Churning public money, moving assets around the table, creating nothing new

On the same day that New York Governor Andrew Cuomo and Seneca Nation of Indians President Barry Snyder announced a deal that will preserve Seneca Gaming Corporation’s monopoly on casinos west of the Genesee River, a defense contractor with major federal support held a press conference in its new taxpayer-funded home in the Butler Mansion on Delaware Avenue at North Street.

Three city blocks to the east, the taxpayer-funded relocation of the state university medical school continues. Three city blocks to the north, the neighbors around Children’s Hospital wonder whether that institution’s taxpayer-funded relocation will leave its buildings as the empty 10-acre site, just a mile further up Delaware Avenue, that was once known as Millard Fillmore Hospital.

Meanwhile, in what was once the taxpayer owned General William Donovan state office building, tens of millions of public dollars are being invested in readying the site for a law firm that currently occupies HSBC Tower, which will soon become empty, but whose owners have already announced their interest in a taxpayer-funded solution.

The defense contractor, relying principally on federal contracts paid with taxpayer money, moved to Buffalo from Idaho. The medical school, relying principally on taxpayer money, is moving from the intersection of Main Street and Bailey Avenue in North Buffalo to the intersection of Main and High Streets in central Buffalo. The Children’s Hospital, relying principally on taxpayer money, will move from Bryant Street to Main and High Streets. The big law firm is moving about 500 yards, slowly, at great public expense.

And because a federal judge in Buffalo reversed himself on a central point of law—only a couple of years ago he said that the casino was illegal and should close “forthwith”—the Seneca Gaming Corporation’s Buffalo casino isn’t moving anywhere, but is instead expanding to serve a client base that it knows is completely local.

So this is capitalism in Buffalo: taxpayer-funded abandonment of big buildings, followed by taxpayer-funded construction of new buildings to house taxpayer-funded activities, while shuffling other taxpayer-supported activities from one jurisdiction to another, with a Native American-owned entertainment entity that was illegal until an eyeblink ago going forward with a completely tax-exempt entertainment complex that will bring zero new dollars into the regional economy.

Recycling, Buffalo-style

The arrival of Sentient Corporation is actually good news for New Yorkers. Sentient’s CEO says the company hires “the smartest people in the world,” including a recent PhD from UB’s engineering department, to make computer models of the moving metal parts in wind turbines, fighter planes, tank engines, and other complex machines so that when taxpayers pay for these things, either directly by buying them or indirectly with tax subsidies, the operators at least know when the parts will wear out.

There are at least two reasons why it’s good for New York State that Sentient relocated here: first, because instead of all the federal income taxes paid by Manhattan millionaires leaking out into the Red States, a few million of that estimated $130 billion money transfer is coming back to the state whence it came. (The late Senator Daniel Patrick Moynihan, who for 23 years published a spreadsheet of how much more New Yorkers paid into the federal kitty than we got back, would be pleased.) The second reason we should be happy about Sentient: It may actually hire some of the graduates of UB’s well-regarded engineering and materials-science programs.

The ongoing tragedy, if not the outrage, is that the other public investments here not only fail to add anything: They just pay insiders to move things around. Sentient Corporation’s help from New York State may not yet mean anything new to the overall American economy, but their presence here is a local bump-up.

The same cannot be said for the publicly-funded relocation of hospitals that pretend to be private but that, by their own admission, rely on public funds for over 70 percent of their revenue.

What to do with critics

In 2010, before he joined forces with the Erie Canal Harbor Development Corporation, iconic Buffalo historian and preservation entrepreneur Mark Goldman criticized the idea that merely moving an entertainment enterprise—or creating more supply where the regional demand was either constant or even shrinking—was not going to add anything new, and could very well kill existing businesses.

In 2010, Buffalo did not know that the HSBC tower immediately adjacent to Erie Canal Harbor would soon be empty. We did not know that Governor Cuomo would hire McKinsey and Company, and convene a group of civic leaders, to advise him on how to use $1 billion in taxpayer funds to create an “export economy,” and build new middle-class incomes, and train a workforce for jobs in STEM—science, technology, and math. Back in 2010, what we knew was that there was something fundamentally awry with a plan to spend hundreds of millions of taxpayer dollars on a project that would bring Bass Pro to town.

A group of citizens, led by Goldman, sued to stop public funds from being invested in moving retail customers, whether for fishing gear or for restaurant meals, from one part of Buffalo to another part of Buffalo. Before we filed that lawsuit, Goldman wrote that “[d]espite excellent design details—low, brick buildings, attractive cobblestone streets, quaint canals lined with cafes, heated street furniture and signage designed by Disney—the plan, costing close to $500 million in public funds, is not supported by any demographic or economic data that makes any sense.”

Further, Goldman wrote, “[a]t a time when most of our stores and restaurants—even those operating in such proven destinations as Hertel, Elmwood and Allen—are struggling to survive; when major cultural institutions like the Buffalo Philharmonic Orchestra, the Albright-Knox Art Gallery, the Buffalo & Erie County Historical Society and the rest are straining with ever-shrinking revenue; when our public schools, even those recently remodeled with almost $1 billion in state funds, are terminating teachers and programs, it is unconscionable that we would consider the kind of public support that the Canal District project requires, particularly since the plan has no business plan.”

Yet this is what continues to happen. Hail, Sentient Corporation, and welcome! But pay attention: There’s much bigger money to be had in moving things around within Buffalo.

Bruce Fisher is a former deputy executive for Erie County and director of the the Center for Economic and Policy Studies at Buffalo State College. His recent book, Borderland: Essays from the US-Canada Divide, is available at bookstores or at www.sunypress.edu.