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March 28, 2001

Governor: To preserve business-climate gains, let's restrain spending
At Small Business Day, he also announces task force on small business issues

New York businesses should urge lawmakers to restrain spending in the 2001-02 state budget, Governor George Pataki said at The Business Council's annual Small Business Day March 27.

"We cannot go back to the failed policies of the past," the Governor said during a luncheon address. "We have to have a budget that reflects the economic circumstances of the year 2001."

Senate Majority Leader Joseph Bruno and Assemblyman Robert Sweeney, chair of the Assembly Small Business Committee, also spoke during the luncheon.

Before the state began enacting policy changes in 1995, "New York was actively hostile to small businesses and taxpayers," the Governor said. New York ranked 47th in the country in creating jobs, endured the nation's highest tax burden and lowest credit rating, and faced a $5 billion budget gap, the Governor said.

Since then, tax cuts that will total more than $100 billion when fully effective, as well as workers' compensation reform, regulatory reform, and other changes, have moved New York from 47th to 11th in job creation, he added.

This year, lawmakers must heed signs of a national economic downturn and restrain spending in the state budget, he said. He recalled the state's experience in 1990, when lawmakers adopted a "spending-binge" budget and then had to make painful adjustments when revenues fell short.

"We're not going to have that happen. We're not going to provide support that is unsustainable," he said. In particular, he said, he would not permit spending to imperil tax reductions that are slated to reduce the tax rate for small businesses from 8 to 6.85 percent.

The Governor's Executive Budget calls for an All-Funds budget of $83.68 billion. The Senate has said that its budget resolution would increase that to $84.1 billion. And the Assembly has said its proposal would add $2.29 billion to the Governor's proposal. The leaders have said they are not near agreement on a budget. Budget negotiations are expected to continue well beyond the state's April 1 deadline for passing a budget, and possibly into the summer.

President George W. Bush's proposed tax cut: Governor Pataki also urged business leaders to support the president's proposed tax-cut plan, which the Governor said would be especially beneficial to New York State.

Task force on small business: The Governor also announced that he has asked Lieutenant Governor Mary Donohue to chair a new task force on small business that would consult with small business leaders to see what additional policy changes in New York State could further improve the business climate for small businesses.

Senate initiatives for business: In his remarks, Senate Majority Leader Joseph Bruno said the business climate improvement of the last six years is partly a result of strategic state investments in job creation. He cited, for example, "Jobs 2000" (J2K), a Senate-driven 1999 law that increased the state's investment in research universities, created a state venture capital program, supported new employer-focused job-training programs, and invested in developing water supplies for businesses and residents.

This year, he said, the Senate wants to continue investing in jobs through GEN*NY*SIS," a Senate proposal that calls for $500 million in combined public and private investments in biotechnology R&D at universities, corporate R&D labs, and other research institutions, with the goal of fostering economic development in this emerging sector.

Senator Bruno also noted that the Senate's budget resolution includes proposals for expanding the state's "Empire Zone" economic development program, creation of a $235 million tax credit to help businesses afford health insurance for their workers, and $1.8 billion in new tax cuts.

Assembly initiatives for business: Assemblyman Sweeney also spoke during the luncheon, briefly outlining Assembly initiatives that have been designed to help New York State small businesses and pledging to sustain that commitment.

The Assembly has passed a package of bills that it says would help small businesses in New York by making it easier for them to raise venture capital, pursue new opportunities, do business with the state, and comply with environmental and other regulations.