeted for data centers in New York.

We spoke with Raga Justin, a capital reporter for Bloomberg Government.

DAVID: Raga, thank you so much for making the time.

Really appreciate it.

RAGA: Yeah, of course.

Thank you for having me.

DAVID: Well, as part of Governor Hochul's one-year moratorium on the permitting of any new data center projects, she's also laid out some hoops that future projects are going to have to jump through in order to be realized after this moratorium expires.

What are some of the concerns, or maybe what are the major concerns about data centers that the Hochul administration is looking to mitigate?

RAGA: Yeah, these are energy intensive facilities, right?

So the number one thing we've heard from the governor and other governors across the country is, we do not want rate payers to be shouldering the cost of these facilities coming on and hooking up to our grid.

So, the ultimatum that Governor Hochul has proposed is, you know, provide your own power, or be prepared to pay so that everyone else's utility bills can go down.

As you know, I mean, this is a year in which gas prices are up, utility bills have been skyrocketing.

She's trying to connect this back to her whole, her whole campaign pitch, and her whole agenda during her tenure in office, that she's trying to make life more affordable.

These facilities certainly aren't, you know, setting themselves out to do that.

And, there is a real big concern that the ramifications of them joining the grid and coming to New York are that everyone is going to have to pay that price, when it comes to their utilities.

DAVID: And the government's not leaving a lot to chance here, through her regulatory powers.

She's trying to spell out exactly, you use X amount of megawatts of power.

You're going to spend X millions of dollars reinvesting into the community.

There's not this sort of ambiguity about what might be expected or this idea that each municipality is going to negotiate their own potential deals on something like this.

And I wonder if that's maybe patronizing to a certain degree.

I mean, are you hearing from municipal leaders, state elected officials, that the state, with its moratorium and this idea that they need to keep communities from being taken advantage of, is a little heavy handed by the state?

RAGA: Absolutely.

I mean, you know, I think, first of all, there's really broad opposition to this.

And I do think that political leaders are smart to pick up on that, including Governor Hochul.

But in New York, home rule is very important to many municipality.

And we see places where there are big projects, the stamp project, for example, or the stream data center project.

In Genesee County, it's going to be part of the stamp sort of industrial park.

Local economic development officials there have sort of unilaterally said, We don't like the idea of this moratorium.

I mean, we are having very heavy debates around this proposed data center project.

We're hearing from residents, we're holding town meetings.

We don't necessarily need the state coming in and telling us what to do one way or another.

Now, the governor has sort of tried to thread that needle, and she has tried to say, We are just implementing a blanket one-year ban.

I mean, the moratorium is a one-year ban on new data center permitting.

However, that gives local officials time to sort of figure out where exactly they do stand, maybe, on some of these data centers coming to their backyard.

But yeah, I mean, I think the interpretation on the ground is the state is trying to tell us what to do.

DAVID: Well, let's talk, then, about the capacity of some of these local governments, because you've examined the interactions between municipalities and some of these data centers who are coming into these communities with a lot of resources, a lot of lawyers.

What sort of maybe challenges is that presenting for local governments as they try to either negotiate or maybe fend off data center projects?

RAGA: You know, it's really interesting to talk to local lawmakers on the ground in some of these towns where data center companies are coming in.

There is a sense that this is a David and Goliath situation, and that large tech companies often have an army of, as you said, lawyers, of, you know, people who are sort of, you know, lobbying on the ground, folks who might not have the resources or the time, frankly, right?

I mean, many of these local government officials, some of them are part time, not a lot of them are attorneys, and even if they are, it can feel as though it's, you know, five people on a town board who are sort of trying to, take in the massive amount of information that the Amazons and Microsofts and Metas of this world might be dumping on them as they try to bring a data center to their to their community.

So I've heard of examples, where we're seeing FOIL requests coming in from these big companies and to local towns, and as you and I know, you know, requesting a FOIL from a state agency takes you long enough.

Imagine if you're a small town and you're getting, you know, thousands of FOIL requests from a data center developer.

DAVID: And so when you talk about record requests, what are they asking for?

And I mean, is this a good faith effort for information, or are they just trying to bog these local leaders down with as much paperwork as possible?

RAGA: Yes, I think that's the idea, is that there is these companies are requesting information that might not be as relevant to the actual project, and more so as a way, as a strategy, to say, look, we have resources, we have a lot of money, and we have all the time in the world, really.

I mean, these projects take years to build out, right?

Anthropic, which announced a $50 billion investment, including in New York, back in November, doesn't even really have plans to start building for quite some time.

So they can afford to ride this process out.

They can afford to ride out the opposition from local residents.

And they have lawyers ready and willing to say, Oh, that was an interesting thing that you said at that last town meeting.

Maybe let's file some foils and see what else we can uncover behind that.

To the point where, you know, local towns are spending big percentages of their town budgets, trying to respond and keep up with all that paperwork, which they're required to do by law.

DAVID: And you've also reported on the data center companies looking to enter into NDAs, nondisclosure agreements, with municipal leaders, with economic development officials that they're negotiating with to her credit.

