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Unshackle Upstate 2011-12 Mid-Term Progress Report


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In recent years, businesses and families have left …

In recent years, businesses and families have left
Upstate New York in record numbers. Private
sector job losses have devastated our communities.

New York State’s leaders have not shown a
commitment to job creation and economic
development. In fact, our image over the last
decade has been quite the opposite – we have one
of the worst business climates in the nation.
It is beyond dispute that the state’s policies have
contributed to our economic problems by failing
to meet the economic challenges we face. In
many cases, Albany hasn’t just failed to act – state
government has actually adopted policies that have
made our economic situation even worse.

This report takes a hard look at what New York
State has done right since the beginning of 2011,
and what additional steps will address the high cost of doing business in the state.

Published in: News & Politics, Business
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  • 1. Unshackle Upstate 2011-12Mid-Term Progress Report A Review of Progress onBudget and Legislative Issues NEW YORK’S TAXPAYERS AN JOB CREATO D RS WANT A 2% Property T AX CAP November 2011
  • 2. INTRODUCTIONIn recent years, businesses and families have left to meet the economic challenges we face. InUpstate New York in record numbers. Private many cases, Albany hasn’t just failed to act – statesector job losses have devastated our communities. government has actually adopted policies that haveNew York State’s leaders have not shown a made our economic situation even worse.commitment to job creation and economicdevelopment. In fact, our image over the last This report takes a hard look at what New Yorkdecade has been quite the opposite – we have one State has done right since the beginning of 2011,of the worst business climates in the nation. and what additional steps will address the high cost of doing business in the state.It is beyond dispute that the state’s policies havecontributed to our economic problems by failingA NEW DAY AT THE CAPITOLOverall, 2011 has been a good year for taxpayersand employers – perhaps the best year in recenthistory.New Year’s Day 2011 began with the inaugurationof a new governor and the promise of changingAlbany’s dysfunctional ways. Immediately upontaking office, Gov. Andrew Cuomo spoke of themany challenges facing New York State – including Unshackle Upstate Executive Director Brian Sampson spoke alongside legislative leaders during a pro-property tax cap event in April 2011. majority in the State Senate, and Senator Dean Skelos (R-Rockville Centre) was elected Senate Majority Leader. This new leadership brought with it stability and predictability – representing a welcome change from the chaos and dysfunction that characterized the Senate in 2009 and 2010. Much remains to be done. Upstate New York’sGov. Andrew Cuomo delivered his State of the State economy did not crumble overnight, nor can itaddress across New York in January 2011. be revitalized immediately. Restoring the Upstatea $10 billion state budget deficit. The governor also economy will require a long-term, sustained effortmade it clear that he intended to follow through on by state government to understand and addresshis campaign promise to cap the growth of local the needs of the business community – and of theproperty taxes. taxpayers – who help make our communities thrive and prosper.New Yorkers also returned the Republicans to the 1
  • 3. UNSHACKLE UPSTATE’S CORE PRINCIPLESUnshackle Upstate continues to focus its work on the following principles: Reducing State and Local Spending Government spending continues to be a major issue for New York State. While the 2011-12 state budget reduced spending by 2 percent, the downward trend must continue in order to “right size” state spending. Additional savings must continue to be explored by consolidating and streamlining services. Spending on education and Medicaid - which make up a significant majority of the state budget - were capped in this year’s budget, but additional recurring savings must be found for the future. Reducing Taxes, Fees and Assessments The 2009-10 and 2010-11 state budgets included $9.2 billion in new taxes and fees. This year’s state budget did not include any new taxes or fees. This action was a significant first step toward improving the state’s economic climate, and the 2012-13 state budget should continue reducing the tax burden on New Yorkers. Reducing State Borrowing Also included in this year’s state budget were significant corrections to the state’s future debt and borrowing policies. For example, the governor and Legislature reduced the 2012-13 projected budget deficit from $15 billion to approximately $2 billion. As it continues to reduce its spending, the state should avoid relying on irresponsible borrowing and long-term debt. Reducing Mandates The tangle of laws and regulations that makes New York notoriously unfriendly to business and job creation also saddles local governments with expensive requirements, typically without funding to pay for them. The result: a tax shift to local governments to cover the cost of paying for a range of services – all at the expense of the taxpaying public. 2
