Business
Council's 2004 budget testimony
Testimony
of
Edward
Reinfurt
Vice
President, The Business Council of New York State, Inc.
Senate
Finance Committee
and
Assembly Ways and Means Committee
February
10, 2004
Chairman
Johnson, Chairman Farrell and distinguished members of the committees,
thank you for inviting us to appear before you today.
I'll
start my remarks by saying that so far the Legislature is on the right
track. You've moved up the schedule for reviewing and acting on the budget,
and that's a good thing. A speedy budget is not the only important thing
- the fiscal policies you and the Governor set are most important. But
a budget that can be adopted in August can probably be adopted in May,
or even by April 1.
As always,
the Legislature will ask one question before all others in writing the
coming year's budget: How much money do we have? The answer to that depends
on one other question: How is our economy doing?
I don't need
to tell you the answer: Right now, we're not doing very well. For the
12 months ending in December 2003, our total private-sector employment
was almost unchanged, down by about 3,800 jobs in a total of more than
7 million. Statewide, we basically reflected the national trend in private-sector
employment. But employment was down in New York City, and in our Upstate
metro regions. Our manufacturing employment fell at a faster rate than
the nation's - 4.4 percent, compared to 3.4 percent nationwide. And while
nationwide employment in the key securities sector grew slightly in 2003,
we lost nearly 3,000 high-paying jobs.
There are
clear signs that the national economy is getting stronger. If that trend
continues, we can expect that New York will gain jobs. Unfortunately,
we have reason to fear that we will not gain our fair share of the nation's
job growth. The cost of doing business in New York remains too high.
You know
the specifics. We have the heaviest tax burden in the nation. Health-care
costs in New York are high. So are the costs of energy, workers' compensation,
and
regulation.
Many business
owners fear that these concerns may be forgotten in Albany. The Legislature
raised taxes sharply last year. Health-care costs continue to go up, partly
because of taxes and coverage mandates imposed by the state. Administrative
decisions by the Department of Environmental Conservation and the Public
Service Commission are increasing the cost of electricity, despite official
state policy that calls for reducing power costs. As state spending continues
to rise, the threat of still more tax increases - if not in this election
year, then later - rises as well. And we are very aware that many interest
groups are asking you to make it even more expensive to keep and create
jobs in New York State.
We ask you
to reject the idea that increasing the cost of doing business is good
for working New Yorkers. We ask you to return to the vision that prevailed
in Albany for eight years in a row - the understanding that cutting taxes
and making our business climate competitive will give more New Yorkers
the jobs they need.
Two percent
here, three percent there adds up
One of our
member companies is Harden Furniture, in McConnellsville, a few miles
outside of Rome. Greg Harden, the CEO, tells us that Harden Furniture,
like many other American manufacturers, faces increasingly tough competition
from China. The new problem is that Chinese manufacturers not only have
cost advantages but are now catching up to American quality. Harden Furniture,
which employs nearly 500 New Yorkers, is competing with China on the cost
of its products. It can continue to compete, but only if it does not face
new costs, including those from government, that do not add value to its
products.
Harden Furniture
pays good wages and provides good benefits, and those together add up
to 30 percent or so of the price of a dining room table or bedroom set.
In China, employee costs are roughly 3 percent, rather than 30 percent.
But, Greg Harden tells us, furniture from China sold here in the states
includes transportation costs that add up to roughly 30 percent. The bottom
line is that Harden quality remains world-class, and it can at least come
close to competing on cost. Thus costs that add 2 percent here, and 3
percent there, can make the entire difference when consumers decide whether
to buy Harden furniture produced in McConnellsville, or the competition's
furniture made in China.
We ask you
to keep those few percentage points in mind when you think about taxes,
when you think about the cost of Medicaid, workers' compensation, energy,
and other costs on New York employers.
Make New
York more competitive, rather than less
We believe
there are steps you can take, within the confines of a responsible budget,
to increase economic opportunity for New Yorkers.
First, we
should recognize that actions you've taken in previous years continue
to bring new benefits. I refer to the law you enacted in 2000 to phase
out the natural gas import tax and to reduce the gross receipts tax on
electricity. We thank you for those positive steps.
This year's
Executive Budget includes a corporate tax proposal that will make our
tax code significantly more competitive for manufacturers. The Governor
proposes to phase in single-sales factor taxation for manufacturers over
five years.
