Uprooting grape-wine foundation money damages business

$2.8 million subsidy a worthwhile investment in a $6 billion industry

 Gov. David Paterson's attempts to cut $9 billion in spending as part of his 2009-10 budget has targeted a growing New York wine and grape industry that feeds rather than sucks the life out of the economy.

This is especially true in upstate New York and the Finger Lakes region where wine making and grape production form a key sector of agribusiness and a vital link to tourism. In both cases, agriculture and tourism, money flows into New York, supports jobs, provides sales tax revenue and, most of all, offers one of the few bright spots in upstate's struggling economy.

So why would Paterson want to cut the state's current $2.8 million subsidy for the New York Wine & Grape Foundation? It makes no sense, especially to a winery owner like Ted Marks who runs Atwater Estate Vineyards on Seneca Lake. His wine business, like most others, makes 85 percent of its revenue through visitors coming to their tasting rooms from New York, other states in the Northeast and along the East Coast. By cutting out the Wine & Grape Foundation's money, Paterson is virtually putting the organization out of a business that promotes wineries and wine trails, such as those that market vineyards along Seneca, Keuka, Cayuga and Canandaigua lakes.

And that's not an exaggeration. The Wine & Grape Foundation, headquartered in Canandaigua, has a $3.8 million budget, said James Trezise, foundation president. Of that, only $100,000 comes from businesses that are members of the organization. Another $900,000 comes from other private sector funding. The math is pretty stark. Take away state funding, and there's no way the members can make up the difference.

As badly as Paterson and lawmakers need to cut the budget, hacking away money that brings in money is not the way to do it. An economic impact study in 2004 by MKF Research of Napa Valley and other sources estimated that the economic impact of the state's grape, grape juice and wine industries at $3.4 billion. When put in that perspective, the $2.8 million is a good investment.

Much of that money goes for promotion to markets outside New York, Trezise said. About $250,000 helps the wine trails advertise their wineries. Another $1 million or so goes to Cornell University for research on how New York wineries can grow grapes more profitably and with higher quality.

This is not a frivolous waste of money. It is an investment, and Paterson, who said he supports upstate's revitalization, has failed to understand the economic importance of the wine and grape business to this part of New York.

There's yet another contradiction in this funding withdrawal. Paterson wants to raise the excise tax on wine, and he wants wine sold in grocery stores. But if he yanks the money used to promote wines and wine sales, how will New York wineries bring in more tax revenue and also compete against other domestic and foreign wines in grocery stores?

The governor needs to think carefully about that. Pulling the plug on one of the state's best economic success stories over the past three decades doesn't help the state's financial condition. In fact, it hurts it.