The governor has tried to offer some sort of guidance to municipalities saying about what type of things might be covered by an NDA and other things that might be too broad.

What are you hearing from people about the actual application of NDAs?

RAGA: You know, these are standard corporate practice.

What has been really interesting, I reported a story about this, and a lot of the lawyers I spoke to said, this is nothing new.

I mean, people ask for NDAs sort of as a standard of economic development.

You know, this has been happening for years.

But because data centers have become so politically charged, and the idea of secrecy and transparency has really lit a fire under people, who think the data centers and that sort of tech, big tech in general, is keeping something from them, right?

That we're not, that normal people aren't being let in on the secret of AI.

And that sort of the tip of the spear is, are these NDAs, these confidentiality agreements that local municipalities are being asked to sign.

Going back to what we said before, I mean, this is also a resource issue, right?

If you are a county or a town, and you've got a big company coming to you with, again, there's a sort of army of lawyers.

Not that you're necessarily always under resourced, but you might be more likely to enter into an NDA just because they're saying that's how they do business.

And if you don't agree, they can pick up and they can go to Data Center Alley in Virginia.

You know, as a local economic development official, you don't want to have to be the person answering for why you did end up losing those 120 construction jobs, or, you know, the tax benefits that could potentially come to your community, because you weren't willing to sort of play ball in this accepted standard way.

Obviously, that is changing.

The tides are shifting on that.

The governor actually hasn't gone.

She's not the governor to have gone the farthest on NDAs, other governors have actually banned them entirely.

They said, you can try to build in a local community, but you absolutely cannot enter into an NDA other than what is absolutely required, you know, under the law to protect an actual trade secret.

Not just because you're exploring moving to our backyard, and you don't want anyone else to know.

DAVID: Well, you mentioned tax benefits, and the other side of that coin is tax breaks that some localities and economic development officials are looking to offer some of these programs.

Is there a consensus on whether these types of projects are a net benefit when it comes to taxes, especially if there are going to be multimillion dollar tax breaks for these developers?

RAGA: The short answer is no.

The longer answer is, it's evolving.

I think that every state is making that decision for themselves as, you know, as you noted, the governor has sort of publicly floated the idea that she wants to introduce and move legislation that would ban sales tax exemptions.

Other states have done very similar things.

There is really an open question now of what is going to happen.

But the ultimate premise of all of these state leaders, what they're trying to say is, if you are going to come here, you know, whether we like it or not, AI is a part of our lives, and the facilities that power that AI are data centers, I think what you're trying to see is state leaders grappling with that and saying, if you are going to come here, we are going to extract, you know, as much as we can from you so that our residents don't feel that brunt and that burden.

The tax exemption piece is a really interesting one because, you know, that speaks to such a broader issue in the state of New York, especially.

DAVID: Well, thinking about that benefits question more broadly, the governor, as part of this framework, has tried to lay out a plan for localities to extract as much, you know, positive good out of these proposals.

To me, it's a little reminiscent of some of the casino projects that have been placed around the state, and there's this requirement that you, you know, invest back into the community, sponsor a little league team, what have you, environmentalists, though, are not exactly in love with this idea that you can do enough positive things to outweigh maybe the negatives of a data center.

In fact, one called the community investment requirements equated them to bribe money.

This type of tension is to be expected, though.

Do you have any sense of how it might end up playing out?

Do you think environmentalists will ultimately win the day here in New York and be successful in not just this one year moratorium because there's legislation on the table in New York that would maybe codify sort of a stronger moratorium on permitting of new data centers.

So where do we see this playing out?

I mean, is the governor going to be the final say on this, or do you think the legislature, with its close alliance with environmentalists, might make a different picture?

RAGA: You know, the governor does ultimately have so much of the say in matters like this.

>> Especially because the legislature defers a lot to the governor.

Sometimes they can't get their act together.

Don't you take this one, Gov?

DAVID: Totally.

RAGA: And we might just see that same dynamic repeating itself this next session.

Right?

But I do think that the climate movement and the environmentalists at large have the wind in their sails a bit on this issue.

I mean, again, it is so, it is brought together people on opposite sides of the political spectrum uniting them in a circle.

Everyone hates data centers.

Whether you're a Republican, whether you're a Democrat, at this moment in time, it is good politics to say that you do not like data centers and that you want to extract as much positive good from them, as you said.

So, you know, I think the governor knows this.

She's reading the tea leaves on that.

The proposed legislation that the legislature has out there now is that Republicans voted on, the omnibus data center developed the responsible data center development act.

Has a lot of environmentalists asks in there.

I don't think that it's something, you know, it's not theirs.

They're one bullet solution, but it is definitely something that they would like to see moving forward.

It gives people way more protections.

It gives them way more of a runway to protest if they think that their environmental grievances aren't being heard.

There are certain standards there for clean air, for clean water, for noise pollution.

So, you know, I think the governor is hearing all of that.

She certainly hasn't shut down the possibility of signing that bill, right?

