Brooklyn MetroTech BID Keynote Address Outlines Affordable New York Agenda
President & CEO
The Business Council of New York State, Inc.
Remarks to the MetroTech BID
June 26, 2009
Thank you. It is a pleasure to be here this morning to speak before you and the members of the MetroTech Business Improvement District.
I am honored that you invited me to take part in the BID’s Annual Meeting for 2009.
This morning I want to share with you some of the lessons I have learned in my new job at the Business Council up in Albany.
I have to remind you: when I left the Brooklyn Chamber of Commerce in the fall of 2006 and went up to Albany, I did not move out of Brooklyn. I still live here, and our daughters, Rose and Ginger, still go to school in the BID at Brooklyn Friends.
I often walk up and down Fulton Mall: I still shop at Sid’s and Macy’s and Faith Art Gallery, and yes, you all know that I still “get spoiled” with New York’s best dry cleaning and tailoring thanks to Victoria and Bridge Cleaners.
I also want to remind you, in case you’ve forgotten, that Brooklyn is part of New York State. In fact, one of the things I have learned in my new job is that Brooklyn has more in common economically with upstate cities like Rochester and Buffalo than it does with Manhattan.
Think about it: those upstate cities and Brooklyn share a common economic history – they were among America’s greatest industrial cities. Centers of manufacturing, trade and commerce of all sorts.
Places like Syracuse, Schenectady and Troy share a powerful industrial legacy with Brooklyn (more than with any other NYC borough). And therefore today they share many of the same economic and social challenges that Brooklyn faces.
Challenges in making a transition from an industrial economy dating back to the 19th century to a 21st century service economy.
A transition from a base of large industrial employers to medium and small businesses employers, like most of you in the BID.
A transition to a new and diverse economy built on services, retail, health care, construction, education, specialized manufacturing, tourism and entertainment.
Since cities all across the state share these same challenges, state-wide economic policy — developed and put into law in Albany — matters as much here in Brooklyn as it does in Binghamton and Buffalo.
And that’s where the Business Council comes in. The Business Council is the leading state-wide business association in New York. We are the voice of the business community in Albany. We are your voice in Albany.
Our 3,000 member companies represent a broad cross-section of the state’s economy.
Seventy-percent are small businesses; one-third are manufacturers.
Most of New York State’s great companies — IBM, GE, Corning, Kodak, Pfizer are on our board of directors.
And our members include many major employers right here in NYC, such as those in banking and insurance.
Our board chairman is Kevin Burke, Chairman and CEO of Con Ed.
Our mission is to advocate for policies in Albany that create economic growth, good jobs and strong communities all across our state.
We work from the assumption that the private sector is the source of wealth.
The private sector 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 judge 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 focus on private sector job creation?
Let’s take a look at the numbers.
Last week the NYS Department of Labor released May employment data.
This recession is proving to be deep and lasting. The employment situation out there is terrible.
Most economists believe unemployment will continue to rise and then stay high for a long time, even as the economy starts to recover and businesses’ bottom lines improve.
The NYS unemployment rate rose last month to 8%, the highest rate since 1993.
The number of unemployed New Yorkers hit 800,000 — the biggest number of people out of work since 1976 — 33 years ago.
And here in Brooklyn, it’s worse. The Dept of Labor reports that the unemployment rate in Kings County rose in May to 9.2%.
Today there are more than 100,000 unemployed people in Brooklyn, compared to 56,000 a year ago. The Brooklyn unemployment rate is now higher than the national average.
Of course there are other key indicators beyond unemployment rates.
Most economists suggest that a good measure of a region’s economic performance is personal income growth. Some cite population growth.
So, how does Brooklyn measure up?
The good news here is that prior to the recession, income growth in Brooklyn was on the rise — per capita income rose from 2005 to 2007 by 12% to about $32,000. But this is low — the state-wide average is $46,000 — and the increase in Brooklyn was less than the state-wide increase.
(If you’re taking notes, per capita income in Brooklyn ranks 24th of the 62 counties in New York State.)
And, what about New York State as a whole?
In terms of income growth, from 1997-2007, New York State ranked 43nd in US. That’s right, 43nd out of 50 states.
Even with a booming NYC economy at the time, the “empire” state — was among the eight worse-performing economies in the country, falling in line between Kentucky and Tennessee.
What has happened to New York? Business owners, like you, know the answer.
New York is 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.
Government in New York collect all these taxes for a reason: Per capita state and local spending 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.
And… we also have some of the most extensive, complicated, burdensome business regulations in the country.
Finally, here’s a real problem few people like to talk about: prior to this recession, we led the nation in the loss of our population to other states, according to U.S. Census data.
From 2000 – 2005, we suffered a net loss of more than 200,000 New Yorkers every year. Basically, we were losing another Syracuse every 12 months.
Perhaps this is not so evident here in NYC because of the effect of foreign immigration, but upstate the population loss is staggering.
And it is especially tragic when you consider that so many who move away are our best and brightest young people.
With all this, no wonder it’s so hard for businesses to survive in New York. No wonder it’s so hard to convince companies to move here or for new companies to start up here.
No wonder it’s so hard to create the new jobs we so desperately need right now.
Enough about the problems… Let’s talk solutions.
The driving question is: What can we do to create a more supportive business environment in New York?
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.
Recently we announced our support for a package of four essential reforms — we call this set of proposals “Affordable New York”.
Each idea stands on its own in helping to improve the business climate; together they add up to a transformational strategy for fiscal reform and economic recovery in New York.
And, yes, they will help make New York affordable again.
1. 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.
2. A property tax cap:
The Commission on Property Tax Relief, chaired by Tom Suozzi, 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.
3. Local government consolidation:
There are currently more than 10,500 local government entities across New York State. The Lundine Commission made numerous recommendations to enable local governments to save money by consolidating and sharing services. Attorney General Andrew Cuomo’s new legislation would make government consolidation easier and give voters more of a voice in these decisions. Consolidation is meant to cut duplicative, wasteful government services and give taxpayers better value.
4. 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.
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.
We must not waste the opportunity 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.
Mike, I hope you and the members of the MetroTech BID will join with the Business Council to help us move this agenda forward.
Thank you all for your time and attention.