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For Release — February 3, 2009

Business Council says state budget must prepare for recovery

ALBANY— “This year's state budget will impact New York's economy, its businesses and its residents for years to come. The budget must make real structural reforms to prepare New York to be competitive when our economy recovers,” said Kenneth Adams, president & CEO of The Business Council of New York State, Inc.

In testimony to the Legislature's joint fiscal committees, Adams said the Governor's Executive Budget proposal spends too much and taxes too much by imposing $4 billion in new taxes, fees and assessments.

“At a time when many businesses are struggling to survive and New York has lost 122,000 private sector jobs in the last year this budget would impose new business taxes, strip economic development incentives and downsize our economic development agencies and programs,” said Adams. “That is the wrong direction for a state that has already been losing the competition for job development with other states.”

“The Governor's proposal to change the rules of the game for companies that have invested billions of dollars based on Empire Zone benefits could have a devastating impact on our economy,” said Adams. “Changing the rules in the middle of the game will not only damage the companies currently within the program it will send a message that economic development agreements with New York cannot be trusted. Economic development officials from other states are actively recruiting New York companies and they will use this against New York.”

Adams pointed out that from FY 2000 to FY 2008 state funds supported spending grew by nearly two and a half times the rate of inflation.

“If the budget had grown at just the annual rate of inflation the FY 2008 budget would have been nearly $20 billion less,” said Adams. “Even spending at twice the rate of inflation would have cut $4 billion from the FY 2008 budget. That would have created a manageable budget deficit, not the massive crisis we are facing.”

The testimony specifically opposed increased taxes on health and other insurers, energy companies, wireless communications companies, cable communications companies and the tax on soft drinks.

“All of these taxes will be reflected in people's insurance premiums, utility bills, phone bills, cable bills and grocery bills. This is not the time to place a huge new tax burden on our economy,” said Adams.
Adams also pointed out that restrictions on pharmaceutical marketing included in the budget would have an adverse impact on the state's bio-pharmaceutical research industry while producing no real savings.

“The tax proposals in the budget are made worse by the Ravitch Commission's proposal to place a payroll tax on all employers in the MTA region at the same time,” said Adams. “This tax on jobs would discourage employers to grow in this region.”

Adams praised the Governor's call for the sale of wine in grocery stores. The proposal's public employee pension reform and Wicks Law reform are also welcome but do not go far enough.

The full text of the testimony is available here.

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