You know, I think she's taken on, sort of, her office wants to be the one to create the guardrails, but I think that they're definitely listening to the legislature more on this build, and maybe, maybe certain other big pieces of climate legislation in previous years.

I mean, as you know, and we've talked about, environmentalists have not been on a winning streak in New York recently, but I do think this is the issue where that might change.

DAVID: Yeah, I think structurally, the governor, any governor, really boxed at having their hands tied by a statute, and when you talked about some of the environmental concerns, it does immediately evoke what the governor has, the public service commission, reviewing these types of projects for, which are impact on water, groundwater, human health, disadvantaged communities.

So it's a range of things that ultimately could accomplish the same types of veto on these types of projects that the legislature is examining, but just by reserving all of that power for the governor, a lot more, we could probably unpack, but unfortunately that's all the time we have for this conversation.

Raga, thank you so much for making the time.

Really appreciate it.

RAGA: Thank you for having me.

DAVID: And now we're going to check in with Marie French, an energy reporter for Politico, New York, who explains an effort by utility companies to get back into the energy generation game with the development of their own power plants, a move opposed by existing power generators.

Here's that conversation from late this summer.

DAVID: Oh, Marie, thank you so much for making the time.

I really appreciate it.

MARIE: It's always great to join you here, Dave.

DAVID: So rewinding back to the '90s, there was a time when utilities were in the power generation game, but they were forced to sell off their operations, except that now they want to get back into the business, arguing that they can help keep the lights on in the future.

There are plenty of other operators, though, who also want to be building new power here in New York.

So why should state regulators consider this option?

What is the pitch from utilities?

MARIE: Yeah, so I think it's important to, you know, put this in the context of the state's climicals, right?

New York is struggling to meet many of its goals.

You know, we've already seen the governor sort of push back the overall emissions reductions targets.

And the state is not on track to meet its 70% renewable by 2030 goal.

Some estimates, put it, 3 years out, some are, it's getting longer.

I think the more time that passes and as the Trump administration goes after some renewables.

So that's kind of the backdrop of this, where the utilities are saying, like, Hey, you're not on track.

We could help.

Like, we could, you know, put our capital to work and build some of these renewables.

They're not saying they want the entire market, but they want to get back in this game, and for them, of course, the capital they invest, they earn profits on.

DAVID: Well, is that what they bring to the table, the capital, they have access to financing, or is there something else that utilities say that allows them to build faster, more efficiently, or in areas that maybe other developers don't want to right now?

MARIE: I don't think they're necessarily making that argument, although I could see them, you know, saying, like, hey, we control some substations, transmission lines, like maybe these are locations that make things easier.

I think the capital, like, markets access is one of their arguments, is that they could get a lower cost of financing.

They say, then the private developers.

But, you know, there's still, there's a lot of questions about how that would work.

You know, ratepayers would be on the hook for that.

So if they had cost major cost overruns, you know, you could see some back and forth about that.

There's also the issue of, like, private developers say the reason they should keep doing this is, they have to take the risk, right?

In this case, the utility would be depending on share on customers to recover their costs.

So, there's a lot of back and forth on this, this issue, and I think it's becoming just because of where the state is in achieving its renewable goals.

It's becoming more of a conversation at this time.

DAVID: Well, if we think about the past experience of utilities operating power plants, or just their track record of delivering power as utilities only, is there any reason to think that they would do a good job?

Is there something looking into the past that says, yeah, these are the guys that we think would do an excellent job?

They do a bang up job under budget and on time or something.

MARIE: I think, certainly they would say, you know, they can they can do it.

They've been, you know, operating the system and making all these investments in the transmission and distribution system.

DAVID: Sure, but nobody's out here given consumer performance awards to their local utilities.

MARIE: Some are, you know, they do win different, you know, there's different surveys that they always brag about, you know?

But also get fined by the state regulators, but they also, you know, some metrics they meet and some they don't.

I think, you know, obviously on the other side of this, the opponents of allowing utilities to do this have pointed to some transmission projects that have had cost overruns.

I think the utilities would argue, you know, they're managing things as best they can with rising costs and all of that going on.

So the challenge for, you know, the policymakers here is kind of cutting through all this noise and deciding, you know, is this going to be a good deal for our ratepayers?

Is it going to help the state make advancements to its goals?

That's the fundamental question they're going to have to grapple with.

DAVID: Well, what about what this would actually look like, having a player who not only controls the pipes, but controls what's flowing through them, so to speak, what sort of regulatory questions would that require, say, the public service commission to entertain in a way they haven't had to for a quarter of a century, since they had to give up all their power plants.

MARIE: Yeah, that's a good question.

I think, you know, the deregulation, like, decision was made because things were expensive, you know, there's cost overruns, there's concerns about, about that.

So, to look at it now, the public service commission does have to decide, you know, like, do we want to change that fundamental structure that we had set up?

The issue of, like, them controlling the power plants, I think generally, the dispatch would probably still be with the New York Independent Soft system operator to decide, you know, what's the most cost effective unit at this time.

