Weak long-term job growth in New York State is a function of high taxes and high government spending, so Albany's priorities in shaping next year's budget should be limiting spending growth and addressing the tax burden, Business Council president Kenneth Adams has told top state fiscal officials in Albany.
"Controlling state spending and promoting economic development and job growth, especially Upstate, should be guiding themes in the state budget for Fiscal 2009," Adams said December 20 in testimony before officials with the state Division of the Budget (DOB).
Controlling state spending and promoting economic development and job growth, especially Upstate, should be guiding themes in the state budget for Fiscal 2009.
Adams noted that recent modest improvements in New York's 12-month job-growth rate did not change "significant economic weaknesses," especially Upstate.
In the 12-month period ending in October, he noted, Upstate job growth was "an anemic 0.3 percent," and manufacturing employment shrank nearly 3 percent.
What's more, he added, "New York's fastest-growing sector was "education and health care," which depends heavily on government spending for its growth.
The culprit? Taxes.
"New York's weak long-term growth is a in large part a function of high taxes, especially local property taxes, which are driven by high spending and onerous mandates on schools and local governments," Adams said.
"Therefore it is essential that we make tax and spending decisions that help improve the economic climate in New York, particularly in areas north and west of the New York City metropolitan area."
Adams noted that the problem is not taxes or revenues, both of which are "way up." New York's tax burden is the nation's heaviest, and state taxes increased $5.1 billion last year, and are expected to go up $2.5 billion this year and $3.3 billion the following year.
"No, our budget problem is not because revenues are weak, it's because overall state spending continues to skyrocket," Adams said.
Adams urged a hard cap on spending growth that would limit that growth to the rate of inflation. This would require imposing cost controls "in big-ticket areas, such as Medicaid," he said.
Adams said The Business Council is also supporting:
- Additional tax reforms, including reforms to promote capital investment and job growth and retention. In particular, he urged several enhancements of the investment tax credit, including one that would permit employers to use them to offset new capital investment.
- Creation of a "new jobs" incentive that is already being used successfully in several other states.
- "The basic direction" of the Governor's Commission on Higher Education, which has proposed upgrades to SUNY research universities to make them stronger engines of economic growth.
- A permanent extension of major economic-development power programs.
- A "meaningful limit on property tax levies and a lighter property-tax burden on businesses." In particular, Adams said, New York State should enact significant mandate relief for local governments and a cap on property taxes that would apply to all classes of property-tax payers. The state's STAR program provides no relief to business and does nothing to ensure that savings to residential ratepayers are offset by increases in local spending.
- Repeal of the Triborough amendment to the Taylor Law, which limits the ability of local governments to negotiation on union contracts.
- More significant Wicks Law reforms that actually reduce labor costs on taxpayer-funded projects.
- Consideration of ability to pay and last-best offer in mandatory arbitration.
- Promotion of shared services and employees among neighboring units of local government.
The full testimony is at www.bcnys.org/presidentsreport/2007/1220budgettestimony.pdf.