  • 4. REVIEW OF THE 2011 LEGISLATIVE SESSIONHow did Albany lawmakers do in 2011? When than $125 million annually, according to thecompared to recent years, they did extraordinarily Division of Budget – included in the property taxwell. cap law were woefully inadequate.New Yorkers saw an on-time state And while it is too early to saybudget that not only reduced whether the Regional Economicspending, but successfully Development Councils willaddressed a $10 billion budget succeed in promoting private-gap. The governor signed sector job creation, we areinto law an historic 2-percent pleased that the effort is aproperty tax cap which also regionally-based one that willestablished a Mandate Relief take advantage of the uniqueCouncil that can address and attributes and strengths that eachprovide relief from costly and part of New York State has toburdensome regulations that offer. Unshackle Upstate Executive Directorthe state has imposed on local Brian Sampson discussed thegovernments. organization’s advocacy efforts with The remainder of this report looks members of the Capitol press corps. at what Gov. Cuomo and theBut by virtually every measure, Legislature accomplished duringthe Upstate economy is still struggling. There is still the 2011 legislative session, and also discusses whatmuch more that needs to be done. The mandate remains to be accomplished during 2012.relief provisions – which will save taxpayers more 2011 BUDGET REVIEW WHAT HAPPENED UU OPINION Overall 2011- Lawmakers enacted an on-time This year’s state budget represents 2012 State state budget that cut spending by 2 a huge improvement over the 2009- Budget percent and closed a $10 billion deficit 10 and 2010-11 state budgets, both without increasing taxes or state debt. of which increased taxes and state spending. State Agency The governor advanced and These state agency consolidations Consolidation achieved a number of state agency that were achieved represent an consolidations through the state excellent first step toward “right- budget, saving over $50 million sizing” state government. during the current fiscal year. The governor also achieved passage of the The Executive Reorganization Act can Executive Reorganization Act of 2011, be an important tool in achieving which allows him to submit an agency additional agency consolidation and reorganization plan to the Legislature savings for state taxpayers. that must be voted on. (cont. on next page) 3
  • 5. WHAT HAPPENED UU OPINIONSpending and The governor launched the The SAGE Commission is the meansGovernment SAGE Commission in mid-April through which the governor willEfficiency (SAGE) “to undertake a comprehensive propose an agency reorganizationCommission review of every state agency of plan to the Legislature. Unfortunately, state government and recommend while the SAGE Commission began structural and operational changes its work, it did not present an agency to it.” The group held two meetings, re-organization plan by the statutory but did not advance an agency deadline. reorganization plan for consideration by the Legislature. The governor should direct the SAGE Commission to begin working again to ensure that it is able to present an agency reorganization plan to the Legislature in 2012.Recharge NY The state budget included the Making this program permanent Recharge New York, which made the – which was long overdue – will Power for Jobs Program permanent. provide low-cost energy to job- creating businesses and not-for-profit organizations across New York State.Sales Tax The enacted state budget renews the This is an example of a tax reductionExemption state sales tax exemption for clothing that will immediately benefit families, purchases under $55. Next year, the and it will also benefit businesses state sales tax exemption will apply to close to the state’s borders by keeping all clothing purchases under $110. shoppers in-state.Reducing Governor Cuomo’s Medicaid Redesign This represents a huge step forwardMedicaid Team (MRT) recommended some – reductions in Medicaid spendingSpending $5 billion worth of cuts to the were long overdue. program, and to cap the state’s share of Medicaid spending. Most of the However, the failure of the governor MRT’s proposals became law. and Legislature to reach agreement on medical malpractice reform – The enacted budget provides for a which was recommended by the MRT two-year Medicaid appropriation, – represents a missed opportunity. providing for a fixed rate of growth for the 2012-13 budget.Education The governor proposed a $1.5 billion Ending the practice of increasingSpending cut in education spending, and the state aid each year – regardless of Legislature restored about $230 the state’s ability to support such million. spending – is critical to restoring the state‘s long-term economic well- The enacted budget provides for a being. two-year appropriation for education, providing for a fixed rate of growth for the 2012-13 budget. 4
