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January 9, 2002

Governor Pataki: Tax cuts must go forward
He calls for spending restraint, new efforts to spur economic growth

Saying New York State will once again "turn crisis into comeback," Governor Pataki called today for going forward with scheduled tax cuts, restraining state spending, and creating new economic development efforts to stimulate business and job growth statewide.

"In the aftermath of the most devastating attack on American soil in our nation's history, we face new challenges," the Governor said in his State of the State address at the Capitol in Albany. "The decisions we face will be difficult. But our choices are limited to two: Either we control the crisis, or the crisis will control us.

"We turned crisis into comeback once," he added. "Together, we can do it again, and we will."

Tax cuts: Noting that tax cuts enacted over the previous eight years have led to historic employment growth, Governor Pataki said the $294 million in tax reductions scheduled to take place this year will remain in place despite the state's financial difficulties. Those include reduction in the corporate tax rate for many corporations, including banks and insurance companies, from 8 to 7.5 percent, as well as reductions in energy taxes on commercial, residential, and non-profit consumers.

"Tax cuts will go forward," the Governor said. "They must go forward, because we know that tax cuts create jobs. This year, next year, and beyond, we will cut taxes by hundreds of millions of dollars. It's what our economy needs, and what our people deserve."

To help make that possible, the Governor said the budget he proposes later this month will reduce General Fund spending compared to the current year's.

Daniel B. Walsh, president/CEO of The Business Council, said: "The Governor's message contains the right prescription for our economy and the right inspiration for our future. Lower taxes, job-creation incentives, and high-tech R&D are proven engines of prosperity and growth.

"The Sept. 11 attacks and New York's statewide recession do not change our formula for growth," Walsh added. "More than ever, New York needs these kinds of policies to enhance its competitiveness and to keep rolling." (His full statement is at www.bcnys.org/whatsnew/2002/0109sos.htm.)

Governor Pataki said he will propose several major steps to stimulate the state's economy.

High-tech R&D: Two proposals will build on efforts over the past year to stimulate more high-tech research in universities and businesses across New York. A new program called Security Through Advanced Research and Technology (START) will help colleges and universities secure federal and other high-tech research funding for "the emerging national homeland security industry," the Governor said.

In addition, the Governor said, he will propose investing $250 million for initial funding of high-tech Centers of Excellence in Rochester, Syracuse, Buffalo, at Cornell University, in New York City, and on Long Island.

"These initiatives will not only nurture new discoveries, but will ensure that these innovations will carry the label 'Made in New York,'" he said.

Economic Development: The Governor proposed creation of a new Empire Opportunity Fund to support economic development projects throughout upstate New York and on Long Island. The fund could be used to support projects such as industrial parks, downtown commercial revitalization, convention centers, redevelopment of brownfields and harbors, and other projects.

The Excelsior Linked Deposit program, which provides low-interest financing for small businesses, would be increased by $100 million.

Local governments: While restraining spending by state government, Albany will work to help local governments become more cost-effective through a task force that will help spread innovation and efficiency among counties, cities, towns and villages, the Governor said. The task force will also recommend "how we can bring the structure of local government in line with the 21st century, he said.

School aid: Governor Pataki renewed his call to "throw out the existing school aid formula" and give school districts more flexibility in using state aid. He said he will propose schoolwide performance ncentives for teachers in urban schools that show the most improvement in meeting higher learning standards.

Initiative and referendum: Saying that New York must "reform the democratic process," the Governor said he will propose a state Constitutional amendment allowing voters to enact laws directly through initiative and referendum. And he called for "meaningful and comprehensive campaign finance reform."

Environment and energy: The Governor called for reform and refinancing of the state Superfund that finances cleanups at contaminated properties. He said he will propose efforts to develop renewable energy sources to protect the environment and stimulate development of new industries. He set a goal of preserving 1 million new acres of open space over the next decade, adding to more than 300,000 acres set aside since 1995.

Health care: He said he will send the Legislature within the next few days a proposal to increase staffing in health-care facilities and strengthen hospitals and nursing homes with a "bold investment in our future."

Housing: Another pending proposal will help local communities, labor unions and community developers identify and pre-permit sites for construction of affordable housing, he said.

Anti-terrorism: The Governor said he will propose additional anti-terrorism laws, including life in prison for possession of chemical and biological weapons, and new security measures at the state's airports, starting with Kennedy and LaGuardia airports. He also plans to introduce a number of criminal-justice reforms, including changes to the Rockefeller drug laws.

In the wake of September 11, Governor Pataki said: "Some may be asking if we still have the faith to feel confident about a century that began in horror - or whether the forces of unmitigated evil have handed us a somber and uncertain future.

"New Yorkers have already provided us with the answer," he said. "We will rebuild, we will succeed."

The complete State of the State address is at www.state.ny.us/sos2002text.html.