We supported
a similar proposal when the Governor advanced it in 2001. And we strongly
support the efforts Senator Skelos, Senator Alesi, Assemblyman Morelle,
Assemblyman Schimminger, Leader Nesbitt and his colleagues have made in
the Legislature to enact single-sales taxation.
New York
was once a national leader in pro-business tax policy. In 1976, we were
the first state to switch to a double weighted sales allocation. This
reform reduced the tax burden on corporations whose percentage of in-state
jobs and facilities was greater than their percentage of in-state sales.
In doing so, the Legislature created a tax advantage for in-state corporations,
and moved ahead of competing states in terms of a pro-growth corporate
tax policy.
Now, at least
35 states, including most of our chief competitors, have adopted double-weighted
sales. More important, a number of states now exceed New York's benchmark
for a more competitive corporate tax policy. Eleven states, including
key competitors such as Illinois, Massachusetts, Connecticut, and Texas,
have already adopted single-sales factor apportionment. A number of other
states, including Pennsylvania, Maine, Oregon, and Wisconsin, are considering
such legislation. Failure to act will result in our companies paying additional
taxes to other states. Our failure to respond is analogous to letting
competitor states hit us in the chin and not swinging back. We must get
in the fight for jobs.
Adopting
single-sales factor in New York will benefit both small and large manufacturers
that locate a significant share of their facilities and employees in New
York. Smaller firms with out-of-state sales will see larger percentage
benefits. On the other hand, there will be no change in tax liability
for firms with all their employees, property, and sales within New York.
Importantly,
this allocation change can also benefit Subchapter S corporations, which
pay tax not through the corporate franchise tax but through the personal
income tax. Typically, Sub-S taxation is based on the location of the
shareholder receiving the income. However, as a matter of New York State
tax law, a business that files its federal taxes as a Sub-S corporation
can elect to file state taxes on either a Sub-S or Article 9-A basis,
allowing a benefit from the conversion to a single sales factor allocation
under state law.
The Business
Council applauds the Governor's proposal, and has offered recommendations
for a broader definition of manufacturing and a quicker phase-in period.
Specifically,
we recommend that you adopt the definition of manufacturing included in
S.4604-A/A.8500, carried by Senator Skelos and Assemblyman Morelle. This
definition has evolved over the past several sessions, and includes key
sectors including software development, publishing and nanotechnology
businesses.
We also recommend
a phase-in period of no longer than two years. The budget projects a net
reduction in tax revenues of $40 million once fully effective in FY 2009.
However, research indicates that the stimulus effect of adopting a single
sales factor allocation methodology will result in increases in both in-state
employment and state corporate tax revenues. A quicker phase-in will allow
New York to more fully participate in the national economic recovery,
and its stimulus effect will help make a faster phase-in affordable.
Research
done for our Public Policy Institute in 2000 indicates that a single sales
factor allocation methodology would have a long term impact of increasing
manufacturing jobs by 32,000, with a multiplier impact of an additional
101,000 private sector jobs. These jobs would produce between $180 million
and $247 million in increased annual personal income tax revenues. This
study was based on a statistical examination of the experience of states
that had modified their apportionment formula in the preceeding two decades.
This report is available on our Public Policy Institute web site, and
we would be happy to forward copies to you.
Finally,
while we strongly support the single-sales factor approach - to reward
job creation and capital investment in New York State - we know that it
will increase tax liability for certain businesses and/or industry sectors
whose physical presence within the state is not in proportion to their
market involvement in New York. The Business Council proposed legislation
two years ago that would hold manufacturers harmless by allowing for a
taxpayer election between the single sales factor and the existing double-weighted
sales allocations, for companies that have a significant physical presence
in New York. We believe this protection should be considered as part of
the single sales factor legislation.
Empire
Zones
Empire Zones
are New York's most valuable economic development tool. There is much
in the Governor's Empire Zone reform proposal that we support.
We strongly
support the concept of different categories of zones focusing respectively
on development in severely distressed areas, county-level development
objectives, and state-wide attraction of major new investments. Each of
these objectives is important to the state's overall economic vitality,
and can be pursued simultaneously through a restructured Empire Zone program.
The proposal
to reconfigure zones reflects a fair balance between meeting the need
for investment in our most economically distressed areas, and providing
local development officials with flexibility in applying zone benefits
to meet local development opportunities.
One of our
top priorities for 2004 is to use the Empire Zone program more effectively
in retaining our existing manufacturing base. This should be a top priority
of the Legislature as well.
Why? Let
me start with one number: $11,407.
