Login Thursday Feb 23, 2012
Follow the Blogs
of the Empire Page's
Exclusive Columnists:
See new posts automatically when you subscribe to an RSS feed of your favorite columnist.
Background: Most people agree that New York State under Andrew Cuomo's leadership made progress in addressing the imbalance between the cost of our public sector and taxpayers' ability to pay the freight. The question is what more can be accomplished given the state of the national economy? Two years into the recovery, the national economy is clearly weak and in danger of being dragged back into negative growth numbers by a combination of factors including debt crises in Europe and at home. Where does NYS go from here to boost economic growth, reverse the outmigration of businesses and middle class taxpayers while still meeting the needs of our citizens for police and fire protection, safe roads, good schools and other public goods?
Mark Alesse: The most obvious answer is that New York is going to suffer more acutely from a continuation of the national and world economic crises, and will remain mired in slow or no-growth much longer than states that had not been so poorly managed nor serially plagued by corrupt and intellectually-dishonest politicians.
I'm not sanguine about the future of New York for several reasons. First, its political history and culture are stuck in the last century. During my tenure at the helm of NFIB I watched when good economic times rolled how NYS spent every nickel it could lay its hands on. And when bad economic times hit, New York raised money by borrowing and raising taxes, and spent every nickel it could lay its hands on. Nothing about this idiocy troubled the political elites, nor the social-welfare lobby, but it drove the business community to distraction. We sounded the alarm as best we could, but were derided for bringing Cassandra to the banquet table.
So businesses just left. Year-by-year those that could packed up and moved to North Carolina and other states whose costs of doing business weren't ruinous. Those that couldn't move, stayed and went broke, the monumental consequence of which is that ambitious New Yorkers, mostly young people, packed up and left too.
EJ McMahan recently released the numbers on this out-migration. This is the most significant sociological event in the state's history, and it has gotten far too little coverage. Consider this; how could New York have hoped to recover from the terrorist attack on 9/11 if it had resulted in a million and a half people dead, instead of 3,000?
Well, that's what's happened and is happening to New York now, albeit in slow-motion. One and a half million people disappeared; gone and no longer contributing to the life and economy of New York. And these were people with a desire to get ahead and whose ambitions were being frustrated by New York. The very sort of people a growing and vibrant society must have. What's left? Take a stroll in downtown Buffalo, Rochester, Schenectady, Albany, or Syracuse after sundown to see what's left. Boarded-up retail space, high commercial vacancy rates, homeless people, the unemployed, some retired people and government offices. There is nothing of the private sector worth mentioning. These cities are a dead-zone.
If you ask me whether it can change, I think the answer is yes. But, if you ask me, will it change? I think that it is unlikely. The politically powerful groups that brought us to this pass are still in Albany, they are still powerful, and they are completely unrepentant, if not completely ignorant, of the role they played in ruining the business climate, bankrupting the state, and driving ambitious people away.
Governor Cuomo apparently sees the big picture and understands much of this. Remarkably, he has accomplished a few important reforms and has the corrupt and dysfunctional Albany establishment back on its heels, but the challenges that remain are Sysipheon.
What are they? In my view every state program that doesn't have to do with the protection of life and preservation of civil order has to be cut in order to dramatically reduce the size of government. After that, the highest priority must be to promote a growing economy. It is axiomatic; people need work above all else save life and security. The only way to have an economy that can create jobs is to reduce the costs of doing business; all of them. That means reforming the tax law, the unemployment insurance and workers' compensation, tort law, commercial liability insurance, commercial property taxes and group health insurance. (Notably, if not predictably, at a meeting of business leaders in Buffalo, new ESD chief Ken Adams mentioned not one of these. It was, however, reported that he is "focused" on the upstate economy.)
Anything less than reducing the costs of doing business to the average of the states with growing economies will not do. So, am I hopeful? Not really. Certainly not in the near term. The future is unknowable and could hold some unforeseen developments, but absent the reforms I've suggested, New York will not be capable of enjoying the full potential of even a global economic turnaround (unlikely in any event) and will just muddle along as it has, with no bright future and just a dimming memory of past glory. (contact Mark at mark.alese@gmail.com)
Mark Bitz: Mark Alesse’s comments are spot on!
