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June 22, 2007

Legislative session winds down after gains for business
Council helps secure positive outcomes on top priorities of Council members

After strong advocacy by The Business Council, chambers and other allies, the Legislature moved towards the end of its regular session by extending the Power for Jobs program for another year, and by laying aside a number of anti-employer bills, including paid family leave, pre-judgment interest in tort claims, and restrictions on pharmaceutical marketing.

The legislative session was marked by positive outcomes on a number of bills directly related to the priorities identified by Business Council members in a survey conducted late last year. In that survey, Council members overwhelmingly identified employee health care as their top cost-of-doing-business concern. The survey also showed strong employer concern about costs of workers' compensation, energy, and business taxes. (The survey is described in detail at www.bcnys.org/whatsnew/2006/1218survey.htm.)

Workers' compensation reform: After historic negotiations among Governor Spitzer, Business Council President Kenneth Adams, the state AFL-CIO, and the state Legislature, agreement was reached in early March on bill that includes long-sought workers' compensation reforms. The reform package is expected to cut employers' costs by 10 to 15 percent, with more savings to follow, and increase benefits for injured workers.

Rejecting anti-competitive tax increases: Despite months of pressure to substantially increase business taxes under the guise of "closing loopholes," Governor Spitzer and state lawmakers in early April agreed on a budget that reduces New York's primary business-tax rate and provides especially significant tax cuts for thousands of manufacturing companies, while substantially reducing new tax costs that had been proposed for banks.

The Business Council had strongly urged lawmakers to resist the temptation to increase the tax burden on businesses.

Here is a quick review of other priority issues on which The Business Council was most active in lobbying throughout the legislative session.

A paid family-leave mandate: Despite strong pressure from advocates, the state Senate declined to approve a measure that would have required employers to offer paid family leaves through the state's disability system.

The Council argued that this idea would impose new costs and burdens on employers in the form of replacement worker costs and overtime. It would also disrupt schedules and create staffing gaps, the Council argued.

The failure of the paid family-leave proposals came after the Council, affiliated chambers of commerce, and Council members mounted a broad advocacy campaign to oppose the idea. Hundreds of individuals from businesses across the state telephoned, faxed, and emailed state legislators to urge them to reject paid family-leave mandate proposals.

Proposals to increases health-insurance costs: The Legislature declined to approval several measures, each of which was strongly opposed by The Business Council, that would have, in different ways, increased New York's already above-average health-insurance costs. For example, the full Legislature did not approve:

Economic Development Power/Power for Jobs: The Legislature voted to extend these crucial programs for one year.

New York's electricity costs that are the nation's fifth highest, 57 percent above the national average, according to recent information from the Energy Information Administration. This cost is a major competitive disadvantage for New York State businesses.

The Power for Jobs and economic development power programs offer employers reduced-rate power in exchange for a pledge to create or retain jobs in New York. Many companies have taken advantage of the programs.

Wicks Law reform: Governor Spitzer announced earlier this month an agreement to make changes to the state's notorious Wicks Law.

New York's one-of-a-kind Wicks Law requires local governments and school districts to use more than one contractor on any public construction project with estimated costs of $50,000 or more. The union-friendly law Wicks Law forces the state and every municipality and school district to hire four contractors for public-construction projects, rather than hire a general contractor, as is generally done on large private projects.

Pharmaceutical market interference: The Senate declined to approve a bill that would prohibit drug companies from providing promotional materials to physicians. By doing so, it would isolate one sector of the business community and subject it to a litany of rules, reports, and penalties for practices common across all sectors of society – the legitimate marketing of goods and services.

Shareholder remote participation: The Senate also declined to approve a bill that would impose significant new obligations on New York State incorporated companies by requiring corporations with more than one hundred shareholders to implement "reasonable measures" to allow remote participation and voting by shareholders. These requirements would include providing remote participants an opportunity to read or hear the proceedings of the meeting "substantially concurrently" with such proceedings. And it would also require corporations to implement mechanisms to verify that remote participants are shareholders.

Expanded bottle bill: The Senate rejected a proposal to expand the state's "bottle bill." The Council had argued that this bill would impose a new burden and new costs on supermarkets, the beverage industry, and consumers.

Net regulation: The Senate rejected a proposal to tell companies that own fiberoptic cables what they can and can't do in scheduling transmission over those cables. The Council had argued that the proposal was an attempt to regulate at the state level activity that unfolds globally.

Pre-judgment interest: The state Legislature rejected legislation that would mandate pre-judgment interest in personal injury cases. The Council had argued that this would greatly increase pressure on defendants to settle, drive up the cost of individual liability cases, push up the cost of liability insurance, and increase the already excessive burden our tort system imposes on businesses, doctors, drivers and all other citizens.

A power-plant siting law: The Spitzer administration and state Legislators could not agree on a new law to expedite the siting of power plants in New York State. The former law, Article X of the state's Public Service Law, expired in 2002. There is widespread recognition of the need for a new law to address one of the driving factors in New York's second-highest-in-the-nation retail electricity costs: a supply that is inadequate to foster competition, ensure reliability, and keep prices down.

Elimination of business taxes on manufacturers: This proposal, advanced by the state Senate as part of its Upstate Now agenda, did not pass the Assembly.

Small business health-insurance tax credit: This proposal, which was also part of the Senate's Upstate Now agenda, did not win approval in the Assembly.

More on taxes: Under this year's budget:

However, the Legislature accepted Governor Spitzer's proposal to require out-of-state companies that are related to New York corporations to file combined tax returns if the related companies have substantial intercorporate transactions. The Business Council had urged rejection of that provision, saying it would increase taxes on major employers and diminish New York's competitive position as a headquarters state.

And the new budget also raises taxes on some New York employers with real-estate investment trusts by phasing out, over four years, a deduction for dividends from "captive" REITS.