January 17, 2006
Weld argues that New York must enact policy changes to reduce taxes and other job-creation costs
Arguing that New York’s economy has become too dependent on taxpayer-financed jobs, a top candidate for the Republican nomination for Governor this year told the Business Council Board of Directors that he would make it his top priority to help New York’s private sector create more jobs.
Achieving that, said former Massachusetts Governor William Weld, will require aggressive efforts to reduce New York’s tax burden and enact policy reforms to ease other high job-creation costs in the state, including workers’ compensation, health insurance, and energy.
“You can’t love the job and hate the job-creator,” Weld told the Council’s board members Jan. 17 in Albany.
Weld also cited the Public Policy Institute’s seminal 2004 report, Can New York Let Upstate BE Upstate?, in arguing that state lawmakers have enacted too many high-cost policies that New York City is able to withstand but that are killing prosperity in countless Upstate cities and communities. That report was the first to argue that state lawmakers permit Upstate to opt out of many state policies that drive up costs.
“Whoever is elected Governor of New York on Nov. 7 will take over a state that has been hemorrhaging well-paying jobs, that has lost 10 seats in Congress since 1980, that has more people moving out of it than any other state, and that has trouble holding its 20-to-34-year-olds—our seed corn,” Weld said in prepared remarks.
About three-quarters of net new jobs created in Upstate New York since 1990 are either directly or indirectly paid for by taxpayers, Weld said. “In other words, they are tax revenue eaters, not tax revenue creators,” Weld said.
Weld said his priority list would have just one item on it—"good jobs at good wages"—and that he would pursue this goal by addressing several persistent policy problems in New York that keep the state’s job-creation costs too high. His policy priorities include:
- Reforming state government fiscal policies that keep
taxes, spending, and borrowing too high.
Weld said New York’s should adopt a taxpayers’ bill of rights (TABOR). Such a law would limit state spending growth to the previous year’s revenues with allowances for inflation and population growth, with any excess revenues returned to taxpayers or committed to a rainy-day fund.
Weld said his TABOR would also limit all property taxes to 2.5 percent of total valuation, with growth in that tax limited to 2.5 percent per year unless voters approved larger increases.
He said he has taken “an ironclad no-new-taxes pledge.”
Weld also noted that he cut spending by 10 percent in his first two months in office as Governor of Massachusetts. ”One thing I can tell you for sure: There’s only one way to cut spending, and that’s to cut spending,” he added.
- Reducing high state spending on pay and benefits for
“New York taxpayers would save many billions of dollars a year if New York had an average number of public employees per capita, instead of being at the top,” Weld said.
New York also must move its public employee pensions from defined-benefit to defined contribution for future hires.
The state must also repeal laws, such as the notorious Triborough Amendment to the state Taylor Law, that give public employees negotiating advantages with management, at taxpayer expense.
- Reduce excessive spending on Medicaid.
Weld noted that New York’s Medicaid budget is $44.5 billion, 2.3 times the national average. “If we spent at a rate of only twice the national average, taxpayers would save another $5 billion per year,” he said. “The current system in New York seems designed to maximize state spending, not to manage or control it.”
Easing this spending will require reducing excess capacity in New York’s health-care institutions, putting more Medicaid patients into managed care, improving disease management, focusing more on consumer-driven health care, and tightening New York’s famously lax enrollment thresholds.
- Enacting workers’ compensation reforms.
Citing Business Council research, Weld noted that New York combines
high costs for employers with relatively low benefits for workers.
Governor Pataki’s reform proposal would both raise benefits
and cut costs, and the legislature should pass it, Weld said.
- Implementing tort reforms to reduce insurance costs
and New York’s high “tort tax.”
- Easing high construction costs by repealing New York’s
union-friendly prevailing-wage law and the Wicks Law.
The Wicks Law inflates public construction costs by requiring
local governments and school districts to use more than one contractor
on any public construction project with estimated costs of $50,000
- Reducing New York’s high costs of energy by improving
the supply. He noted the importance of reauthorizing
New York’s long-expired Article X of the state Public Service
Law, which had served to expected the siting of proposed new power
- Reducing high “opportunity costs” created
by some state environmental regulations. He noted, for
example, that New York’s new brownfield law had been designed
with the needs of New York City, not Upstate, in mind, and had
done little to convince developers that Upstate properties that
would be redeveloped represented truly “bankable”
- Identifying opportunities for spending money more wisely in K-12 education.