The Business Council of New York State, Inc.
Remarks to the Rockland Business Association
Nov. 12, 2009
Thank you. It's a pleasure to join you this evening. I'd like to thank Al for inviting me. I'd also like to thank Al and Burt and the RBA board for having one of the most active Chambers in the state. The RBA is stalwart ally in our advocacy efforts in Albany. You all are a strong and vital partner of the Business Council on many tough issues.
Whether it has been successful efforts like defeating Paid Family Leave or battles we've lost together, like the imposition of the MTA payroll tax, the RBA always stands up, works closely with The Business Council and makes its voice heard. Thank you very much for that.
This is a crucial time in our state's history and we all need to work together to improve the state's policies so that we see a strong economic recovery in New York.
I know these are difficult and frustrating times for all of us. For too long New York's political leaders have taxed too much and spent too much -- making it difficult to live and do business here.
Let's be clear, the decisions made in our State Capitol do have a direct impact on your businesses and lives here in Rockland County. State-wide economic policy – developed and put into law in Albany – matters as much here in Rockland as it does in Broome or Erie or my home of Brooklyn.
The Business Council works with you and our members across the state to shape those policies. Our three thousand member companies represent a broad cross-section of the state's economy. Many don't know this, but seventy-percent of our Business Council members are small businesses; one-third of them are manufacturers.
At the same time, most of New York State's great companies – IBM, GE, Corning, Kodak, Pfizer are on our board of directors. And our board chairman is familiar to many of you -- Kevin Burke, Chairman and CEO of Con Ed and formerly head of Orange and Rockland.
Our mission at the Business Council is to advocate for policies in Albany that create economic growth, good jobs and strong communities all across our state. We work from the simple, basic assumption that the private sector is the source of wealth. That it's the private sector economy that enables government to provide the services our communities need.
While obvious to all of you, this basic economic fact -- that the private sector economy comes before government -- is not always appreciated in Albany.
At the Business Council, we test every public policy proposal with one simple question: Will the proposal in question help create private sector jobs? If the answer is yes, we get involved. If the answer is no, we don't.
Why this relentless focus on private sector job creation?
Let's take a look at the numbers.
The most recent unemployment data shows this recession is proving to be deep and lasting. The employment situation out there is terrible.
The NYS unemployment rate is nearly nine percent. Nationally it's 10.2 percent. And while your county has fared a bit better with a rate just of 7.4 percent, there are more than eleven thousand unemployed people here, 42 percent more than a year ago.
What has happened to New York? Business owners, like all of you, know the answer. Government policy decisions over the years have made New York into one of the most anti-business states in the country.
Back in March, CEO magazine's annual survey of 543 CEOs again placed New York behind California as the second worst state to do business in America.
Talk about obstacles to business growth and job creation…
Here's what you need to know about New York State:
Personal income taxes in New York are the highest in the U.S. -- 123% above the national average.
Local property taxes are the highest in the country -- 79% above the national average.
We have the second worst business tax climate in the country.
Obviously, government in New York collects all this tax revenue for a reason – to spend it.
Per capita state and local spending in New York is the second highest in the nation, 47 percent above the national average – but with only “average” results in education and health care outcomes to show for it.
But, hold on a minute -- as we face these challenges and a huge state budget crisis we have a unique opportunity to help change the direction of our state. To leverage this crisis, as they say. To get key reforms that put us on a path to lasting economic recovery. Let's start with the “DRP”: Governor Paterson has proposed a two-year, five billion dollar deficit reduction plan that would balance our budget without resorting to new taxes and make structural reforms to keep state spending down in the long-term.
Some of the Governor's proposed cuts are difficult, but as business leaders we must support the Governor's attempt to change Albany's pattern of overspending and overtaxing.
Now, despite the Governor calling the legislature back to Albany earlier this week, an agreement has still not been reached. The State Senate Democrats refuse to believe the Governor, the Comptroller and the Assembly Speaker that the crisis is real and the deficit seriously threatens our economy. Using their own numbers and analysis, they have proposed a plan that fails to make the needed cuts to address the structural imbalance in the state's budget. It's a little bit like holding a yard sale when you can't make your next mortgage payment. It delays the inevitable and only makes the crisis worse.
That is a very dangerous course for our state. Comptroller Thomas DiNapoli estimates that on the current course of spending, the state's deficit will be $27 billion in Fiscal Year 2011-2012, just two years away.