Although I'm, you know, I think that's also a question for policymakers to weigh in on.

DAVID: Somewhere, we're having this conversation, a socialist is screaming at the television and saying, What about just having the state build up more renewable energy?

Let's be more ambitious and forget about these private players.

Is that a credible option at this point, given how the state has already taken on some efforts to build up its own power generation?

I mean, could the state be doing more in this sector?

MARIE: Yes, that, that, screaming at the TV in my inbox every day.

No, they're, they're great.

Yeah, like that's a, that's definitely a question.

I mean, NYPA is moving forward with a lot of proposals to build generation.

Been your power authority.

The New York Power Authority.

Excuse me, yes.

They've been enabled to do that.

They're working on it.

They're not going fast enough to satisfy many, many parties who push for them to have that authority.

I think that'll also be part of, of the conversation as they, they look at this, because NYPA technically, you know, is, does operate some, you know, high bulk transmission.

DAVID: When you look at the tea leaves on this issue, does the fact that the public service commission is evaluating this suggests that, yeah, they are going to make some sort of change in the landscape, because they could have just punted on this, or they could have just not taken it up altogether.

Does the fact that they are saying, yeah, let's entertain this, suggest that they are figuring out a way to fold this in, maybe as part of the governor's, all of the above branding on energy?

MARIE: Well, Dave, when you've been here as long as I have covering energy in New York, you know that this issue has come up multiple times.

This latest iteration does seem a little more advanced than in previous conversations, right?

Like the public service commission isn't asking, like, mm, should we do this?

They're kind of asking, if we did this, how would we do it?

You know, they're sort of leaning a little bit more in that direction at this point.

So that does, I think, you know, and fundamentally, they are, you know, also reconsidering this idea of how do we achieve the state's goals?

Like, clearly, what we're doing is not working, because we're not making the progress that we'd like to see on the renewable goals.

Like, that's kind of how this came up as, like, as part of the review of progress toward that goal.

DAVID: Well, putting aside the renewable aspects, what about just having enough power of any kind to ensure that we're meeting the needs of New York?

Is that part of this conversation, or is this more of a conversation solely about enough green energy, and we've got enough power writ large?

MARIE: You know, I think what utilities are seeking right now is focused on the renewable energy front, but there is a real question in front of everyone, really, in the state, about how to ensure reliability and whether, you know, having, like, more direct contracting and more involvement of utilities in planning and, you know, the planning process to meet energy demand is needed.

Right now, we have ConED actually going through a process.

They're doing more -- it will be like an RFP of like storage, other options, because they're focused on cleaner options.

But I think there is a real, recognition or understanding from the Hochul administration.

Their view is that more gas power is going to be needed.

DAVID: Well, Marie, thank you so much for making the time.

Really appreciate it.

MARIE: Absolutely, it was wonderful to speak with you.

DAVID: And for more on the perspective of power producers in New York, tune into the "Capitol Press Room" podcast where we hear from a representative for the industry about the energy landscape in the Empire State.

But now we're going to highlight an ongoing effort by Democratic state lawmakers who are trying for the second year in a row, after a similar bill was vetoed, to impose guardrails on how smart devices and websites store and use health data they collect.

We talked with Allie Bohm, senior policy council at the New York Civil Liberties Union, about the legislation now awaiting Governor Hochul's signature that would impose restrictions on digital health data.

DAVID: Welcome back to the show, Allie.

ALLIE: Thanks for having me.

DAVID: Well, what is it about the existing privacy protections in place right now with something like HIPAA that you feel needs to be augmented in New York with additional implementations on health data?

ALLIE: That's a fantastic question.

So, HIPAA pertains to information, to health information, HIPAA for folks, you have a pretty wonky audience, but in case someone doesn't know, is the health information, portability and accountability act.

So note that that's P is portability, not privacy.

It is a federal health privacy law, and it pertains in very specific circumstances and settings, specifically healthcare circumstances to healthcare providers, health insurers, and what are called healthcare clearing houses.

We don't need to go into that detail.

It does not apply to your Fitbit, your smart watch, your period tracking app, your search history, you searched for abortion on Google, or you searched for erectile dysfunction medication on Google.

Your location information when you were near a clinic.

Your, payment information when you were buying, tampons, for example, or pregnancy test.

None of that is covered by HIPAA and I think that surprising to people.

So that information, in fact, is not only not covered by HIPAAA, but actually receives no privacy protections under federal law or under state law here in New York, and that's what we're trying to change.

DAVID: Right, and this bill regulates some of the collection and selling of healthcare information.

So are you looking for broad prohibitions or is this some sort of consumer options you're looking so that people can, if they're interested, still get that really personally catered experience, the, you know, the ads for car seats after you start talking about maybe wanting to get pregnant and things like that?

ALLIE: This bill builds two doors for processing.

So for a company using your health information.

The first store is what we like good lawyers named in a very colloquial way, the strictly necessary prong.

And that essentially means that the company can do whatever they need to do with your data for things that you would expect.

So things like providing the good or service that you've requested, keeping their site on the Internet, without having viruses overtake it.

