Text of a Memorandum sent to New York State Legislature from Daniel B. Walsh dated April 30, 2003.

April 30, 2003

TO: Members of the Legislature
FROM: Daniel B. Walsh
RE: Freeze taxes, don't raise taxes

For nine straight years, the New York State Legislature has cut taxes so that working men and women would have a better chance at a good job in the Empire State. I hope you will not reverse that proud record now.

The revenue measures being proposed would raise sales taxes, increase personal income taxes and repeal incentives for major business investments at the very time we need them most-now.

Every one of these tax increases would be a mistake. Just as the tax cuts you enacted have brought thousands of new jobs to New York, these tax increases would drive thousands of good jobs away.

Private-sector workers have already been punished-and now are being asked to bear a greater burden, so that their public brethren share no burden. Over the last two years, more than 300,000 taxpaying New Yorkers have lost their jobs. Others have taken pay cuts, reduced work weeks, or at best gone without raises. Now, at the behest of the unions representing public-sector workers, you are told that higher taxes on working families and on employers are the answer.

Higher taxes are on the table even though-indeed, in large part because- the Legislature is taking no action to stop the waste of taxpayers' dollars by repealing the Wicks Law, eliminating lawsuit abuse, reforming costly prevailing-wage rules, or taking other steps that mayors, town supervisors, school boards and business leaders have requested for years.

I know you are concerned about property taxes. But the idea that higher state taxes will mean lower local taxes is a delusion. It is the oldest canard in Albany. Like Lucy with the football, year after year someone sets this game up, we run down for the kick, and the taxpayers end up landing on their backs-with higher property taxes. The way to cut local taxes is to cut local costs, not increase state taxes.

Mandate relief is one way to cut local costs. Another way, as we suggested yesterday, is to freeze the pay of public employees. This will cut the growth in costs, maintain vital public services, and, most important, provide tremendous fiscal relief to localities. Our Public Policy Institute calculates that a one-year freeze on state and local government wages could save the state, its localities and school districts a total $2 billion to $3 billion. For local taxpayers the savings would amount to the equivalent of $1.5 billion to $2.3 billion in additional state aid.

Newspaper reports and Budget Division estimates indicate that the legislative budget would raise spending by more than the inflation rate. If the Legislature cannot resist union demands for higher spending and higher taxes in the face of this historically negative fiscal environment, I fear that business and investors will conclude that you never will.

We have made enormous progress in recent years, convincing corporate decision-makers around the country and around the world that New York State has changed. The proposed tax increases will send a very different message-that New York is going backward, rather than forward. The inevitable result will be that thousands of working men and women will lose the opportunity for a good job in the Empire State.

Finally, the business community offers this challenge.

If the Legislature is truly convinced that higher state taxes and spending will hold down local property taxes, it should insist that this be done. There's a simple way to do that-enact a one-year freeze on property taxes.

We believe that state tax increases will damage our economy. We believe that mandate relief and a wage freeze are better ways to help localities cut costs. But if you think higher state taxes will hold down local taxes, stand up for your beliefs and enact a freeze on property taxes at the same time. Let's convert some of this wishful thinking into reality.