As difficult as some of the Governor's proposed cuts are now, if the legislature waits and lets the deficit grow even bigger it will be much more difficult to manage.
At the Business Council, we believe that we must leverage this crisis to achieve long-term reforms in government spending and fiscal policy. We have to make key reforms now so that New York State will be prepared to succeed when the broader U.S. economy starts growing again. Otherwise, my real fear is that New York will be the poster child for the “jobless recovery”.
The Governor is proposing two structural reforms that The Business Council has championed.
A state spending cap: The state spending cap proposed by Governor Paterson would limit the annual growth in State Operating Funds to the average rate of inflation from the previous three years. It is estimated that if a cap like this had been in place from 2003 to 2008, state spending would have been $17 billion less.
Pension reform: Both Governor Paterson and Mayor Bloomberg have called for the creation of a new pension tier for new hires into the government workforce -- called Tier V. The state Division of Budget estimates that this proposal will save nearly $50 billion over the next 30 years. We must have pension reform for both the city and state workforce. Current benefit levels are unsustainable. Without reform, future public pension costs will destroy our economy. Our “GM moment” is here and now.
The Business Council also believes two other fundamental reforms must be adopted going forward.
A property tax cap: The Commission on Property Tax Relief made its recommendations last December, the most important of which is a cap to limit the growth of school property taxes to 4 percent or 120 percent of the Consumer Price Index, whichever is less. Sky-high property taxes are a huge issue outside of NYC, and the idea of capping their annual growth has wide-spread support.
Local government consolidation: There are currently more than 10,500 local government entities across New York State. Consolidation is meant to cut duplicative, wasteful government services and give taxpayers better value. Progress was made on this issue this year when legislation proposed by Attorney General Cuomo and supported by The Business Council was signed into law making it easier for municipalities to consolidate if and when it makes sense.
All four of these reforms will help reduce the cost of government, lead to lower taxes (or at least lower annual increases in taxes) and put New York on a path to economic recovery. They will make our state more competitive, and help us attract new business investment and jobs.
In addition to these fours reforms, I recently gave testimony before both the State Assembly and Senate regarding our support for the Deficit Reduction Plan in which I recommended other actions that should be taken to balance our state budget and reduce the burden on New York taxpayers.
These include a roll-back of the three percent raises granted earlier this year to state employees in the current and next fiscal years. Private sector employers and workers know the need to tighten the belt during these difficult times, the state workforce must do the same. There should also be a hard hiring freeze at the state and local level through the next fiscal year.
Contributions by public employees to their health insurance should be brought in line with private sector standards. And the state should repeal the Wicks Law that increases the cost of all public construction across the state.
Remember, we must not waste the opportunity that our current economic and fiscal crises present to make fundamental reforms in the way our state and local governments do business.
Now is the time to make the bold reforms our state so desperately needs. To use policy, not just “projects”, as economic stimulus.
To create the conditions that will lead to new job creation and an accelerated and lasting recovery for New York.
Now we can't get this done alone -- we need your help and the help of folks like you all around the state.
We have created some new tools to help you get involved. Working with the U.S. Chamber of Commerce, we have created a web-based e-advocacy site that can help you connect with state legislators, leaders, and the Governor. It's called Fix New York. And you can reach it through our Business Council website: BCNYS.org. When you go there just click on Fix New York.
Let me wrap up with one more important subject: The other huge issue we are facing on the federal level is health care reform. Business Council members have told us that the cost of employee health insurance is the number one cost-of-doing business issue in New York.
We look forward to supporting a federal health care reform that would lower costs and expand availability of health insurance.
Unfortunately, the bill recently passed by the House fails to do that. Instead it would cost over $1 trillion over 10 years. And it would actually drive up costs for many businesses, especially small businesses. And finally, it would increase the tax burden on already overtaxed New Yorkers.
We asked our Congressional delegation to view health care reform through a New York lens. Recognizing the unique aspects of the health care system in New York and the need to reduce costs. Three New York House Democrats, Michael McMahon of Staten Island and Brooklyn and upstate representatives Scott Murphy and Eric Massa agreed with us and voted against the bill as did their Republican colleagues from New York.
The Business Council will stay engaged on this issue and work to secure legislation that will bring down costs and help New York employers.
Al, thank you again for this opportunity to speak with the RBA. As I said at the beginning, we very much value our partnership with your organization.
Thank you all for your time and attention. Have a great evening.