AMZN Amazon.com Inc

By Jimmy Vielkind 

The demise of Amazon's proposed $2.5 billion campus in Long Island City could have its first fallout to the east, on Long Island.

People familiar with the collapse of the deal said the nomination by state Senate Democrats of Queens Sen. Mike Gianaris to a state board that held sway over the project created a level of uncertainty that Amazon.com Inc. executives were unwilling to abide.

Mr. Gianaris opposed the project, in his district, in part because city and state officials promised up to $3 billion of incentives in exchange for a promise to create 25,000 jobs. His position was driven by concern about how the project would impact surrounding neighborhoods, but also by an energized base of progressives that was organizing against the deal -- and could in a future Democratic primary turn its ire on any politician who supported the project.

The deal was more popular in suburban areas, including Long Island, where five electoral wins helped propel Senate Democrats into the majority. After the plan fell apart, Senate Minority Leader John Flanagan reached out to business leaders to raise funds for the GOP, saying the collapse proves Democrats are "openly hostile to business and only care about the narrow political interests of their New York City members."

The Republicans have no chance of unseating Mr. Gianaris. But Long Island is still competitive. The six Democratic senators there will face Republican attacks, even though they supported the Amazon deal as important for the regional economy.

Dani Lever, a spokeswoman for Gov. Andrew Cuomo, faulted the Democratic conference for effectively adopting Mr. Gianaris's position. "Amazon was not a Queens political issue, it was an important economic project reflecting on every member in the conference," Ms. Lever said.

Last week, Ms. Lever also publicly blamed state Sen. Todd Kaminsky, the senior member of the island's Democratic delegation. He said he supported the project both publicly and in internal conversations with Senate Majority Leader Andrea Stewart-Cousins.

Mr. Kaminsky said it was misguided for Ms. Lever to fault project supporters like himself for the deal's demise. He said the Long Island lawmakers would use the Amazon outcome as a reference point as they advocated in budget negotiations.

"We know we're under a microscope. Everything we do is going to be compared, whether it's numbers in a budget, to the former Republican majority," Mr. Kaminsky said.

Mr. Gianaris said last week that the state's economy would be fine without Amazon, and that the company's reversal proved it would have been a bad partner. A spokesman for Ms. Stewart-Cousins faulted the governor for trying to divide the Senate Democrats and noted Mr. Flanagan had previously criticized the Amazon deal.

RETURN OF THE MEDICAID WARS: After eight years of keeping quiet, one of Albany's most potent lobbying forces is mobilizing against a proposed change in Medicaid spending.

The Healthcare Education Project -- jointly funded by the Greater New York Hospital Association and 1199SEIU, which represents health-care workers -- is planning a significant television and digital ad campaign as well as phone-bank calls and visits to legislators' offices, HEP spokesman Brian Conway said.

Mr. Cuomo proposed reducing the planned increase in Medicaid funding for the coming fiscal year by $550 million, which leaders of HEP said was a cut that could force hospitals to close. State Medicaid spending will still increase by about $200 million to $21 billion. State Budget Division spokesman Morris Peters said the change was prompted by a revenue shortfall and that his agency would work with the affected parties to mitigate their impacts.

State spending on the Medicaid program has increased steadily and predictably since Mr. Cuomo took office in 2011. But HEP waged brutal campaigns against previous governors, including Eliot Spitzer and David Paterson, as it pushed for more funding.

Asked if the ads would target Mr. Cuomo, a spokesman for HEP said they wouldn't mention any elected officials and are intended solely to educate New Yorkers.

THE QUESTION: In the latter part of the 19th century, which upstate college owned the Anable Basin, site of what was to be Amazon's New York headquarters?

LAST WEEK'S ANSWER: After Amazon, the state's largest project-based incentive package was $1.2 billion for Advanced Micro Devices, later GlobalFoundries, to build a semiconductor factory in Saratoga County in 2006.

Know the answer? Have another question, or a tip? Write to jimmy.vielkind@wsj.com.

Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com

(END) Dow Jones Newswires

February 18, 2019 20:23 ET (01:23 GMT)

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