They address what my 2005 book, Creating a Prosperous New York State, was all about. Not long after researching and writing it, I concluded that the Medicaid, union, and pro-big government special interests not only controlled all three branches of government in Albany, but represented a majority of the state’s population. This population, the entitlement culture, and the state’s overhead make it impossible for most businesses in NYS to successfully compete in the long run with businesses located in states without these drags. Thus, in 2007, I sold a 6 generation business, employing 300 people, doing $40 million in sales, and growing 20% a year, because I knew the niche market advantages that we worked so hard to create were temporary and transferring it to the 7th generation would be far more of a curse than a blessing to them. Within 9 months of selling our company, the purchasing company moved it to Pennsylvania. They indicated to me that they had intended to keep our business in NYS, but found the costs too high to earn a satisfactory return for the shareholders of a publically traded company. Within two years of moving it, they doubled its sales and increased its profitability five times.
I have encouraged both of my hardworking and able boys to leave the state. The 24 year old has, and I believe the 18 old will upon completing college. My wife and I will be leaving the state in 2012. Over the years I have made numerous business owner and CEO friends, who for the most part have similar sentiments. They more often than not have or will sell family businesses for the same reason and have advised their children to leave the state as I have.
Years of paying the freight(NYS taxes) for 50 plus other families didn’t really bother me until I realized that most of the taxes were enabling entitled lives. Moreover, I realized, taxes that enable entitled lives, disable purposeful lives. Having little interest in doing this, I now think about ways to minimize the taxes I pay to governments that enable entitled lives, and maximize my donations to charities that enable purposeful lives.
Robert W. Schwartz: Both Mark A's and Mark B's responses are typical rehash of the terrible history of the last 30 years of bad policy by our NYS government. Neither offer solutions. Here are four modest proposals to improve our business climate:
Richard Ottalagano, Supervisor, Fulton County: I'm going to step out of line on this. I don't have praises for Governor Cuomo. He promised a property tax cap along with mandate relief. What we got was a tax cap, and same sex marriages! Local governments will reduce services to a point that will cause more businesses to leave the state. In my eyes the biggest problem the state has is too many agencies and authorities not answerable to any elected body.
I read term limits for all levels of government as a solution, and I wish the writer luck with that, as there is very little interest in running for local positions. I'd rather see minimum requirements for offices, courses and tests given before one can run for office. The average person would be shocked how little newly elected people know of their position, OJT is a very poor option.
So how can a state lowering spending and taxes without jeopardizing the core services that its residents have come to depend on? The answer is clear…it is all about mandate relief. Simply put, there are laws in the state of New York that drive up local government spending and as a result increase our taxes. Yet, with a little help from the legislature, we can repeal/reform these laws. The end will result is that the current level of taxation can be spent more wisely and efficiently…it can be targeted to support economic growth.
Earlier this year Unshackle Upstate proposed 9 ideas that will take the necessary first step for mandate relief. That list includes:
· Enact the Unfunded Mandate Reform Act
· Limit the ability of the state to impose future unfunded mandates
· Authorize local governments to “opt-out” of certain unfunded mandates
· Require all local government and school district employees and retirees to make minimum contributions to their health insurance
· Create a new defined contribution pension tier for all state and local employees;
· End the state’s “project labor agreement” mandate;
· Raise competitive bidding thresholds for local governments (GML 103) and
· Expand Court of Claims jurisdiction to include claims against local governments
The concept of mandate relief is not new but it can be uncomfortable. In fact, some of what we proposed above are political hot potato’s because they take away some critical leverage of the public employee union leadership. And that creates issues for some within the legislative body that rely on the unions for contributions and support.
But if you asked the average New York resident if they would support a plan that allows for the state to continue to provide critical services without raising spending or taxes, they would overwhelming support it. It is time for our 212 elected officials to join the Governor, local governments and the taxpayers and finally support and pass meaningful mandate relief. We can’t nibble around the edges anymore. Our future is bright…but just how bright will depend on the Senate and Assembly.
