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PRIORITY ISSUE: Outsourcing

Status:
Several bills have been introduced that would adversely impact businesses that utilize out-of-state or overseas business resources.

• S.4750 (Spano)/A.1213 (Brodsky) would require benefit recapture and impose a 5 year benefit ban of businesses that move jobs out of New York. In some instances, these penalties would only be imposed if there was a reduction in the business's net in job employment. Affected benefit programs include Empire Zone benefits, and other grants, loans and tax benefits conferred by ESDC/UDC; recapture provisions apply only to the effective date of this law.
Senate version is not moving
Assembly Economic Development Committee

• S.5427 (Maziarz)/A.8669 (John) would preclude the use of non-U.S. labor or services in satisfying procurement contracts awarded by New York State government in most instances. Generally applies to contracts valued over $250,000.
Senate Rules Committee
Assembly Calendar • UTILITY CALL CENTERS - S.2189 (Volker)/A.4184 (Cahill) would require that public utilities maintain customer service call centers that are within both the state and their respective service areas.
Senate Energy Committee;
06/06/05 - Passed the Assembly
06/06/05 - Referred to Senate Rules

• S.4277 (LaValle) would prohibit investments of the NYS common retirement fund in institutions or businesses which out-source jobs overseas, and requires the fund to to divest any current investments in such companies “in a fiscally prudent manner.”
Senate Civil Service/Pensions Committee

• S.4761 (Leibell) directs the Department of Labor to prepare a report on the impact of offshore outsourcing on information technology jobs; and to make recommendations for improving the competitiveness of that industry in NYS.
Senate Labor Committee

• S.1597 (Paterson) is a broad outsourcing bill introduced by the Senate Minority. It would: prohibit business from transferring nonpublic personal information to non-affiliated third party overseas without prior written permission of the consumer; prohibit the state & local governments from entering into contracts "for any purpose" with an entity which engages in the practice of outsourcing jobs; prohibit "contractors" receiving state development assistance from outsourcing jobs; require repayment of assistance received and a five year ban on receipt of additional state assistance by companies that outsource jobs; requires companies planning to move in-state jobs overseas to provide a 180 day notice to affected employees; etc.
Senate Consumer Protection Committee

S.4750 / A.1213 memo in opposition
A.4184 memo in opposition
S.4277 memo in opposition
Contact:
For more information, contact Ken Pokalsky via e-mail at ken.pokalsky@bcnys.org or phone at 518/465-7511.

The Business Council strongly opposes legislation that would place restrictions on the ability of business to engage in either "outsourcing" or "offshoring" activities.*

These proposals ignore the realities of our increasingly global economy, and will do more harm than good to New York's economy, businesses and workers. Mainstream economists from both parties 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. Moreover, New York's economic problems are not caused by the off-shoring of jobs, and will not be solved by anti-outsourcing legislation.  The legislature would do more to secure jobs, and promote job creation, by focusing on key economic climate factors such as the cost of health care insurance, workers' compensation, electric power and property taxes, which impose significant competitive disadvantages on New York State businesses.

The most onerous bill now under consideration in New York (A.1213/Brodsky) would prohibit a business that has received state financial assistance from moving any "employment, jobs or positions" out-of-state.  "Violators" could be required to repay the state the value of state financial assistance received after the effective date of this bill, and could face a mandatory five year ban on receiving any additional state assistance. 

This bill has several major shortcomings:

These prohibition on, or penalties for, "outsourcing," would significantly impair the state's ability to retain existing businesses, or attract new business or new investments to New York. Under these 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. We question how many businesses would be willing or able to accept such stringent conditions in order to qualify for state assistance.

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 that place unreasonable limits on business activity, and impose draconian, retroactive penalties based on unreasonable criteria.

* The term "outsourcing" typically refers to situations where a function had been performed within a company, but is now done under contract by non-employees. The reference to "off shore" jobs would apply to purchase of services from businesses performing the work overseas, irrespective of whether such jobs or services were ever performed  by New York or U.S. businesses or employees. Often, it is unclear which of these different economic scenarios the intended target of this legislation is.