  • 6. 2011 LEGISLATIVE REVIEW WHAT HAPPENED UU OPINIONProperty Tax The governor signed into law a 2- This historic law, while not perfect,Cap percent property tax cap (Chapter 97 should provide most Upstate of 2011) that exempts some pension New Yorkers with relief from ever- costs and tort costs. The cap allows increasing property taxes. for growth, and includes an override option that would allow for the tax The sunset date built into the law levy to exceed the cap when 60 means that it will have to be approved percent of voters (for school districts) again in the coming years. or 60 percent of the total voting power of the governing body (for But the failure to achieve real local governments) approve such an mandate relief this session (discussed increase. below) will put a great deal of pressure on local government officials to live within the property tax cap.SUNY The governor signed into law the This will strengthen SUNY’s ability to NYSUNY 2020 bill, which includes provide quality affordable education, a Challenge Grant Program to enable students and parents ensure encourage economic development that they can afford their education, plans on SUNY campuses and and will enable SUNY campuses the surrounding communities across the state to become engines and a rational tuition program of for economic development. predictable tuition increases which will benefit the SUNY campuses themselves.Health Insurance Two proposals would have increased As the cost of health insurance health insurance premiums – the coverage continues to rise, the Health Care Reform Act (HCRA) Legislature should not approve any surcharge and a bill that would have legislation that will increase costs for allowed for collective negotiations those with private health insurance. by health care providers (S.3186-A/ A.2474-A) – were not approved. We note again that the Health Care Quality and Cost Containment Commission does not appear to have met since it was enacted into law in 2007. We urge the governor to appoint the members of this Commission to analyze the costs and quality of proposed health insurance mandates as soon as possible. (cont. on next page) 5
  • 7. WHAT HAPPENED UU OPINIONArticle X Siting The Power NY Act included a new The new power plant siting law will power plant siting law to streamline encourage the construction of new the decision-making process with electric generation and help reduce respect to the construction and rising energy costs incurred by operation of new major electric Upstate’s manufacturing industries generating facilities, or the re- and other large energy users, powering of existing facilities. providing a much needed boost to the Upstate economy.Workers’ The Legislature introduced several It is critical that the 2007 reformCompensation bills that would erode cost reduction law be implemented as intended to components in the 2007 Workers’ ensure that it provides the savings to Compensation reform package, businesses while ensuring access to including S.3741/A.6294 (which medical care and benefits for injured passed the Assembly, but did not pass workers. Bills that undermine the the Senate). historic 2007 reforms – such as S.3741/ A.6294 – must be rejected.Project Labor During the final negotiations on Mandating or encouraging the useAgreements the property tax cap/mandate relief of PLAs arbitrarily increases public legislation, attempts were made to construction costs since bids must encourage the use of Project Labor include antiquated and costly Agreements (“PLAs”) by enabling union rules that increase labor costs project owners to require them and render the majority of local instead of going through the separate construction workers ineligible to bidding process otherwise required work on the project in favor of hiring by the Wicks Law. only union construction workers. Proponents argue that PLAs ensure the speed and quality of construction plans. But PLA projects cost taxpayers, on average, 12-18 percent more than projects awarded by open, competitive bidding. (cont. on next page) 6
  • 8. WHAT HAPPENED UU OPINIONUnion Contracts Governor Cuomo reached agreement The 2011-12 state budget reflects with the leadership of the state’s savings that are to be achieved two largest unions (CSEA and PEF) through a reduction in labor costs, on contracts that included pay and and the governor negotiated fair health care concessions in exchange contracts with CSEA and PEF given for avoiding layoffs. the state’s financial situation. The governor’s determination that the CSEA and PEF members have state government must tighten its approved their respective contracts. belt will help put New York State on a stable financial footing in future years.Mandate Governor Cuomo started well on this, The state must provide for realRelief for Local issuing Executive Order #6 appointing mandate if local governments andGovernments a