David A. Paterson’s first year as governor of New York can be aptly characterized as a baptism by fire. He’s had to contend with a financial firestorm that has torched the fortunes of Wall Street–and with it a huge chunk of much-needed state tax revenues.
Like governors across the nation, New York’s first African American chief executive seeks to correct the largest budget shortfall in state history. His proposed $121 billion budget with its massive tax hikes, huge service cuts, and other “extreme measures†continues to fuel fiery debate among state legislators, public employee unions, and citizen groups. (At press time, Paterson was seeking to use federal stimulus funds to retool his budget proposal.) In early March, his approval rating stood at 26%.
Despite the firestorm, Paterson’s focus is squarely on keeping the Empire State’s economy humming. A staunch supporter of minority business development, he’s found part of the answer in a brand of government activism that follows the model of late Atlanta Mayor Maynard Jackson.
Paterson is seeking to increase opportunities through the creation of a minority business task force to establish inclusive policies as well as enforcement of Executive Order No. 8, which in 2007 set up a council composed of state agency heads to promote the participation of minority- and women-owned business enterprises (MWBE). The governor’s emphasis on across-the-board MWBE participation in state projects has opened doors for, among other entities, black-owned construction management companies, investment banks, and law firms.
But achieving this ambitious plan will not be easy. In fact, the national credit crunch scuttled a model project, the construction of a $370 million video lottery terminal at a horse racing track, which would have given The Peebles Corp. (No. 18 on the be industrial/service 100 list with revenues of $245 million) and black-owned construction management firm McKissack & McKissack the chance to become prime contractors and equity partners. As Paterson grapples with a myriad of challenges and responsibilities, he spoke with black enterprise about his future plans.
Black Enterprise: In developing his economic stimulus plan, President Obama reached out to governors to gain their input. How will New York benefit from the plan?
David A. Paterson: New York is lucky enough to have 1,900 shovel-ready projects on road, bridge, highway repair, and transportation projects, as well as clean water and wastewater management programs. The stimulus package is one that puts people back to work and the infr
astructure repair is a job creator: $1 billion of infrastructure repair creates 30,000 jobs. The more we put people to work, the more they start spending money again. And that hopefully inspires investment and opens the door for credit. Then you start getting your economy growing.But how do you bring jobs back to the financial services sector?
I don’t think the financial services industry is going to recover from this recent period for a decade. The alternatives will be creating jobs in the clean renewable energy field at a time when we need to decrease our carbon emissions, particularly in automobiles, and trying to be at the epicenter of the information technology race with the other states. We should also try to use our colleges and universities so they can feed the state’s economic development practices with a lot of their research as they do in California and Massachusetts. Because 18% of the jobs in our state come from financial industries as opposed to an average of 2% nationally, if we don’t find other ways to put people to work right now then we are going to have a problem.
The loss of so many jobs must be affecting the state’s population.
I don’t have to tell you the disproportional numbers of who is getting laid off and who is getting most burned by this crisis. Particularly, African American families have been most impacted because a higher percentage of our net worth was expended on trying to maintain a home and trying to traverse the lines of unemployment. The middle class in the African American community is leaving New York in droves. There are 15% fewer African American families in New York City than there were a decade ago. Every year now in Atlanta’s Piedmont Park, they have Buffalo Reunion Day, for all the people from Buffalo who have relocated to Atlanta. Now Buffalo reunions have sprouted up in Charlotte, North Carolina; Las Vegas; and Washington, D.C. They are moving for a better quality of life because New York is the highest-taxed state when you add in property taxes and personal income taxes.
What impact has this trend had on minority business development?
When we came into office in 2007, only 5% of state contracts were going to minority and women firms–2.64% to women, 2.36% to minorities. Asians got 1% of contracts. Hispanics got 0.74%. African Americans get two-thirds of 1%. So, that’s why my mission has been the inclusion of minority and women businesses. The most frustrating thing is that New York finally has the leadership that insists on equality of opportunity in economic development and we don’t have enough businesses because they’ve either shut down or moved to other states.
So how does your administration create opportunities in this environment? Can you adopt a Maynard Jackson model for this millennium?
When I met Maynard Jackson, we talked for hours and he was telling me that if you’re indirect about it, it’s not going to happen. You cannot cloak MWBE as a small business program. So when we came into office, Gov. Spitzer signed Executive Order No. 8. But I still didn’t think many of the agency heads around the state got it. I thought it was becoming ceremonial by the lack of compliance among the agencies. Then about a year later they looked up and there was a new governor. Now there’s an understanding that we’re insisting on fairness in the distribution of procurement in a state that is 40% black, Hispanic, and Asian and 51.8% female.
If your administration’s goal is to increase minority involvement and equity in construction projects, will you have to continue to import companies or develop a program to help create new firms?
That’s a good question. I think that as these businesses get more business, they will grow; most of the huge entrepreneurs started as small businesses. So it’s creating that opportunity. And then the word is out: ‘Hey, New York is open for business again.’ So we’re hoping that the understanding of the capacity of the decision-making in government, and how it can affect emerging communities, is such that New York would attract business and people thinking about starting businesses. When that happens, you’ve got things going in the right direction.
Majority firms recognize that we’re asking for fairness [but to them] it’s about business. So, if the governor is saying we want fairness, it’s not because anybody has had an epiphany about being fair to your brothers and sisters of all colors and persuasions. It’s that fairness is now good for business. So you see a lot of these companies running all over the place trying to find minority subcontractors who will work with them. They want to let it be known that they will not be part of the continued obstacle that was created for qualified men and women who happen to be black to flourish in industry.
This story originally appeared in the May 2009 issue of Black Enterprise.