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February 9, 2004

Council opposes bill to use state's economic development programs to impose isolationism

The Business Council is strongly opposing a bill that would use the state's economic development programs to create isolationist sanctions against employers that move jobs beyond the state's borders.

The bill (S.6040-Spano/A.9567-Brodsky) would require employers that receive any broadly defined "development assistance" to return all such aid if they move even a single job from any facility out of state. Employers penalized in this way would also be denied any other development assistance for the next five years.

The bill defines "development assistance" to include tax credits, loans, grants, power sales, and infrastructure upgrades. The sanctions would hit any business if it or its corporate parent moved a job.

The bill would also make its sanctions retroactive by requiring repayment of development incentives from past years.

"We can think of few state policies that would hurt New York State's economic climate more than the unreasonable standards and draconian penalties proposed in this bill," Business Council President Daniel B. Walsh said. "Better state policy would focus on addressing taxes and other high business costs that make it so hard to keep jobs in New York in the first place."

Walsh noted that the state's development incentive programs already include reasonable and appropriate performance standards. For example, both the Empire Zone program and the Power for Jobs program award tax credits that depend on the annual achievement of employment criteria.

The bill would actually impose requirements that contradict the intent of some of these programs. For example, an Empire Zone business could increase both its in-zone and statewide job counts, but still lose benefits and face the additional punitive measures if even a single job were transferred out of state.

"New York is part of an increasingly dynamic world economy, and whole industries are undergoing irreversible transformation. Businesses will continue to move jobs out of, and into, New York State as they respond to changing economic conditions," Walsh said.

"The question is, how do we respond? We can become more protectionist. Or we can become more competitive. We think the latter approach makes far more sense."

Walsh said the better legislative alternative to state-level isolationism would be steps to reduce the high costs of business that are known impediments to job growth in New York State. These include property taxes, health-care costs, workers' compensation costs, and power costs. All of these costs are above average in New York, and some are among the nation's highest.