Hochul’s Proposed $250 Million AI Consortium Faces

Scrutiny

Zach Williams

• Lawmakers want more details on New York AI hub

• Albany hearing on the matter slated for Tuesday

New York lawmakers are raising concerns about Gov. Kathy Hochul’s bid to
allocate $250 million in the state budget to create a hub for artificial intelligence
research despite the lack of an official plan.

The Democratic governor in her Jan. 9 State of the State address floated
a challenge to California leadership in developing the technology by creating a
partnership with universities and private philanthropies. She then included $250
million for the AI project in the $233 billion draft state budget a week later, but it
didn’t include extensive details of the proposal.

The purpose of the consortium, according to Hochul’s office, is to make AI

systems that can be “prohibitively expensive and difficult to obtain” available to
nonprofits, researchers, and small companies. Educational institutions would
then be able to “incubate the AI-focused technology startups of the future,
driving job growth.”

Lawmakers want specifics. “Many concerns about who, what, where, why,” said
state Sen. Liz Krueger (D), who chairs the Finance Committee.

Empire State Development President and CEO Hope Knight, whose agency would
oversee the money, will likely face questions on the matter at a Tuesday hearing
in Albany. The governor announced on Friday her choice of the University at
Buffalo as a site for the consortium’s proposed computing center. She’ll reveal
more details about the consortium in the coming months, according to a
spokesperson.
Hochul has previously floated big spending items with few details, including a
2022 effort to get $600 million for a new stadium for the Buffalo Bills.
Lawmakers ultimately received key information days before the budget deadline.
She appears to be taking a similar approach this year to the proposed $400
million AI consortium with universities.

“We have to know the details,” said Assemblymember Ed Ra, the ranking
Republican on the Ways and Means Committee. “We have to know what
stakeholder engagement will be like.”

The Hochul administration has vowed to work with lawmakers in creating the AI
program. “Governor Hochul will work closely with the relevant state agencies,
founding members, and key partners to bring her vision for the Empire AI
consortium to fruition,” said Hochul spokesperson Justin Henry.

A lack of details about the consortium is concerning considering and the state’s
history of underperforming economic development programs, said John Kaehny,
executive director of the good government group Reinvent Albany. “The best
thing I could say about the AI consortium initiative right now is that the amount
of money is not huge by boondoggle standards,” said Kaehny.

‘Conceptual Clarity’
The governor has picked up public support in her bid from academia in the early
stage of the process. Krystyn Van Vliet, vice president for research and
innovation at Cornell, said the project has enough detail to go forward now. “I
feel that there is conceptual clarity on the goal and why this scale of investment
and commitment in the state is appropriate.”

Key challenges remain as Hochul’s administration has yet to say how it will
address topics like governance and intellectual property rights.

Hochul’s budget proposal (AB 8804) would allow Empire State Development to
use the $250 million on items “including but not limited to the acquisition of real
property, preparation of plans, design, construction, renovation, administration,
and other costs.”

A second budget bill (AB 8300) would allocate $2.5 million to the State
University of New York system to support the consortium.
The administration would spend the money over 10 years and follow state
procurement rules, said spokesperson Avi Small.

Columbia University, Cornell University, New York University, Rensselaer

Polytechnic Institute, the SUNY system (which includes the University at Buffalo),
and the City University of New York system signed letters of intent, said Small.

Hochul aims to get $150 million from other sources. SUNY could provide $25
million, and $125 million more could come from sources like Tom Secunda, co-
founder of Bloomberg LP, and The Simons Foundation, according to a Jan. 8 press
release from Hochul’s office. Bloomberg LP is the parent company of Bloomberg
Industry Group.

To contact the reporter on this story: Zach

Williams at zwilliams@bloombergindustry.com
To contact the editors responsible for this story: Bill
Swindell at bswindell@bloombergindustry.com; Fawn
Johnson at fjohnson@bloombergindustry.com
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