Doug Boettner, Empire Page Columnist: First of all unwarranted spending by State agencies on operations has to cease. Zero-based budget reviews need to be done for each major state agency and only expenses critical to their mission both legislative and regulatory requirements should continue.
The same holds true for municipalities and school districts. A comprehensive review of operations and costs need to be performed and costs cut accordingly. In addition, consolidation of both municipalities and school districts should be made mandatory by the state legislature.
All of these actions over time will serve to reduce the tax burden on both businesses and individuals and homeowners. The exodus of New Yorkers has to be stopped if the economy is to rebound.
Secondly, borrowing by New York State and public authorities to meet operational expense must cease. Borrowing should only be allowed for fund capital construction and large capital acquisitions, and for projects that are backed by a solid revenue source. Pyramiding of debt is a sure way to collapse any organization.
One needs to keep in mind that substantial downsizing of governments across the board will hurt the economy from the standpoint that unemployment of government workers will rise substantially and less good and services will be procured. However, once businesses realize that NYS is becoming more tax-friendly, more businesses will locate and relocate to New York and that will serve to reverse the unemployment figures and the purchase of goods and services from those very businesses. One will fuel the other.
Finally, the State Legislature needs to recognize they are a major part of the problem. They have overtaxed and over-regulated businesses in this state for decades and now we see the results: a mass exodus. Hopefully they are seeing it also and are realizing something needs to be done. They need to reform the laws to make New York State a business-friendly state. We as taxpayers need to enforce our concern with them on this issue.
My feeling is Governor Cuomo gets it and he will continue to move New York State in the direction outlined above. Capping property taxes is a start. Getting concessions from the public employee unions also is a good start. Working with local communities to identify opportunities for bettering their local economy is another good measure. There is much more work to be done, but the word needs to go out to the business community…there’s a new sheriff in town and he is going to make New York State a good place to do business.
Paul Bray, Empire Page Columnist: In February 2000 I wrote a column entitled, “Upstate: Replacing a culture of blame with a culture of building”. The more things change, the more they stay the same.
What I wrote in 2000 was:
“Everyone knows the rap on upstate. The weather stinks, the tax burden and energy costs are high and regulations stringent, manufacturing has fled leaving a plague of brownfields, population relative to the nation’s population is declining and with it the State’s power on the national scene and we have a medieval State government. From the weather to government, there is a lot to blame.
The recently organized alliance of Syracuse, Rochester and Buffalo business organizations called Advance Upstate New York has the answers. Its agenda is simple. Cut taxes and energy costs, reform Workers Compensation and repeal the Wicks Law and the upstate economy, unshackled, will take off.
At first their agenda sounds good. It won’t improve the weather, but who is against lower taxes and costs. If only economic revivals were so easy. Look closer at these business leaders and you see for the most part that they represent the remains of the traditional upstate economy trying to hold on in a fundamentally changed economic world.
The authors of Grassroots Leaders for a New Economy, an analysis of how places like Austin, Texas and Silicon Valley created thriving economies, would call what is going on in upstate New York an example of a self defeating culture of blame. It happens when existing business leaders control the political agenda sending out negative messages to support policies needed to maintain decade old ways. The business agenda is less an answer to economic plight than a drag to economic revival.
Look again at upstate and you can see the germination of a new economic revival in information technologies based on the vast areas educational, transportation, urban and environmental assets. The economic answer is inside the regions of upstate based on emerging collaborative economies.
Upstate has the right fundamentals for a vital 21st century economy with its industries of the mind like bio technology, software, micro electronics, telecommunications and the environment. It will be based around major university centers in Albany, Syracuse, Rochester, Binghamton, Cornell and Buffalo supported by colleges, community colleges and professional schools.”
Each university center will be the engine of competitive regions linked by world class high tech/transportation corridors like the Thruway and recreationways/heritage corridors. From these university engines with their technology, research capacity, tech transfer infrastructure and business partnerships will come new products and a new generation of manufacturing jobs.”