That is the
bonus each manufacturing job bring to Upstate New York. It represents
how much more, on average, an upstate manufacturing job paid compared
to the average non-manufacturing private sector job in 2001, according
to the state Labor Department. For the 53 upstate counties, the average
manufacturing wage was $44,633. For private-sector jobs outside manufacturing,
the average wage was $33,226.
Looking at
our core economic areas upstate, the numbers are even more dramatic.
In Erie County,
the average manufacturing job paid $45,515. That was $17,170, or 61 percent,
more than the average private sector job in other industries.
In Niagara
County, the difference was $28,810, or 123 percent. In Monroe County,
it was $19,766, or61 percent. And in Onondaga County, $16,060, or 51 percent.
Again, in each case the dollar figures represent the bonus - the additional
pay - produced by each manufacturing job, compared to all other private-sector
jobs. That does not include benefits, which on average are much better
with manufacturing jobs than elsewhere.
These are
high-paying jobs, and New York State should fight like hell to keep every
one here.
Let me mention
one other number - 100. Over the last five years, we have lost an average
of 100 good manufacturing jobs in New York State every single day. That's
the equivalent of a significant factory closing every single week.
Whether you
look at New York State or the U.S. at large, it is essential for manufacturers
to become more productive, to continuously invest in modern machinery
and control equipment, in order to maintain a competitive edge in an increasingly
cost-competitive world. As a matter of policy, we cannot continue to measure
manufacturers' commitment to New York State, and award manufacturing investment
incentives, based on employment count alone.
To address
this concern, we propose extension of Empire Zone-type benefits to manufacturers
that make significant capital investments in New York State, and either
increase employment or retain a high percentage of existing employment
in the state.
We are encouraged
by a provision in the Governor's Empire Zone reform package that leans
in this direction. However, we believe it should go further.
The Executive
Budget proposes new criteria for calculating QEZE real property tax benefits
based on a "qualified empire zone investment." Specific criteria on what
qualifies as a significant in-zone investment would be established in
Empire State Development regulations. However, this benefit would only
be allowed for such investments in severely depressed census tracts (based
on criteria set forth in Section 958(a) of the General Municipal law,
which includes 20 percent poverty levels and unemployment levels at or
above 125 percent of the state average).
Given that
manufacturing is such a vital component of the state's economy, especially
in upstate regions, and that manufacturing continues to struggle statewide,
we believe that investment and job retention-based QEZE benefits should
also extend statewide. We believe such a program can be developed with
bright-line qualifications for both investment levels and employment retention
criteria. For example, investment levels could be set at both a fixed
dollar amount and as a percentage of existing capital assets, in a way
that establishes appropriate criteria for small and large manufacturers
alike.
We look forward
to discussing specific legislative options with the Legislature and the
Governor. But we can think of no more important economic development policy
for 2004 than to focus on retaining good manufacturing jobs.
We also believe
the Governor's reform plan should be modified to take advantage of other
opportunities to make the Empire Zone program a more effective pro-manufacturing
tool. Specifically, reform legislation should include capital investment/job
retention criteria in the proposals for awarding state-wide Flex Zone
acreage, and in designating county-level discretionary zone acreage.
Power
for Jobs
The Business
Council supports the Governor's proposal to extend Power for Jobs contracts
for businesses whose allocations will expire in 2004.
The same
factors that justified the original Power for Jobs statute - energy cost
and generating capacity - still exist today.
Costs - The
average industrial power price of 5.4 cents per kilowatt hour in New York
is slightly above the national average. But that figure reflects the beneficial
impact of NYPA hydro power going to major industrial users. Without NYPA
hydro power, the average industrial rate in New York rises to nearly 8
cents/kwh, roughly 60 percent above the national average. Average rates
for commercial users are even higher - at 11.5 cents/kwh, more than 50
percent above the national average for commercial power rates.
Some of New
York's power cost problem is due to factors beyond our direct control.
But much of the cost problem is self-inflicted, driven by legislative
and administrative policies that add to the cost of generation and distribution.
The high cost of local property taxes is a prime example.
Moreover, recent
regulatory initiatives in New York are also adding to the electric prices
paid by in-state businesses. These include:
- The state's acid rain regulations, which will drive up wholesale
energy costs by a statewide average of 5.4 percent, with regional cost
increases as high as 16 percent. Total costs, as estimated by DEC itself:
$430 million in capital investment, up to $370 million in higher energy
prices, and a loss of 5,900 jobs.
