March 3, 2006
Spitzer: New York must make business more competitive by lowering taxes, energy and labor costs
The first element in helping New York create an innovation-driven economy is making businesses more competitive by reducing the state’s “excessive” property tax burden, lowering energy costs, reforming workers’ compensation and lowering the cost of health insurance, Attorney General Eliot Spitzer said in remarks before business leaders at the Rochester Institute of Technology.
“Too often in this state, government can make things worse,” Spitzer, a candidate for the Democratic nomination for governor, said. The Attorney General said that economic development strategy has often been “fragmented” and “politically driven.”
The Attorney General pointed out regional differences in the challenges facing the state.
“Since 1990, Upstate's population has grown slower than all but two states,” Spitzer said. “Right here in Rochester, the population has actually declined by 8 percent. And during that same time, Upstate lost 25 percent of its young people ages 20 to 34.”
Spitzer said parts of downstate are facing similar challenges with population and job growth. “Counties like Nassau and Westchester stand at a crossroads as America's first suburbs adapt to the complex challenges that come with urbanization.”
Albany has helped the state move through economic transitions in the past, the Attorney General said. He pointed to the state’s involvement in the Erie Canal and higher-education systems as taxpayer investments that helped the state to grow.
“So we know government can make things better, but we also know that too often in this State, government can make things worse. In sharp contrast to the kind of focused strategy that I will propose today, New York State's economic development strategy has been fragmented, politically driven and unaccountable,” the Attorney General said. “I want to make sure our government is part of the solution and not part of the problem.”
Before any more taxpayer dollars are spent on “ineffective” economic development program, Albany must be reformed, Spitzer said. “Decisions must be based on merit, not on politics – with the public interest, not the special interests, in mind.”
Other parts of the U.S. have made the investments necessary to create an innovation driven economy and create jobs, the Attorney General said. “If we don't lay the foundation for future economic growth today, if we do not invest in our generation's Erie Canal, we will be left behind.”
The Attorney General said his strategy for economic growth included five parts.
“First, we must make businesses more competitive by improving New York's business climate,” Spitzer said. “Among other critical reforms, this must include reducing the excessive property tax burden; lowering the cost of health care; reducing energy costs; and reforming our workers' compensation system.”
- He said his strategy would also:
- Revitalize cities, downtowns and rural communities “to
make them more economically vibrant places to live and work.”
- Support small businesses, which the Attorney General said create
most of the new jobs in the state.
- Build a transportation, energy and telecommunications infrastructure “that supports economic growth.”
The Attorney General said the fifth part of the strategy to revitalize the state’s economy would concentrate economic development energies on building strategic industries.
“New York has many other examples of strategic industries that can be made more successful if backed by a focused and aggressive strategy,” Spitzer said. “Semiconductors and nanotechnology in the Hudson Valley and Albany; medical instruments and environmental systems in Syracuse; life sciences and a growing corporate outsourcing sector in Buffalo; and here in Rochester, photonics, biotechnology and life sciences, re-manufacturing, advanced manufacturing and fuel cells.”
“We must expand the research capacity at our colleges and universities in areas relevant to these industries,” Spitzer said. “Given the wealth of intellectual capital in Upstate, we must do more to leverage this competitive advantage.”
Spitzer said he would create a "New York State Innovation Fund,” which would provide funding that will lead to innovations with commercial applications. “This Innovation Fund, which will be funded initially by a voter-approved bond act in the same way that the Transportation Bond Act was last year, will be structured to maximize investments based on scientific merit and eliminate investments based on political influence,” Spitzer said.
The second aspect needed to grow strategic industries will combine innovation and commercialization, he said.
“Access to capital, particularly venture capital, is a third critical element to ensuring our strategic industries continue to grow,” the Attorney General said. “The amount of venture capital invested in Upstate is paltry compared to other parts of the country.”
Spitzer pointed to other examples of venture capital programs around the country, including the Massachusetts Technology Development Corporation, “which seeks to fill the gap between the amount of capital angel investors typically provide and the minimum investment size that institutional venture capital funds typically require.”
“New York State should create a 'Seed Capital Fund' to fill this same need,” Spitzer said
Spitzer said workplace development is the fourth ingredient in fostering strategic industry growth. “New York currently spends $1.3 billion per year on workforce development. This is an enormous amount of money and New York State should have much more to show for it than it does.”
The Attorney General said too many young people left New York seeking better-paying jobs while many businesses complain of a shortage of skilled workers. “This disconnect shows the failure of our workforce training system and highlights the need for a ‘demand-driven’ workforce development policy.”
The Attorney General said the money spent on workforce development should be streamlined and consolidated, along with labor market data.
“Data means everything in a rapidly changing economy,” the Attorney General said. “Unfortunately, the state is largely flying blind. To address this problem, the state should establish the ‘Empire Research and Information Center,’ a new think tank-like division of the Empire State Development Agency that will integrate the labor market and education data from across government agencies for dynamic, accurate and real-time analysis.”
The Attorney General also said that the state’s education system “must do a better job at preparing its graduates for the 21st Century economy.” Spitzer promised to provide more details, and speak to the importance of math and science in particular, in a later speech.
The Attorney General said part of the execution of his plan would be to appoint a “Chief Science Advisor,” who would help steer the state’s future investments.
“I'm convinced New York can be the global capital in many industries--from life sciences to alternative energy to homeland security and defense,” Spitzer said. “A science advisor will help set priorities among these worthy goals.”
Spitzer also called for a reorganization of the Empire State Development Corporation, and said the organization should have a stronger focus on Upstate “where the impact of economic transition has been greatest.”
Spitzer said that as governor he would give the Corporation an Upstate headquarters and more resources.
“The answer to revitalizing New York State's economy is to look both to the effective strategies that have helped transform our economy in the past and to look ahead to new strategies for the economy of the future,” the Attorney General concluded. “In an era in which intellectual capital is the fulcrum of economic growth, New York must emerge as the state where ideas are born, companies are raised and jobs and careers thrive. Ours is not just the Empire State, but the Empire State of innovation.”