Responding to their legal obligations, it even includes some limited research and development to, say, improve the product or service that you're using.

For everything else, so think about the things that Don't benefit you, but maybe benefit the company.

The company has to ask for your permission to do those things, and, you know, you named it.

Some folks are absolutely going to opt in to targeted advertising.

I've heard people say, you know, I love targeted advertising.

It cuts down my search time and we expect that those people will consent to that use of their information.

By the same token, if a company wants to do something like, you know, the buzzword these days is AI, right?

AI is sort of creeping folks out.

Say a company wants to Use your data to develop the next AI to replace doctors.

They have to ask you before doing that.

And I'll flip back to your targeted advertising.

Which my targeted advertising, example.

You know, that may land differently if you are, you know, hoping to have, you know, products come to you more closely.

But if you are someone who, say, has cancer and you want to tell your kids in your own time, but you share a device with them, you might not want them to see ads that relate to cancer.

And so you might want some control over that.

You don't have that today.

And I give that example because we have talked about this bill a lot in the context of reproductive healthcare and gender affirming care.

And it remains absolutely critical in those spaces, and it's really important to say that that's the tip of the iceberg.

You know, this bill has impacts for so many people, whether that's people who are living with mental or physical health conditions or recovering from substance abuse, who want privacy or seniors who we know have a disproportionate quantity of health issues sometimes.

Struggling with online exploitation, to survivors of intimate partner violence, whose online data could expose them to revictimization, to parents and educators who are worried about youth online safety.

And frankly, to anyone these days who's just simply concerned about big techs, wanton, exploitation of our intimate information.

And that list goes on.

DAVID: Well, I want to talk, then, about the implementation of something like this, because that seems to be where some of the objections have come up, and it was part of the rationale for the veto in 2025 by Governor Kathy Hochl, who described this effort as well intentioned, but also argued that maybe it was too broad in scope, and that it would create certain ambiguity that might be negative comparatively goals.

What sort of changes have there been since 2025 to this legislative effort?

ALLIE: Sure.

So I will launch into those.

I also want to just trouble the, The assumption, which is to say, this bill is modeled very strongly on the children's Data Protection Act, which is law here in New York, and which Kathy Hochul actually really championed.

It's very, very similar.

So if you are a company that is operating in New York, and you have any young people who you are serving, you probably are already complying with the vast majority of this legislation's requirements.

Similarly, I want to, remind folks that there are several states across the country, most notably Washington state, that have, helped out of privacy laws.

And so companies that operate on a nationwide basis are also accustomed to implementing very similar laws, including Washington's.

We did not see a massive exodus of businesses after children spent into a fact.

Washington State has not seen an exodus, and I say I say massive.

I don't believe they've seen any exodus.

We have not seen any exodus.

And Washington's law, unlike ours, has a private right of action, and there has been no lawsuits.

Under Washington's law, which suggests that there's compliance.

So I just want to say that at the jump, but in terms of major changes we've made.

So one of the changes is that we aligned our definition of regulated health information much more closely to Washington State's My Health, My Data, Acts definition.

That's not a substantive change, but we hope that it eases regulatory compliance because companies that operate in both states can say, oh, yes, we know what these things are.

They're what they are in Washington.

We also expanded.

I talked a little bit about permitted purposes before, so that's where something is strictly necessary.

We expanded that list to include, times where, Originally it was providing or maintaining a specific product or service requested by the individual.

It became providing, maintaining, developing, improving or repairing a specific product, feature, or service requested by an individual, or functionality thereof, in order to build some space for the companies to continue to innovate within, the rubric of consumer expectations.

I think a huge change in an area where we got a lot of pushback from companies was the original bill had a 24 hour waiting period before companies could ask for consent for what I'm going to call ancillary processing.

Again, the processing that doesn't benefit you, that you might not expect, but that they nonetheless want to do, again, and they should ask themselves, what is that category that they think people are going to say no to?

And should they be doing it if they think?

Anyway.

But I digress.

So we've taken out that 24 hour waiting period.

They can ask immediately.

What we were hoping to achieve with that 24 hour waiting period was letting folks know that consenting to these ancillary uses of their data is optional.

It's not going to change their ability to use the product or service as long as it's, you know, not something that's strictly necessary.

They wouldn't have to ask for consent.

So we've replaced that with a requirement that requests for consent clearly and conspicuously state that the processing for which consent is requested is not strictly necessary.

They wouldn't be asking for consent if it was, and that the user may decline without preventing continued use of the website, online service, online application, mobile device, connected device, or any other service.

The user is requesting or signing up for, as you guessed, and just read some legislative language, but essentially we are trying to find another way to make clear that consent really is optional here.

It really is a meaningful choice.

For individuals, without putting in place that 24 hour waiting period that we heard from companies a lot of anxiety about and a lot of concerns that it was going to cause friction.

DAVID: Well, Allie, that's all the time we have for this conversation.

Thank you so much.

I really appreciate it.

ALLIE: Thank you.

