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Government Affairs Albany Update

April 23, 2004

Outsourcing/Offshoring Legislation

Two previously announced outsourcing bills were introduced this week, as the Senate ended its period for unlimited introduction of bills. These include:

Pension Fund Investments - The most significant new bill (S.6872/Lavalle) would prohibit investments by the state's $100 billion common retirement fund in the "stocks, securities or other obligations" of any company which outsources jobs, and requires the fund to divest any such investments " in a fiscally prudent manner." The bill was introduced with three co-sponsors: Larkin, Marchi and Velella.

The bill defines outsourcing as "to seek resources outside the United States to save more [sic] and/or to exploit the skills of another entity." Since the meaning of this legislative language is unclear at best, its difficult to say exactly who would be affected by this proposal. However, the sponsor's memo provides a more recognized definition of outsourcing (work done for a company by another company or people other than the original company's employees), and states that the legislative intent is to prohibit investments in businesses that outsource jobs overseas.

Obviously, this bill would have a major impact on the investment options available to the Common Retirement Fund, and would likely affect many Business Council members. For example, one analysis shows that this bill would preclude the state retirement fund from investing in at least 23 of the 30 stocks tracked in the Dow Jones Industrial Average. We have requested a meeting with the Senate sponsor, and also have asked the State Comptroller for comments.

Senate Democrats "Omnibus" Bill - Legislation first announced by Senate Democrats at a March 3 press conference has finally been introduced (S.6935/Paterson). The bill generally tracks the provisions of their earlier press release. Key provisions include the following:

Offshoring Legislation Chart

Staff Contact: Ken Pokalsky
The following chart illustrates the various offshoring/outsourcing bills introduced in the NYS legislature to date, and includes a brief summary, current status and Business Council position.

Offshoring Table
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Internet Access Tax Legislation Pending

A bill which would allow state and local governments to impose billions of dollars of taxes on Internet access is now pending before the U.S. Senate. The bill, S.2084 (Alexander/Carper), would allow states to tax the Internet "backbone" – everything but the last mile to the consumer from the Internet. Because the Internet Service Providers (ISPs) will not be able to explicitly pass through the tax to consumers when they purchase high speed transmission, the ISP will be forced to absorb the tax or raise the price charged for Internet access service.

Congress initially enacted the Internet Tax Freedom Act in 1998, and voted to extend it in 2001. This Act prohibited states and localities from imposing taxes on Internet access. Senator Schumer voted for this measure, Senator Clinton voted against it. This moratorium expired at the end of October, 2003.

In September, 2003, the Internet Tax Non-Discrimination Act passed the House with broad bi-partisan support. This legislation would reinstate the federal moratorium against Internet access taxes, as well as "multiple and discriminatory" taxes targeting Internet commerce, and make them permanent and national in scope. The Act would ensure technological neutrality, so that consumers would be protected by the federal moratorium no matter what technology they use to access the Internet. The Senate bill, S.150, has been referred to the Senate with the bi-partisan approval of the Commerce and Finance Committees.

Governor's Program Bill on Workers' Compensation Introduced

The Governor has introduced his reform package on workers' compensation. The bill (S.6841/A.10975) has been introduced in both the Senate and the Assembly. The Senate version is being sponsored by the Committee on Rules and in the Assembly by the Committee on Rules at the request of Assemblywoman John.

Assemblywoman John introduced this bill in an effort to spur negotiations on this important issue. While she is also carrying the AFL-CIO bill, Assemblywoman John indicated in a meeting with The Business Council earlier this week, that she would like to see something done on this issue this session.

This bill provides a balanced approach by placing durational limits on permanent partial disabilities while at the same time raising the maximum benefits for injured claimants. The bill is expected to save the business community over 15 percent in workers' compensation costs.

Click here to view The Business Council's side by side comparison of the three bills currently in play