What's New

Zack Hutchins
Director of Communications

May 25, 2005

Report: New York should build economy in which small businesses thrive

New York State can pull itself out of "dire" economic straights by building an environment more friendly and supportive to small businesses, according to a new report by Assemblyman Joseph D. Morelle (D-Rochester).

Assemblyman Morelle said the goal of his report was to lay out steps necessary to create an entrepreneurial environment in New York. Standing in the way of that environment are some of the highest tax burdens, Medicaid costs, and energy costs in the nation, the report said.

“New York must work not only to attract new businesses to the state, we must focus on retaining existing businesses in the state,” the report added.

The report said that some areas of the state are creating jobs and increasing per capita income by building an entrepreneurial economy, that is “technology-driven, knowledge-based and entrepreneurial.”

Morelle said New York can build an entrepreneurial economy statewide by concentrating on four “entrepreneurial economy principals,” which include:

“I hope this report sparks discussion of these important economic ideas and issues,” Morelle wrote in the report’s introduction. “If we fail to act soon, if we fail to create a business environment where innovation and entrepreneurship are encouraged then our economy will continue to decline.”

Morelle’s report, “Creating a State of Innovation,’ contends that if lawmakers “fail to act at the state and local levels, New York, especially Upstate New York, will continue to decline.”

The report said a number of factors are burdening the state’s current economic climate, including an Upstate tax burden nearly 22 percent above the national average and Upstate property taxes 55 percent above the national average.

The report also pointed out that in recent periods of national economic decline, New York has been slower to recover than the rest of the country.

“Upstate New York did not fully reap the benefits of the 1992-1999 nationwide economic expansion,” the report said. “We lagged in job growth, population growth and housing price increases.”

The report argued that there is evidence steps taken to improve the state’s business climate have thus far failed.

“There is increasing evidence that zone-based tax incentives designed to lure or retain businesses are not working,” the report said.

The report said that only 10 percent of new jobs in a community could be attributed to tax inventive and that the incentives were invented to attract large businesses, which “detract from a focus on early-stage entrepreneurial business.”

“If the state needs a tax-reduced oasis to rescue the business environment from the drought-like conditions that policymakers have created, then it is incumbent on us to take a critical look at the state and local regulatory policies that make ‘carve-outs’ necessary to attract businesses in the first place,” the report said. “We need to make New York’s policies business-friendly throughout, not just in selected zones.”

The report is available in PDF format at assembly.state.ny.us/member_files/132/20050511/.