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Remarks to the Corning Area and Schuyler County Chambers

Kenneth Adams
President & CEO
The Business Council of New York State, Inc.

Feb. 24, 2010

Thank you. It’s a pleasure to join you today. I’d like to thank Tom and Denise for inviting me. I’d also like to thank those from Schuyler County for joining us.

I’d like to point out that Tom is the Chair of The Business Council’s President’s Council and has long been a stalwart supporter of our advocacy efforts. I’d like to thank Tom and everyone at Corning for their support.

Also your chambers are strong supporters in helping The Business Council carry our message in Albany and I’d like to thank all of you 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 the southern tier.

The Business Council works with our members across the state and with partner organizations, like yours, 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 iconic 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.

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?

Because private sector job growth is the only way to build strong communities and solve New York’s chronic budget problems. We need job growth to create opportunity for our people.

Government policy decisions over the years have made New York into one of the most anti-business states in the country.

But there are signs of positive change. I recently gave our views on Gov. David Paterson’s executive budget proposal at a legislative hearing. His plan recognizes that New York has a structural budget imbalance due to too much spending that our economy cannot support.

Unfortunately, the state’s budget deficit continues to grow and Albany must confront the fact that reductions in spending are the only way to balance the budget and promote long-term growth. Last year the legislature tried to tax their way out of the deficit and it was an utter failure that damaged our economy.

lf Albany continues business as usual the spending line outpaces the revenue line by billions of dollars far into the future.

This will be a challenging legislative session and we will need all New Yorkers who believe in lower taxes and less government spending to make their voices heard.

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”.

In 2009 two significant reforms were enacted with our support.

Pension reform: Governor Paterson pushed hard for the creation of a new pension tier for new hires into the government workforce -- called Tier V and we supported that effort. It was enacted in a special session in December despite some strong opposition from organized labor and some legislators.

The state Division of Budget estimates that this reform will save nearly $50 billion over the next 30 years.

This provides significant reform for the pensions of newly-hired local and state workers. Current benefit levels are unsustainable. Without reform, future public pension costs will destroy our economy.   Our “GM moment” is here and now.

While some have argued that this reform did not go far enough, it will produce significant savings.

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 in 2009 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.

The Business Council also believes three other fundamental reforms must be adopted going forward.

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.

The Governor vowed in his budget presentation to keep spending within the limits of his proposed cap even if the legislature fails to enact the reform. We support him in that effort.

A property tax cap:   The Commission on Property Tax Relief made its recommendations more than a year ago, 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 throughout the state. In much of upstate New York we have the perverse problem of housing stock that is attractive and affordable, but the property tax burden on it is not affordable. The idea of capping the annual growth of property taxes has wide-spread support.

Mandate relief: Governor Paterson has also put forward a series of proposals to relieve local governments and school districts from state mandates that drive up costs. One of the principle reforms would be repeal of the Wicks Law for school districts which could significantly lower construction costs.

Mandate relief is important to allow local governments and schools to lower their costs and keep the pressure off the property tax.

All 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 reforms, The Business Council supports 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.

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.

That is our broad “pro-jobs” reform agenda. But, let me also touch on one issue of specific importance in this region and that is the development of natural gas from the Marcellus Shale.

The Business Council is working with our members who have a direct interest in this issue to support drilling in the Marcellus Shale for three reasons. First, it will create jobs and economic opportunity, especially in this region. Second, it will generate tax revenue to help balance the state budget. And third and perhaps most importantly it will provide an abundant and clean source of domestic natural gas that will help our overall economy.

Not far from here, across the state line, Pennsylvania is creating thousands of jobs and billions of dollars in economic activity by drilling. New York needs the jobs and economic activity that Marcellus Shale natural gas can provide in both a safe and environmentally sensitive manner.

Now we can’t get these things 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 web site: BCNYS.org. When you go there just click on Fix New York. This tool can help you let legislators know your position on important issues.

And finally, I have just a couple of thoughts on economic development in New York. One of our biggest concerns in the budget is that the economic development initiatives may fail to provide the incentives to keep employers, especially manufacturers in New York.

We believe there is a lot to like about the Governor’s Excelsior Jobs program in the way that it targets sectors for growth and provides refundable job credits. But, that is a job creation program not a job retention program.

We believe that with New York’s hostile business climate the state must do more to encourage employers to invest capital in this state and keep jobs here.

We also have some concern that even in these difficult economic times the Excelsior program may prove to be too little incentive compared to competing states.

The Business Council will stay engaged on these issues and work to secure legislation that will bring down costs and help New York employers.

Thank you again for providing me the opportunity to speak with you. Thank you all for your time and attention. I’d be happy to answer questions.