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For Release — Wednesday, March 29, 2006

'PLEASE DON'T TELL ME THIS IS THE BEST ALBANY CAN DO': BUSINESS COUNCIL BLASTS DRAFT STATE BUDGET, WITH A HUGE SPENDING INCREASE AND NO BROAD-BASED BUSINESS TAX RELIEF

ALBANY, N.Y.—The budget that the Legislature is preparing to enact does little, if anything, to create jobs and build prosperity across New York State, Business Council President and CEO Daniel B. Walsh told Assembly Speaker Sheldon Silver in a March 29 letter.

“Please don’t tell me this is the best Albany can do,” Walsh said in his letter, which criticized the state Assembly majority and its Upstate members for their role in crafting a budget that significantly increases spending and rejects broad-based business tax-cut proposals advanced by Governor Pataki and Senate Majority Leader Joseph Bruno.

The proposed budget contains no broad-based tax relief for business, the letter said. “Indeed, you have rejected every single proviso of the business tax reforms proposed by Governor Pataki and by the Senate Majority,” Walsh wrote.

The letter said the budget is dominated by a huge spending increase and contains “one-shot tax gimmicks” that give only a false impression of relief to the nation’s most over-burdened taxpayers.

“In Albany, who cares?” the letter said. “But in the New York of the real world, we cannot afford a government that operates like this.”

In the New York of the real world, we have yet to make back the jobs we lost in the 2001 recession, Walsh wrote. “Meanwhile the rest of the nation soars along, with more than two million more jobs than it had when the downturn began. In the New York of the real world, excess tax burden is stifling employers’ ability to create jobs."

The letter noted that the nonpartisan Tax Foundation recently ranked New York's business-tax climate the nation's worst. It also noted that a Business Council survey of employers released last week showed that New York's tax burden hampers employers' competitiveness—and that business-tax reductions would likely have been invested in businesses.

Walsh credited Silver for recognizing retail competition from New Jersey and proposing a sales-tax exemption for clothing. But he criticized the Assembly for not taking similar action to help Upstate companies facing different competitive pressures.

"Why can’t you see the technology companies, the manufacturers, the innovators all over our state who are facing even tougher competition, and who need action by this state to help them put their investments and their job growth in New York?" Walsh asked.

“In the New York of the real world, conditions Upstate have reached the point where your own party’s leading candidate for Governor compares the region to Appalachia,” the letter said. “Upstate has more than a third of our state’s population. Don’t they have any representation in the Assembly Majority conference?”

New York leads the nation in only one important measure—net out-migration to other states, the letter said. “We average a loss of 200,000 every year. Upstate alone had net out-migration of 400,000 people from 1990 to 2002, according to the Census Bureau.”

In the last 15 years, Upstate has grown jobs only about one-fifth as fast as the nation and only about one-seventh as fast as another cold, “Rustbelt” state—Wisconsin, the letter said. “The 2000 Census found that Upstate’s population had grown only one-ninth as fast as Appalachia’s. Upstate’s population in the critical 20-34 age group fell by 377,000, or almost one-quarter.”

New York’s total employment in the Upstate region rose by 0.2 percent in 2005, the letter said. Eleven of the 12 other states covered by the Appalachian Regional Commission had stronger job growth; employment in West Virginia, for example, rose by 1.4 percent.

“Remedies for these problems may not be easy to identify, but you don’t have to think of them all on your own,” Walsh wrote. “The business community offered good ideas. So did the Governor. So did the Senate.”

Each set of proposals would have made some modest use of the state’s current surplus to try to improve New York’s competitive posture, Walsh wrote. Each would have helped New Yorkers capture some share of the nation’s booming job growth.

The letter concluded: “The Assembly’s ideas are. . . what?”

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