'THE REAL NEW YORK' WANTS NO STATE TAX HIKE

Text of a letter sent to state Legislators from Daniel B. Walsh dated March 12, 2003

DANIEL B. WALSH
President/CEO

March 14, 2003

RE: The noise around the Capitol—and the Real New York at work in your district

Springtime in Albany is heralded not by robins, but by charter buses- buses filled with protestors organized by one taxpayer-financed entity after another, all bent on convincing the Legislature that you simply must not and cannot cut the New York State budget.

Each group has its own cause. But they all have a common theme: that if only New York would raise its state taxes still higher, we could have what we want.

As the crowds march and the organizers hold their news conferences, they are hoping that the noise alone will convince you that they are the true voice of New York. I sympathize with the pressures you face because of these protests.

But I am writing to tell you that these good folks marching in Albany are not the true voice of New York. The real "Real New York" is back in your district, at work, producing goods and services, and trying to fight off a recession.

Seven million New Yorkers work in the private sector. When they think about Albany—if they think about Albany—I believe most of them are simply hoping against hope that we in the capital city will do nothing to harm their businesses, take away their jobs, prolong the recession, or reverse the economic progress that New York has made in the last ten years.

No, you don't see workers and managers and small-business owners marching to demand that you hold the line on taxes and spending. You wouldn't expect to. Nobody buys them a bus ticket. Nobody gives them a day off from work. Nobody withholds from their payroll to buy ads in the Legislative Gazette. Nobody sends them to rallies or forums on the budget.

But that doesn't mean those toiling in the private sector don't have a message worth listening to. We hear from them every day, and we know that economic recovery in New York is far and away their highest priority. The views of people in the real economy, the Real New York, can, I think, be distilled into three basic concepts:

1. Let's get real. The private-sector economy is the tax base. The national economy has been in recession since March of 2001-most severely, in New York, since 9/11/01. We've lost 154,000 private-sector jobs. In the face of that kind of job loss in the tax-paying economy, it is simply not possible not to take some cuts in the tax-spending sector, as well. Let's get real.
   
   
2. Private-sector growth is the only way out. A strong economy, a strong tax base, and healthy state and local budgets can come about only through recovery and growth in the private-sector economy. It is simply not possible to tax-and-spend our way to economic health. Private-sector growth is the only way out.
   
   
3. Higher taxes kill jobs. New York's job growth since the Legislature and Governor Pataki wisely began cutting taxes proves the link between jobs and taxes. So does our experience before 1994. As the Public Policy Institute has pointed out,* the tax increases New York enacted in the middle of the last recession "had negative results for New York's economy—and thus, ironically, for the state's own finances. What had begun as a relatively mild downturn turned into the worst employment disaster since the Great Depression—nearly 275,000 private-sector jobs eliminated in 1991, and another 80,000 the following year. The Empire State continued losing valuable jobs more than a year after most other states were on the rebound."
   
   As the Institute noted, the tax increases therefore did not increase revenues; "tax collections ended up more than $130 million below the previous year's total." It is simply not possible to raise taxes without hurting the economy. Higher taxes kill jobs.

What the spending lobbies are asking you to do is not only unwise and unrealistic, it's impossible. You cannot raise state taxes by billions of dollars, and expect that to yield a robust public sector that suffers no cuts. That course will lead only to more economic problems, and more revenue losses, in the months and years ahead.

The charter buses around the Capitol are shiny and impressive, and I'm glad to see spring coming. But those buses are carrying a dangerous message—one that will in fact lock us into a longer, colder winter in our private-sector economy.

Listen, instead, to the voice of the Real New York. It may not have charter buses, but it does have experience with a harsh reality New York proved again only a decade ago: Tax increases aren't the solution, they're the problem.

Sincerely,

(Signed) Daniel B. Walsh

The Business Council of New York State, Inc.
 152 Washington Avenue  |  Albany, New York 12210-2289  |  518-465-7511