- The "system benefit charge" the PSC has imposed on most electric
power sales in New York State, $150 million per year. According to
PSC data, this represents a 1.3 percent to 2.5 percent increase in
the total electric bill for most ratepayers - rising to well above
3 percent for some industrial customers.
- The ongoing efforts to develop a "renewable portfolio standard," which
could impose additional costs on ratepayers in order to provide a subsidy
to wind, solar and other "renewable" power development. We are pleased
that this proceeding is now taking more time to address the cost and
reliability issues we deem so important. We also are concerned that
the ongoing "Regional Greenhouse Gas Initiative" will place significant
increased cost on some of our most affordable fossil fuel generating
capacity, with adverse impacts on both power prices and capacity.
Capacity — Based on projected demand growth and
the need for surplus generating capacity to support system reliability
and price competition, The Business Council estimates a need for at least
7,000 MW of additional generating capacity by 2008. Since 2002 - the date of the last Power For Jobs extension
bill - only 1,100 MW of additional capacity has come on line, and only
about 2,500 MW of generation is under construction. About 1,000 MW of
generation under construction is scheduled to be in service in the near
future. The lack of additional capacity is attributed to a number of factors,
including financial problems in the power industry, the national economic
downturn from which we are still emerging, and a very uncertain regulatory
environment in New York for the construction and operation of power plants.
Given these
ongoing factors of electricity prices and generating capacity, The Business
Council supports a continuation of the Power for Jobs program to help
energy intensive and at-risk companies remain competitive, and help them
retain and add to their in-state employment. Since current Power for Jobs
allocations will begin to expire later this month, timely legislative
action is essential.
Repeal
the "cleanup tax"
We have several
recommendations in the area of environmental conservation. First and foremost,
we urge the Legislature and the Governor to repeal the "site cleanup tax"
of 2003.
Last year's
Superfund/brownfield bill imposed significant new surcharges on generators
of hazardous wastes. Compounding the problem, when negotiators finished
working on the 107 page bill, they left out an important exemption for
hazardous wastes generated through state and/or federally approved site
cleanup projects.
I would like
to remind you of The Business Council's strong opposition to the overall
hazardous waste surcharge. Hardly a "polluter pay" approach, as some advocates
of the surcharge would say, this is a near $20 million hit that targeted
the state's manufacturing sector. Last November, some 700 manufacturers
statewide were hit with a five- to 10-fold increase in hazardous waste
program fees. The grace period for payment has already expired. Small
businesses which simply could not afford to pay this unexpected fee are
now subject to interest payments, and will soon be at risk of state-imposed
penalties. The Legislature should provide some relief from this significant
fee on manufacturers.
Starting
at 15 tons of wastes generated, these surcharges would come into play
with the removal of about ten cubic yards, or an average sized dump truck,
full of contaminated soils. This could add up to $400 per ton, a surcharge
that in many instances will exceed actual treatment/disposal costs. For
the small brownfield site, this surcharge starts at $4,000 for that first
truckload of wastes.
This inadvertent
measure will needlessly add to the cost of brownfield, superfund and RCRA
cleanups in New York State. Not only that, it will actually impose a financial
disincentive for complete cleanups by making removal actions that much
more expensive.
Finally,
it is our understanding that the $18 million in projected surcharge revenues,
imposed as part of the state superfund refinancing mechanism, did not
include surcharge revenues from remedial wastes. Therefore, adoption of
this exemption will not impair the state's superfund refinancing plan.
Therefore,
we urge you to repeal the cleanup tax as part of the budget agreement
for FY 2005.
The Administration's
previous two Executive Budget proposals included an explicit surcharge
exemption for cleanup wastes, as did the brownfield legislation approved
by the Senate last March.
Specifically,
we urge you to support the surcharge exemption language included in last
year's budget bill, S.1409/A.2109, as well as in S.2935, with the addition
of specific exemptions for wastes generated under the newly created brownfield
program and the Clean Water Clean Air bond act municipal site restoration
program.
Environmental
Justice - The Executive Budget includes a proposed $50,000 state-funded
grants program for groups that bring "environmental justice" claims against
certain environmental permit applications.
While we
have general concerns about the public funding of project opposition groups,
our most serious concerns apply to other aspects of the Budget proposal.
If any such grants program is to be adopted, it is crucial to have reasonable
criteria and limits on such programs.
We believe
the Executive Budget proposal fails this test on several counts.
