The purpose of the meeting is to build a united front among business and development groups from every region of the State in order to promote state policies and programs that foster economic growth and fiscal responsibility.
Summary presented by the Citizens Budget Commission
1. Opening Remarks
Kathy Wylde explained the purpose of the meeting is to build a united front
among business and development groups from every region of the State in order
to promote state policies and programs that foster economic growth and fiscal
responsibility.
Panel 1: Fiscal Responsibility and Taxes
Carol Kellermann delivered a presentation on the 2010-11 budget and New York
State’s long-term fiscal situation. (attached)
James Wetzler said the State’s current fiscal situation is not new, but part of a
long term pattern, although the size of the problems are increasing. As an
economist, he cited lagging productivity in the public sector as a primary reason
for the budget deficit. He noted that the demand for public sector goods is
inelastic, and therefore as public sector costs and wages rise there is no
associated decrease in demand from consumers.
Kenneth Adams pointed out that ordinary New Yorkers are not in a position to
control public costs, prices, or purchasing decisions. Public pressure on elected
leaders who make these decisions is inadequate because the average citizen does
not really follow what is happening in the state budget. To resolve the State’s
problems requires greater public awareness and a sense of urgency about New
York State’s economic “house of cards.”
Thomas Santulli called New York’s fiscal situation a disaster and cited federal
and state mandates as a major problem. New York spends more on Medicaid
each year than the entire budget of most states. Finding ways to reduce
spending, not tax increases, is the only way to resolve the fiscal problems.
Brian Sampson said New York is on an unsustainable budget trajectory and
cited state legislators, who are very secure in their jobs, as a primary impediment
to fixing the problem. State Senators and Assembly Members do not fear
business organizations or taxpayers, and are therefore unresponsive to their
concerns. His group, among others, is organizing to bring political pressure to
bear on legislators.
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2. Discussion
• Leadership: New York needs strong leaders to solve its fiscal and economic
problems.
• Taxes: Tax increases alone are band-aids. Spending reductions are necessary
to balance the State’s budget for the long-term. Soaking the rich will hurt the
State by encouraging people to leave the State or shelter income.
• Small Business: Small businesses are held back by the high costs of doing
business in New York, such as property taxes. The State needs to consider
what policies are needed to enable small businesses to keep their doors open.
• Labor Contracts: Collective bargaining could achieve real savings for New
York. However, the State cannot be at war with its workforce. Cooperation is
the only path to progress.
• Imposing caps: Spending and property tax caps are actions that some believe
may be the only way to keep costs under control. A cap should not be applied
at the current unsustainable level.
Panel Two: Jobs and Economic Development
Kathy Wylde delivered a presentation on current and proposed economic
development programs and the need for predictable, “as of right” tax incentives
targeted to creating new jobs in growth sector industries.
Matthew Ryder gave a presentation demonstrating the promise of “back
shoring” for New York State, as many companies are looking at bringing back
jobs that they took offshore during the past decade. The cost differential between
the US and developing countries is narrowing and there is an opportunity for
Upstate, in particular, to capture returning jobs in call centers, R&D and back
office functions that pay quite well. The Excelsior Program proposed in the
Executive Budget would help attract these jobs to New York.
Garry Douglas said businesses in the North Country are starting to do better but
that Albany needs to play a more constructive role. The Excelsior Jobs Program
will put New York on the right track but its 50-job eligibility threshold is too
high. Greater consideration needs to be given to regional differences in the
State’s economy. Empire State Development’s 10 regions are not an accurate
reflection of the way the State’s economy works. The State offers no tools to help
certain industries, like tourism.
Jonathan Drapkin called for an economic development plan that transcends a
two or four-year term in office. Top economic development priorities for the
Hudson Valley include: (1) prioritizing shovel ready sites; (2) establishing a
constructive dialogue between business and environmental groups to expedite
the land use approval process; and (3) discouraging legislation that has
unintended, anti-business consequences.
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3. Darcy Fauci said many businesses do not consider relocating to Upstate New
York because of Empire Zones’ cumbersome application process. The Excelsior
Jobs Program is a step forward but the State needs to take better advantage of its
SUNY system, too.
Robert Simpson cited the State’s failure to realize economic development
benefits from the significant R&D investment in New York’s universities. The
State needs to be a more active partner in encouraging innovation. The Excelsior
Jobs Program is a start, but there is also a need for programs that promote Main
Street development and revitalization of distressed areas.
Julie Suarez said that of the 36,000 farms in New York, 97% are family-owned.
800 of these farms produce 80% of the State’s total agricultural output. There is
diversity in the needs of New York’s farmers but no farmer has the means to take
advantage of economic development programs in the way other businesses do.
Reduced regulation and tax incentives are needed to help farmers.
Randy Wolken described a growing manufacturing sector that requires support
for both retention and attraction.
Discussion
• Industrial Development Agencies: Without the Empire Zone Program, the IDA
program has increased importance as the only way to reduce onerous
property taxes.
• Immigration: Immigration reform can be a tool to attract investment.
• Pro-Active Leadership: Starwood Hotels is moving from White Plains, NY to
Stamford, CT despite an equally generous incentive package offered by New
York. Connecticut convinced the business that they would be business-
friendly for the long term.
Areas of Consensus
• New York State needs a program that provides incentives for productive
economic activities in growth industries. This program needs to be responsive
to the State’s diverse regions, not “one size fits all.”
• New York’s business community needs to (1) focus on the big picture, not just
narrow industry or regional interests; and (2) be more on top of legislators,
communicating shared business priorities with greater regularity.
• The Excelsior Jobs Program is a good start. Further consideration should be
given to the 50-job eligibility threshold, job retention programs (especially to
provide access to low cost power), and property tax relief.
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