Legislative Memo


S.6040 (Spano)/A.9567 (Brodsky)



"Poison Pill for Job Growth" Act



February 26, 2004


The Business Council strongly opposes this legislation, which would prohibit a business that has received state financial assistance from moving any "employment, jobs or positions" out-of-state. "Violators" would be required to repay the state the value of any and all state financial assistance received up to that date, and would face a mandatory five year ban on receiving any additional state assistance.

This is an isolationist bill that will do more harm than good to New York's economy, businesses and workers.

In general, the proposed legislation ignores the fact that mainstream economists from both Democratic and Republican administrations have said "outsourcing" of some jobs cuts costs for consumers and makes businesses more efficient, ultimately resulting in more U.S. jobs, rather than fewer. Recent news reports quote top economic advisers to former President Clinton, for instance, confirming this widely accepted economic reality.

More specifically, the proposed legislation is unfair in that it would impose severe economic penalties against businesses that have fully met their obligations to the state under existing economic development programs. For example, under the Empire Zone program, a business must meet a job growth test each and every year in order to qualify for the program's most significant incentives. Under this legislation, if that company moves even one job out of New York State, it would be forced to repay the value of all state incentives received to date, and be banned from any additional state incentives for a five year period, irrespective of how many new jobs it created within the state.

The bill's prohibition on "outsourcing," and the attached penalties, would also significantly impair the state's ability to retain existing businesses, or attract new business or new investments to New York. Under this proposal, the acceptance of state assistance would come with severe limitations on a firm's ability to move employees or business operations to meet business needs, irrespective of the justification for doing so or the net impact that such changes would have on in-state employment. We question how many businesses would be willing or able to accept such stringent conditions in order to qualify for state assistance. And considering high cost-of-doing-business factors in New York - such as property taxes, workers' comp and electric power - our economic development efforts will be significantly impaired by making these programs less attractive to new investments.

The Business Council does not oppose measures to increase the accountability of major state economic development programs, where needed. For example, we believe the Governor's Empire Zone reform proposal contains appropriate provisions regarding the tracking of, and reporting on, costs and benefits within that program.

However, we strongly oppose measures such as S.6040/A.9567 that place unreasonable limits on business activity, and impose draconian, retroactive penalties based on unreasonable criteria.

For these reasons, The Business Council urges you to join us in our opposition to S.6040/A.9567.