Among other
things, the proposed Uniform Procedures Act amendments would impose "environmental
justice" considerations in all permit reviews subject to UPA, but provide
no definition of what "environmental justice" is, or in what way (or to
what end) such considerations would be applied. Inevitably, some groups
will make "environmental justice" just another tool in their arsenal to
oppose projects and permits.
We have conveyed
detailed comments on the cleanup tax and the "environmental justice" issues
to staff of the Senate and Assembly environmental committees.
We can't
wait till next year
I don't need
to tell you the daunting nature of the challenge facing you. Not only
will this year's budget decisions be difficult. There is every indication
that, without major fiscal restructuring, the budget gaps in 2005 and
2006 will be nearly as bad as this year's.
To us, that
raises the specter of more tax increases being put on the table in years
to come. We expect that the temporary tax increases you enacted last year
are just that - temporary. The pledge from Senator Bruno and Speaker Silver
of no new taxes, which we applaud heartily, must be more than a one-year
pledge.
We have some
thoughts on the various ideas for tax increases that are in the air and
that you may hear about today.
I'll start
with a truly big, and truly bad, idea - bringing back the stock transfer
tax. All of us are very glad to hear the recent reports of rising profits
on Wall Street. They are the brightest silver lining in the thunderclouds
of this year's fiscal picture. The Wall Street Journal reported last week:
"As financial companies start to pay out big bonuses for 2003, lavish
spending by Wall Streeters is showing signs of a comeback." Some people
used to call this trickle-down economics, but the fact is that big spending
on Wall Street creates jobs for thousands of working New Yorkers - to
say nothing of the millions in tax revenues it generates for New York
State and for New York City.
Governor
Carey and the Legislature acted to eliminate the stock transfer tax in
1977, despite the budget crisis they faced that year, because they knew
it hurt New York's ability to compete for securities-industry activity.
Today, New York's stock exchanges face far tougher competition than they
did 25 years ago.
In 1998,
you and Governor Pataki made our investment tax credit available for technological
investments by securities brokers and dealers. That action reflected a
recognition that New York has been losing market share in this key industry
to other states. The New York City Independent Budget Office estimates
that a city-level stock transfer tax would drive nearly 60,000 private-sector
jobs out of the city. Given the enormous economic losses such a tax would
create, the Independent Budget Office questioned whether the proposed
stock transfer tax would generate any net new revenue at all.
Then there's
the punitive health-care tax that Local 1199 promises will be the subject
of a "massive" lobbying campaign directed at you and your colleagues.
Mr. Rivera argues that business owners who already pay for health insurance
will support his idea. He brought to his press conference several people
whose businesses have Local 1199 and various hospitals as customers. But
as far as the mainstream business community is concerned, he could not
be more wrong.
If Mr. Rivera
wants to start a debate with business executives about higher health-care
taxes, we can only quote two of our most respected national leaders: Bring
it on. Businessmen and women know that taxes in New York are already far
too high, and that the taxes that go directly to hospitals and to Local
1199 members are part of the problem.
Adding a
tax of $3,000 to the most marginal and vulnerable businesses is akin to
telling recipients of the earned income tax credit that they must now
pay income tax. If you don't have the money, you simply cannot pay.
On the other
hand, we agree strongly with Senator Seward and Assemblyman Morelle that
a tax credit for small business health insurance is a very good idea.
We are more than willing to work with Mr. Rivera to support enactment
of the Seward-Morelle bill into law.
There are
various other ideas for raising corporate taxes. The Fiscal Policy Institute
has a plan that could add up to $1 billion, or a 50 percent increase in
the corporate income tax. We think of such ideas, collectively, as the
New Jersey plan. Without going into detail as to why each is a bad idea,
we would remind you of two key points:
- Taxes in
New York are already far above those in competitor states; and
- Businesses
pay roughly one in every three state and local tax dollars in
New York through business taxes, the personal income tax, the sales
tax, property taxes and others.
Three
tough budget years are ahead
It seems
safe to bet today that the budget you and Governor Pataki enact this year
will reduce spending in some areas. There will simply not be enough dollars
to pay for all the programs that seem to deserve support from the taxpayers.
If that is
the case, it only makes sense to give close attention to the biggest single
cost item in the budget. Medicaid provides vitally important services
to many New Yorkers. But it also absorbs a rapidly growing share of the
dollars you appropriate each year. Besides the nation's heaviest tax burden,
the Medicaid program has given New York a continuing legacy of shifting
costs from publicly funded health coverage to private health plans.