DAVID: Well, now we're going to shine a spotlight on a battle over taxpayer subsidies for an Amazon warehouse in Orange County, where a state appointed monitor for the local economic development agency was successful in reducing the tax breaks ultimately being offered, by a tune of about 30%, to discuss the current economic development landscape, and whether monitors should be deployed more broadly in New York, we recently spoke with State Senator James Skoufis, an Orange County Democrat, who secured the independent monitor for the Industrial Development Agency operated in his backyard.

Here's that interview.

DAVID: Well, is there reason to believe that the experience, at least the initial experience in Orange County, is unique, and that other counties are also offering up taxpayer funded subsidies that are more generous than what is actually needed to attract certain projects.

JAMES: That stands to reason, and we've seen it.

It's not just, you know, something without looking to a crystal ball and assume that Amazon is going to be seeking more generous tax abatements from other communities.

It already happening.

Especially with these types of very large, higher tech facilities that employ, nevertheless, in this case, 750 post-construction jobs.

This is an enormous project.

They're going to spend almost a billion dollars building this thing.

And so, yes, they are ripping off communities in lots of other places around the state and certainly the country.

And what I would tell those communities now is they have a benchmark to point to.

In Orange County number one.

Number two, to the extent that they feel they're getting ripped off in deals like this, we created the model.

They should talk to their state legislators and pursue a state monitor if their IDAs are not doing the work they should be, in vetting these proposals, and importantly maximizing the benefits from these projects on behalf of their taxpayers.

That's what IDAs are supposed to do, and over and over and over again fail to do.

Instead of... DAVID: Because why should a monitor be necessary?

What is it about the incentive structure right now that doesn't encourage the local economic development agencies to strike the best terms?

Does it have to do with how they're funded and the fact that they, in some situations, get a portion of their revenue based on the size of the deal they're handing out?

Or is it something else that sets up a problematic incentive structure?

JAMES: It's not a portion of the revenue.

Virtually all of their revenue.

That's derived from these deals.

They get a percentage, they effectively get a commission for the tax breaks that they hand out and the larger the tax break, because these are worked as percentages, the larger the dollar commission, the IDA receives.

There's a perverse incentive within the idea itself to not look out for taxpayers and get the best deal possible.

And that's its own issue.

We need to figure out.

In the meantime, we do wrongly, in many cases, entrust the IDA to do what they're supposed to do.

Their fiduciary duty is to, as I just noted, maximize the greatest possible benefit.

On behalf of taxpayers when these applicants come before them.

Ask the tough questions, drill down and figure out what, how far can we go?

How much can we push this applicant before they say goodbye?

We're going elsewhere.

Instead, what happens is the applicant comes in and says, we want this, and the IDA, 9 times out of 10, says, you got it.

That's not how it's supposed to work and that's why I, I fought very, very hard over the course of a couple years to get this monitor and other communities should contemplate if they are going through what I'm talking about.

They should contemplate advocating with their state legislators to get a state monitor themselves until we permanently fix how this all works.

DAVID: Right now, New York State has an authorities budget office here in Albany.

And for the most part, they're just a repository for data, and they're not necessarily assessing the deals that are being handed out.

Does that make sense as an entity for potentially empowering with additional teeth?

Is that somewhere to start or do you think that, given the way they're set up and historically what they've been empowered to do, you gotta go with the independent monitors.

JAMES: There is a significant role, I believe, that the ABO can play in an oversight and accountability that they do not play right now.

And that's by no fault of their own.

There, as far as state agencies go, a relatively new state agency.

And they just simply have not been provided the statutory teeth, the opportunity to inject accountability from a statewide standpoint, like we're talking about.

You know, the, the current leadership, I believe, is interested in that.

The previous leadership was under Jeff Proman, very interested in that.

We need to, as a state legislature, if we don't want to go around and start picking and choosing where there should be monitors, which I understand.

Some folks might be reticent in going down that road, then we need to have a more global statewide approach here in providing someone or somewhere with real power to step in and protect taxpayers if the local IDAs are not, and certainly the ABO fits that bill.

DAVID: Well, finally, what about a cost benefit analysis after the fact you led the charge here at the Capitol to get an accurate assessment of the state's film tax credit, the hundreds and hundreds of millions of dollars we spend each year and trying to assess the bang for the buck there.

JAMES: About 30 cents on a dollar, by the way.

DAVID: Yeah, they might not necessarily be the most efficient subsidy.

Do you have a sense of whether additional reporting requirements, one, are practical, given how many economic development agencies there are around New York and how many subsidy programs there are, but two, if it is practical and could be done in some way, do you think that should be part of the equation?

And that might inform how these local economic development agencies hand out subsidies.

JAMES: It's a difficult question to answer because a lot of these ideas, including Orange County, by the way, they, as a matter of, of adopting these tax breaks, they include a cost benefit analysis.

There are these, it's a cottage industry of little firms around the state who do this work, who advertise as basically a Lincoln and a nod kind of a service.

