New York’s economic development programs face potential disruption due to anticipated federal funding reductions, lawmakers warned during a public hearing in Albany. State agencies are preparing for a challenging budget cycle amid uncertainty caused by the ongoing federal government shutdown and recent legislative actions, including the passage of HR-1, known as the Big Beautiful Bill. n nGovernor Kathy Hochul criticized the cuts during a Thursday morning appearance in New York City, stating they would harm mass transit systems and weaken the state’s security infrastructure. Meanwhile, Hope Knight, President and CEO of Empire State Development (ESD), defended the state’s workforce development initiatives, acknowledging some expected reductions but emphasizing the need for further discussions with federal and state partners to assess the full impact. n nAgencies like ESD are awaiting clarity from Washington on the extent of the cuts. Programs set to expire soon may be among the first affected. Knight noted that without stable funding, supporting small businesses could become significantly more difficult. n nOne major concern is the expiration of funding for the federal Manufacturing Extension Partnership (MEP) at year-end. Randy Wolken, President and CEO of Manufacturers Alliance of New York, stressed that MEP support is vital for small and mid-sized manufacturers, helping them access resources needed for production. He added that Micron’s planned semiconductor factory in Syracuse remains on track and unaffected by current federal spending changes. n nAssemblymember Marianne Buttenschon, chair of the Small Business Committee, highlighted the need for increased workforce housing, even as federal aid diminishes. She pointed out the contradiction in inviting workers to communities without providing adequate living options. Buttenschon also urged state agencies to evaluate which regulations hinder small business growth when submitting budget proposals. n nReductions in federal funding for workforce training, agriculture, and scientific research are expected to impact innovation programs across the state, including those at Cornell University. Assemblyman Al Stirpe, who leads the Economic Development, Job Creation, Commerce & Industry Committee, expressed alarm over the potential consequences, noting that beyond economic losses, such cuts could delay life-saving medical advancements. n nStirpe suggested raising taxes on higher-income individuals to offset some of the lost federal support. However, Republican lawmakers like Assemblyman John Lemondes oppose this approach, arguing it could accelerate outmigration—a persistent issue for New York—and further weaken the labor force. n nLemondes cited testimony from witnesses indicating that other states offer more integrated services for entrepreneurs, making it easier to navigate support systems. He described New York’s current model as inefficient and fragmented. n nCritics have long questioned the return on investment from the billions spent annually on workforce development programs. Knight countered these claims by highlighting that since Governor Hochul took office four years ago, New York’s GDP has grown by 20%, and the private sector has added 800,000 jobs—an increase of 10.6%. n
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How federal cuts could impact N.Y. economic development programs
Significant federal cuts are expected to hammer some of New York’s economic development programs meant to strengthen the workforce, lawmakers said Thursday, as state agencies prepare for a difficult budget cycle. n nState assemblymembers held a public hearing in Albany on Thursday to examine economic development programs that could be on the chopping block. But the impact on those programs remains unclear with the ongoing federal government shutdown, and Congress ‘s passage this summer of HR-1, or the Big Beautiful Bill. n n”Let ‘s not focus just on what we ‘re doing, but what the federal government is doing to us,” Gov. Kathy Hochul said Thursday morning in New York City — blasting cuts that will slash mass transit and the state ‘s security apparatus. n nMeanwhile, Empire State Development President and CEO Hope Knight defended the state’s workforce development programs to lawmakers. n n”We see some reductions in some of our programs, but are just awaiting more discussion with our state and federal partners to better understand what the impact will be,” Knight said. n nEmpire State Development and other agencies are waiting on clarity from Washington to understand the magnitude of federal cuts, but programs that are set to expire could be among the first to see reductions. n n”We ‘ll just have to continue to monitor to figure out how we might support these businesses if that funding were to go away,” Knight said. n nThat includes millions of dollars for the federal Manufacturing Extension Partnership, which sunsets at the end of the year. n nManufacturers Alliance of New York President and CEO Randy Wolken said that funding is critical for the success of small and mid-sized companies across the state. n n”That kind of impact for small and medium manufacturers, without the kind of help from the MEPs networks, could make it more difficult to secure the resources they need to make products,” he told Spectrum News 1. n nWolken said work is on schedule for Micron to build a new factory in Syracuse to build semiconductor chips, and will not be affected by spending changes. n nAssembly Small Business Committee chair Marianne Buttenschon said the state must focus on more workforce housing — even with less aid from Washington. n n”It ‘s great to tell someone, ‘We need you, we want you to work within our community, ‘ but then we forgot to provide you a place to live,” said Buttenschon, a Democrat from Marcy in Oneida County. n nButtenschon said state agencies must assess which programs and regulations are impeding small business growth as they make their budget requests. n nBut businesses are expected to feel the sting of less federal aid for workforce training, agriculture and millions of dollars slashed from scientific research — impacting innovation programs at Cornell University and others statewide. n n”We ‘ve really moved forward in biosciences and agriculture, and it ‘s actually kind of scary to think what the results of those cuts might be,” said Assemblyman Al Stirpe, who chairs the Economic Development, Job Creation, Commerce & Industry Committee. “It ‘s more than economic. It ‘s going to be thousands of jobs…but the lack of the products that come out of the research that ‘s done that help people who really need something to save their lives — it’s disconcerting for sure.” n nStirpe said with changes to SNAP benefits or food stamps, lawmakers will have to prioritize spending on health and education to keep people alive. n n”Other than that, you ‘re going to just have to throw everything up in the air and whatever lands, that ‘s what you ‘re going to do,” he added. n nStirpe, a Democrat from Cicero, said it’s time for the state to impose higher taxes on the rich to make up a portion of the difference. n nBut Republican lawmakers like Assemblyman John Lemondes argue that it will continue to drive more people out of New York — one of the nation ‘s leading states for outmigration — and hurt its workforce even more. n n”We ‘re losing businesses, we ‘re losing workers… We are chasing our population away, yet at the same time, we ‘re pretending that the circumstance doesn ‘t exist,” Lemondes said. “We ‘re ignoring it. n n”We can add program after program after program and add money to all kinds of things, but if we ‘re chasing our No. 1 asset away — people, human capital — we ‘re not accomplishing anything,” Lemondes added. “The boat ‘s getting more holes in it, and we ‘re not plugging them fast enough.” n nLemondes recounted testimony from witnesses Thursday who said other states integrate services for businesses so it ‘s easier to determine what entrepreneurs need and how to access it. n n”Everybody ‘s happy and it ‘s much more efficient,” he said. “We don ‘t have that here.” n nBusiness leaders have long criticized the state spending billions of dollars per year on workforce development programs to spur economic growth, arguing there’s a lack of return on investment. n nESD President and CEO Knight pushed back on that claim Thursday, arguing New York ‘s Gross Domestic Product has increased 20% and the state has 800,000 more private sector jobs in the last four years since Gov. Hochul took office, or an increase of 10.6%.