Mandate Relief Redesign Team school districts are going to be able to (MRRT) in early January to “look for live within the state’s newly-enacted ways to reduce the costs of mandated property tax cap. programs on schools and local governments.” But the mandate relief measures that were ultimately adopted as part of The MRRT held 6 meetings the property tax cap legislation are throughout the legislative session and woefully inadequate. issued a preliminary report on March 1st. But the MRRT failed to issue a final The new 11-member Mandate Relief report, and did not reach agreement Council, tasked with identifying and on mandate relief measures. reviewing mandates that can be eliminated or reformed, may provide The property tax cap law (Chapter some relief in the future. But that is 97) included some mandate relief uncertain. provisions that will save over $100 million, but much more must be Achieving real, sustainable mandate done. relief for local governments and school districts will be a major 2012 Under Executive Order No. 6, the priority for Unshackle Upstate. MRRT must issue a final report to the governor by March 31, 2012. (cont. on next page) 7
  • 9. WHAT HAPPENED UU OPINIONEconomic In late July, Governor Cuomo While it is too early to gauge whetherDevelopment launched the Regional Economic the Regional Economic Development Development Council initiative, which Council approach will be successful, he says will “redesign the relationship it is important that the state has between the state government established a process by which those and businesses to stimulate closest to the communities in need regional economic development can work together in setting priorities and create jobs statewide.” Ten for the allocation of limited state Regional Councils throughout the resources. state are developing a plan for the development of their respective regions, and the state has committed to work with each one to help them carry out their plans for development and to distribute state economic development funding.Natural Gas There were a number of bills that Unshackle Upstate believes thatDevelopment would have banned or limited the hydraulic fracturing can be done practice of using hydraulic fracturing safely, and that New York State must to drill for natural gas. Most were be prepared to take full advantage based on fear and misinformation, of this tremendous economic rather than on science and a clear opportunity. understanding of the practice and its risks and benefits. None of these DEC should continue its science- bills were enacted into law this based, comprehensive review session. of the potential environmental impacts of natural gas development, The Department of Environmental and determine whether its draft Conservation (DEC) recently issued regulations strike an appropriate its draft regulations for high-volume balance between economic hydraulic fracturing, and is now development and environmental accepting public comments on them protection. before any drilling permits can be issued. 8
  • 10. LOOKING AHEADUnshackle Upstate believes that Gov. Cuomo is We look forward to continuing to help move Newcommitted to improving the environment for York State government in the right direction tofamilies and businesses throughout Upstate New create an economic environment that permitsYork, and we are committed to support those private sector job creation and offers relief toefforts. taxpayers.We recognize that the problems facing Upstate Unshackle Upstate is looking for the following fromNew York did not occur over night, and that they Albany:cannot be solved in a single legislative session.Another fiscally responsible budget Action from the SAGE CommissionWe look forward to a state budget that is enacted We look forward to the SAGE Commissionon-time, that does not increase state spending, and submitting a wide-ranging and comprehensiveincludes no new taxes, fees or borrowing. plan to consolidate state agencies, authorities and commissions that have overlapping functions, andReal mandate relief for local governments to provide a road map to ensure that the remaining ones provide better services to the taxpayers.Now that the property tax cap has passed, it isessential to work with local governments and Economic development plans from the Regionalschools on efforts to reduce costly state mandates. Economic Development CouncilsRelief from business mandates We have high expectations for what the Governor has promised will be “a new operating model forIt is long overdue for the state to provide relief for New York State government” that is intended tobusiness from unnecessary, burdensome and anti- “stimulate economic development throughout thecompetitive business mandates. entire state, while improving the business climate statewide.” 9
  • 11. Connect with Unshackle UpstateVisit our Website: www.unshackleupstate.comJoin the Unshackle Army: us on Facebook: us on Twitter: our Videos on YouTube: Unshackle Upstate 150 State Street • Rochester, New York 14614 Phone: (585) 256-4625 Proudly Produced in Upstate New York