Hey, we'll give you the data that justifies just about any deal that you can cook up, so you can go out to the public and demonstrate that there's great benefit with these small costs, quote unquote small costs associated with whatever tax abatement.

And they come up with these ridiculous figures that, you know, extrapolate, you know, the construction workers are going to spend millions of dollars at the local delis and the gas stations and literally, they can sell the farm.

And these, these firms will still come back with a cost benefit analysis that is net positive for taxpayers.

But again, disregarding the fact, even if it is net positive, that doesn't mean it's the best net positive that you could have derived from a negotiation.

And so that's why it's a little tricky, even if you require a cost benefit, it still doesn't speak to the heart of the issue and the matter, which is, are they maximizing the benefit on behalf of taxpayers?

DAVID: Well, you could, though, with that information, say, okay, well here's the deal Orange County got, and they're banging for their buck calculation.

How does it compare to what Rockland County is considering or some other projects?

So maybe from that perspective, you could get a sense of, are we stretching our dollar as far as we could go?

JAMES: It's true.

And certainly, more data is always better, more transparency, more information is always better.

In fact, we provided the ABO, the authorities budget office with significant new funding in this year's budget to create a new so-called Paris system, which is their, which is their public facing reporting system that collects all of this IDA information, and they believe that will help inform and instruct where they can better put their auditing resources, and perhaps instruct the legislature on where we need to step in more effectively.

And so more data, more information is always better.

Can we come up with a construct that mandates effective cost benefit analyses?

It's possible.

I think it's worth considering.

DAVID: To hear the full version of that conversation with State Senator James Skoufis, check out the "Capitol Press Room" podcast available on all your favorite platforms.

And before we go, in light of school being back in session, we're going to discuss some of the concerns and priorities from the state school board's association with the group's chief advocacy officer, Brian Fessler.

Here's that conversation.

DAVID: Oh, Brian, thank you so much for making the timers.

Appreciate it.

BRIAN: Good to see you, David.

Thank you.

DAVID: So, for years now, state education officials have been laying the groundwork for transforming what it will take to graduate from high school.

And in September, the State Board of Regents took a formal step to essentially phase out after 2027, the use of Regents exams as a requirement for obtaining a high school diploma.

So, from your perspective, the school board's perspective, what needs to happen between now and 2028 as they look to take a more holistic approach to determine if someone is ready for that high school diploma?

BRIAN: Yeah, so as you said, during the September Board of Regents meeting, they kind of gave authorization, the regents gave authorization to the department to move ahead, with kind of the next phase or the next step in their New York inspires process.

And so the big kind of notable piece of that was kind of moving ahead with the plan to eliminate it, as you said, the Regents requirement, or a requirement that graduates take a Regents exam and pass a Regents exam in order to graduate, and that will begin the information they provided showed that for students who entered ninth grade in 2024 and thereafter, that as of the end of 27- 28, those regents' exams will no longer be a requirement in order to graduate.

So the exams will still exist.

It sounds like they'll serve a slightly different purpose.

But the next steps will be the department kind of rolling out the formal regulations or regulatory proposals to put some of that information into regs.

And so our role at the school boards association is not just kind of sharing that information and making sure school board members and school leaders are aware of what's going on and the timelines and kind of the processes to get there.

But it's also making sure that we serve as a go between, I think, between our members and the state in order to identify what school districts will need and what they'll need to do.

But that also what school board members are saying they need in terms of resources, information, guidance, training, et cetera, in order to make sure whatever this transition looks like over the next few years.

You know, kind of continuing with the department's timeline, making sure our schools have the resources and information and guidance necessary to successfully implement that process.

DAVID: Yeah, and whatever this transition looks like is the big question and something we'll be keeping an eye on, but let's talk about some things we know more about right now.

And that has to do with school funding.

This is a perennial issue.

One where the focus has, I think, over the last 5 or 6 years, been primarily at the state level and what they're providing relative to the state's needs.

But I want to focus more locally, because for a decade and a half now, school districts have had to live under these so-called tax cap.

And for 5 or 6 years now, the tax cap, what's allowed without a super majority, just with a simple majority vote of school voters, is actually below inflation, essentially a cut, though, if you're trying to keep up with inflation.

So what has been the impact of the status quo?

For example, are school districts trying to break the cap, so to speak?

Are they looking for that super majority vote or are they just trying to live within the tax cap?

BRIAN: So what we've seen over the past decade and a half is each year, the overwhelming majority of school districts operate within the tax cap.

For districts that do decide to put a proposals that exceed the cap, asking voters for a super majority approval to exceed the cap.

You know, it usually ends up being district specific circumstances.

You know, maybe they've tried to run tight for a few years, and hoping that there's something rosier or greener, You know, over the Horizon.

And when it hasn't played out, or if there ends up being kind of a unique high cost impact on a budget, then we see districts attempt to override the cap.

Generally, those overrides are successful.

Historically at about a two thirds or so approval rate, but that's compared to an approval rate of a tax cap, compliant budget of 98, 99% plus.

So what we did see this past year, in the May budget vote, was we saw a small uptick in the number of districts asking for an override.

