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March 22, 2005

Four diverse panelists agree: New York's economic policies have hurt its economy

A farmer, a journalist, a fiscal-policy expert, and a veteran lobbyist discussed how New York’s economic policies affect its economic outcomes—and agreed that the effect has been an unhealthy one for many decades.

“In the 1960s, New York State had everything going for it,” said Mark Bitz, a turkey farmer from central New York and, since last fall, a high-profile reform-Albany advocate. What was then a state with a good education system, a fair tax system, and a large and growing population has deteriorated, and “is now a state where the young and talented leave.”

Bitz was joined in the discussion at Small Business Day March 22 in Albany by: Jay Gallagher, capitol bureau chief of the Gannett News Service and author of an upcoming book on New York; E.J. McMahon, director of the Manhattan Institute’s Empire Center; Gerard Conway, director of governmental affairs for the Medical Society of New York. David Shaffer, president of the Public Policy Institute, moderated the panel.

In 1990, Shaffer said in introducing the discussion, New York State had 1.1 million more jobs than Texas; today, Texas has 1.1 million more than New York. That relative job loss of 2.2 million jobs for New York is “a staggering shift,” he said.

Bitz attributed this decline in New York to consistently uncompetitive legislative races and a “borrow-tax-and-spend government.”

Gallagher attributed some problems in Albany to a lack of public interest. “We’re in trouble now because we’ve never paid attention to what happened here,” Gallagher said. “The way to fix it is to pay more attention and hold representatives more accountable.”

Several panelists said that a widely advocated Medicaid measure, a cap on growth in the counties share of the Medicaid burden, could actually provide little or no relief to business taxpayers in the big picture unless the overall cost of the program is reduced.

A cap alone, Gallagher said, “wouldn’t do anything to decrease Medicaid costs.” He noted that some lawmakers might look to increase taxes to pay for the increase in the state spending that would result if county spending is capped without reductions in overall spending.

McMahon agreed that shifting Medicaid costs to state government would do little to help ease taxpayers burden. Most lawmakers would propose an increase on high-wage earners to sustain the added costs, he said.

“It’s not just a problem of who pays but what they are paying for,” Conway agreed. “Medicaid needs real and substantial change to get quality care at affordable prices.” He emphasized that New York's Medicaid spending encourages costly care in hospital emergency rooms, not the more traditional and cost-effective care in physicians' offices.

For real long-term improvements in New York’s fiscal circumstances, New York must emphasize spending reductions at all levels of government, McMahon said.

“Taxes are pervasive and corrosive,” he said.”The solution is to slow government growth. Spending at every level needs to be slowed down.”