The Senate
Task Force on Medicaid Reform and Governor Pataki's Medicaid Task Force
have both made proposals that we believe make sense.
County executives
from around the state have asked you to relieve the local share of Medicaid
costs, for the sake of property taxpayers. We support a state takeover
of local Medicaid costs as long as there is an ironclad requirement that
those savings flow to the taxpayers. We also support Chemung County Executive
Tom Santulli's proposal that counties be allowed to seek waivers from
state-level mandates on Medicaid services. Local officials and local medical
professionals are in a better position than state government to determine
the best way to deliver health care services to families and individuals
in a given county.
Failure to
resolve the problem of high Medicaid costs means more than failure to
address state government's fiscal problems. For years New York's Medicaid
policy has shifted costs from the public sector to privately financed
health insurance, particularly employer coverage. The $1.3 billion that
employers pay in health-care taxes each year are one example.
If we're
truly concerned about the uninsured, why do we keep making private health
insurance more expensive by shifting costs from Medicaid?
We believe
real Medicaid reform means making its benefits more comparable to those
benefits taxpayers purchase for themselves through their employment. It
means using technology to improve the efficiency and quality of medical
care. It means attacking high-cost cases such as asthma, diabetes and
coronary heart disease where we often do a poor job that hurts the individual
and drives unnecessary spending. Effective management of these high-cost
cases means providing individuals with access to the most effective treatment
available, including tried and true medications, to treat these illnesses.
New York
State must also promote the public dissemination of usable data on the
state's health-care system. There continue to be wide variations in the
cost of Medicaid from county to county. More widespread use of data can
help us better understand these differences and help policymakers develop
interventions that can make the system more efficient, with more effective
outcomes.
We do not
believe the Executive Budget proposals to raise taxes on hospitals and
nursing homes are Medicaid reform, and we oppose those proposals.
One major
reason for the continuing focus on Medicaid is its impact on local property
taxes. While fundamental reform of Medicaid may not be possible immediately,
there is one important step you can take this year to make our property-tax
system more expeditious and less costly. That is to replicate, in the
property-tax area, the approach the Legislature took in creating the Tax
Tribunal for controversies involving taxpayers and their state taxes.
Senator Bonacic
has proposed legislation to transfer jurisdiction for review of assessment
challenges involving commercial property with a value of $1 million or
more from the Supreme Court to the Tax Appeals Division. The transfer
would reduce the burden on our Supreme Courts while establishing a core
of expertise in the tribunal handling such cases. It would lessen the
uncertainties faced by both local governments and taxpayers. It would
reduce judicial challenges, which now take years to reach final determination.
Localities would see litigation costs go down, and property tax assessment
decisions would become more consistent over time.
Technology
and our future
One of the
most significant steps taken by the Legislature and the Governor in the
past few years is the bold and sound action you took to create Centers
of Excellence throughout the state. This program was announced when fiscal
times were good. These centers have positioned us to leverage our academic
strengths with our business strengths in areas of science which portend
to be on the cutting edge of what will drive our economy in this century.
The fact that the substantial commitments made by the state at that time
were sustained during difficult fiscal times is a testament to how important
you believe this program is to the long-term prosperity of the state.
We agree.
A number
of other technology investments and programs have been made in recent
years. This year it is proposed to broaden the state's support of university
leadership efforts by creating a new higher education capital investment
matching grants program open to all colleges and universities, public
and private. The matching requirement gives accountability and leverage
to the efforts taking place at campuses throughout the state to upgrade
facilities and programs that are deemed by each institution to be critical
to its future. This program will focus efforts on campuses in every part
of the state to identify initiatives which will identify their areas of
academic excellence and pursue a course which will prepare their students
and rally the support of their alumni. We hope to see this program bring
the type of partnerships and synergies we have seen with the Centers of
Excellence program. We support this effort and urge its passage.
We also support
the Executive Budget proposal that "qualified biotechnology companies"
be allowed to sell their unusable net operating loss carry forwards to
other business income taxpayers (Articles 9, 9-A, 32 and 33). Under this
proposal, qualified firms must have their principal operations in the
state and have fewer than 225 employees, with at least 75 percent of them
in-state.
This is an
excellent experiment in using saleable tax credits as a mechanism to bring
private-sector seed money into emerging biotech businesses in New York
State. We urge you to adopt this proposal this year and watch its impact
closely, as it seems like a good model for broader initiatives to support
our emerging, high-tech industries.
Thank you
for your attention.