You know, that is kind of a canary in the coal mine, I think, for us.

Trying to figure out, you know, is this a systemic issue that's going on?

Is it districts responding on, you know, kind of a yearly basis to really high health insurance premiums and costs that we've heard quite a bit this year?

So we're paying attention closely, you know, to see what additional trends there may be going into the next upcoming year.

But really, we continue to hear about both broad and acute pressures that the tax cap puts on school districts, as they tried to balance, frankly, you know, what their school staff, students, communities need, and what taxpayers can afford.

DAVID: So, we can talk about this later if we have time, you know, one element of this could be trying to control costs.

I mean, there's this expectation right now that costs are just going to keep going up and there isn't so much of a focus on not even just slowing the growth of it or even bringing it down.

But because we live in a world where it is increased spending, what is the answer to that at the local level with those tax caps?

Is the policy answer to just get rid of the cap?

Is it to allow certain costs to come outside of the cap?

Is there anything you guys are advocating for?

BRIAN: Yeah, you know, certainly, there's a segment of our membership that would be very happy if there was no tax cap, and kind of allowing school boards and school leaders through the trust of, you know, them being in office, elected by their communities, to kind of put together a budget proposal that meets the needs of everyone.

So certainly a segment there.

I think, you know, politically speaking, we try to operate in what we think maybe a little bit more possible.

We understand the tax cap has been in place for, as you said, a decade and a half.

It's pretty ironclad.

It's permanent in law right now.

And so instead of placing all of our advocacy effort in an attempt to get rid of the tax cap, we more focus on different aspects of the cap that we think are inefficient, have led to unintended consequences, or put, you know, I think in our mind, kind of irrational pressures on school districts that make school boards and school districts, jobs harder, without necessarily serving the community serving the taxpayer in a way that might have been intended when it was drafted.

The other part of this that speaks to the school funding conversation more broadly, with regard to the tax cap is, you know, we have a tax cap system that effectively, you know, controls or limits tens of billions of dollars every single year, statewide.

And that communicates, not at all, with our state's school aid system, and Foundation aid, in particular, kind of the main operating aid for schools.

And so some of the growing conversations over the past couple years is how can we put these two school finance system behemoths together in a way that one, you know, the property tax system and the school aid system communicates in a way that helps schools, help students, and helps taxpayers.

DAVID: Yeah, I was thinking about this in preparing for the interview that it would make sense if you're looking for a little leeway at the local level.

Well, if your aid at the state level only went up 1%, maybe you create some new formula where you get a little more will room on the tax cap, but if your state aid went up 4%, maybe you have less wiggle room at the tax cap.

Is that what you're talking about here?

BRIAN: Yeah, I think in a simplistic way, yes.

DAVID: Wow.

Simplistic.

Okay.

DAVID: but, you know, I was working very hard on this project.

BRIAN: To your point, those were the conversations we had prior to the tax cap when we were talking about school aid.

It said, you know, if school aid goes up, that puts less pressure on local property taxes.

So, you know, there wasn't a kind of statutory connection like you're describing, but I think there was a practical connection.

But right now, we have, you know, a tax cap system that is in law, and foundation aid and school aid that effectively is in law either by statute or by the state budget.

And those systems do not interact or communicate at all.

Foundation aid was created before the tax cap, but so the tax cap assumes a level of local support.

You know, when running through all these complicated formulas, but the tax cap doesn't necessarily allow districts to fully achieve what the foundation aid formula conceptually says school districts should be doing.

So, in a complicated way, yes, we think that should happen.

That happened a little bit more naturally and organically pretax cap, but that has made, the tax cap has made, you know, your suggestion much more difficult to kind of work around on an annual basis for school districts.

DAVID: Well, we have about 30 seconds left.

What about at the state level?

I mean, is the picture there just steady as she goes, or will you be looking for something demonstrably different in terms of funding in the 2027 budget?

BRIAN: You know, the here and now we want to make sure our schools have the resources necessary to, you know, equitably and adequately support students.

So on an annual basis, that's the goal.

We do think it, the foundation aid formula and the tax cap are ripe for more meaningful reforms and updates in a way that makes sure, you know, not just are we supporting schools today, but that, you know, we're putting our schools in a situation to support the students of today and tomorrow and 10 years ago, or 10 years from now, and not working in a system that supported students five, 10, 20 years ago.

DAVID: We're going to need a blue ribbon commission to come together to solve all those complicated issues, or could the legislature do it on their own?

BRIAN: All of the above.

DAVID: Sure.

BRIAN: So we're looking forward to having those conversations.

DAVID: Well, Brian, thank you so much for making the time.

I really appreciate it.

BRIAN: Thank you, David.

It was good to see you.

DAVID: And ultimately, that's all the time we have this month, by thanks to all our guests, as well as WMHT, for sharing their studio with us, for daily state government coverage, check out the "Capitol Pressrom" at capitalpressroom.org, wherever you download podcasts.

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On behalf of the entire team at WCNY, I'm David Lombardo.

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