January 7, 2004
Governor urges key business tax change, and reforms in education, Medicaid, and workers' comp
Governor George Pataki said in his State of the State message Jan. 7 that New York can and should add a million new private-sector jobs by the end of the decade.
He also proposed a range of reforms that could put that goal within reach, including a new business-tax reform, education reforms to enhance accountability, immediate cuts to state and local Medicaid costs, energy initiatives, and workers' compensation reform.
"Every community in our state has great potential for economic growth," the Governor said in his January 7 address. "To meet that potential, let's build on what we know works."
Business Council President Daniel B. Walsh hailed the Governor's proposed job-creation goal. "Let's do it," he said.
In his message, the Governor advanced a number of policy ideas:
in reforms of the state's tax law to benefit firms that
have a majority of their jobs, factories, and capital investments
in New York. "Let's help New York-based companies better
compete and encourage others to locate here," he said.
The Governor has proposed similar reforms in previous State of the State messages. The Business Council has long supported adoption of the so-called single-sales factor reform, under which corporate taxpayers would calculate their taxes on in-state sales. Currently, taxes are based on three factors: in-state sales, property, and payroll. This effectively penalizes companies that have a high percentage of their jobs and capital facilities in New York.
A January 2001 study by The Public Policy Institute, The Business Council's research affiliate, showed that adopting single-sales factor to eliminate taxation of companies' jobs and property in the state could lead to an additional 133,000 jobs while increasing state revenues. That study was conducted for The Institute by economics professors from University of Chicago and University of North Carolina.
The Governor did not offer details on his reform proposal and did not specify what kinds of businesses would be affected.
- New workers' compensation reform. New York's overall workers' compensation costs remain above average by a number of measures. Previous reforms, championed by Governor Pataki in 1996, brought New York's costs closer to the national average. The Council has long argued that New York State needs additional key reforms to the program to enhance the state's competitiveness. The Governor said he would submit legislation in the weeks ahead.
- Improvements in the state Power for Jobs program, under which employers can receive reduced-rate power if they commit to creating or retaining jobs.
education reform to improve a school system that is already
the nation's costliest.
"Reform is the key to our effort to provide every child in New York with the best possible education. We cannot simply provide additional resources and maintain business as usual. Rather, we must enact broad based reforms that ensure more of the money we spend on education makes it to the classroom, and that someone is accountable for how it's spent and how it helps our children."
The Governor also renewed his earlier calls for a new school-aid formula "that is fair, simple, and sustainable."
- Reducing state and local Medicaid expenses this year. New York's Medicaid program "is quickly outstripping our ability to afford it," the Governor said.
- Changes in the state's Empire Zone program to improve its accountability, focus benefits to communities and neighborhoods that need it most, and provide flexibility to target projects with large job creation potential.
- Expanded investments in the state's high-tech Centers of Excellence program, and creation of a high-tech council of academic and business leaders.
The Governor also repeated his agreement with earlier statements by Assembly Speaker Sheldon Silver and Senate Majority Leader Joseph Bruno that New York should not raise taxes this year. "Obviously, I agree," he said.