Simply restated, cutting government spending, cutting taxes, removing regulations and so on and so forth aren’t going to take us to a better economic future. Instead, the road to a better future depends on greater competitiveness, entrepreneurial spirit and greater effectiveness. We need to put our educational, environmental, heritage, civic, urban and social capital assets to work with a real sense of belief in our assets backing up our progress.
-regional, anti-sprawl, pro-core land use, transportation and other infrastructure planning;
-regional, unified economic development programs;
-regional, “fair share” workforce housing policies/programs; and
-regional tax-base sharing.”
Greater leadership and belief in our future should get us to a culture of building sooner than later, but probably not until we get rid of the culture of blame.
Linda Petzold, Small Business Owner, Bainbridge, NY: How to Get Our State and Federal Government to Help:
Greg Hitchcock, Empire Page Editor: Southern politicians are right. Historically, they have been proponents of states’ rights against the encroachments of national power. Today, we need a Jefferson rather than a Lincoln.
Virginia-born Thomas Jefferson believed in states’ rights fearing an overly centralized federal government. In fact, he believed that a revolution against government was a good thing from time to time, something that was natural in the writer of the Declaration of Independence.
Illinois politician Abraham Lincoln, on the other hand, was the Civil War president that upheld national authority in the north’s mission of preserving the Union. At that time in our history, federal authority was a necessary evil – Congress abolished slavery, promoted and built our transportation network of rails and roads, and sold cheap Western land to farmers in order to populate the frontier.
Today, we must insist upon going backwards in order to move forward, allowing the individual states to develop internally what we depended upon the nation to resolve. Northern states are beginning to realize the necessity of this Southern strategy.
New York State under the leadership of Gov. Andrew Cuomo is seeking ways to do just that, restructuring state government to make it more responsive to the needs of its own citizens. It is not looking to Washington to solve its problems, but to New Yorkers themselves. Gov. Cuomo’s initiatives are looking for new ways to solve age-old problems.
It is crucial to count on ourselves more than ever especially considering the state of our global and national economies. I am not promoting the fragmentation of the nation, but rather the strengthening of it from the grassroots, to the states, all the way to the White House.
It is time to stop asking the nation to bail out the states; the states must bail out the nation.
John Droz, Jr., consumer advocate, physicist, and environmentalist: Two years ago I wrote an expose titled "NYS Dirty Dozen" (<<http://www.northnet.org/brvmug/NYSDirtyDozen.pdf>>). I submitted it to some thirty NYS major newspapers to publish. Not one did — and that is a part of our problem. The key points I made were —
We need to genuinely fix the conditions that make job growth naturally happen. In other words, what economic reasons would an employer pick NYS as a place that he and his employees would find attractive? Put yourself in that perspective and carefully consider the following facts about NYS:
1- State & Local Income Taxes (per capita): 49 states are lower;
2- State & Local Sales Taxes: 47 states are lower;
3- Property Taxes: 46 states have lower;
4- Education Cost per Pupil: 48 states are lower;
5- Composite SAT Score: 46 states are better;
6- Cost of Housing: 44 states are lower cost;
7- Cost of Electricity (KWH rate): 47 states are lower cost;
8- Cost of Gasoline (tax per gallon): 47 states are lower cost;
9- Cost of Food: 43 states are lower cost;
10- Cost of Everyday Healthcare (per capita): 47 states are lower cost;
11- Cost of Longterm Healthcare: 47 states are lower cost;
12- State & Local Employees as a % of Total Workforce: 44 states have lower.
Has Governor Cuomo or our legislators genuinely addressed these fundamental barriers to economic growth? Absolutely not! In fact, they continue to make them worse.
A prime example is the Power NY Act of 2011, aka Article X. Despite all the flowery unsubstantiated euphemisms freely strewn about by our politicians and the beneficiaries of this draconian legislation, two facts remain: 1) this is a retraction of Home Rule right of NYS citizens, and 2) the real objective here is to implement more expensive, less efficient electricity (like wind energy).
Such measures translate to talk is cheap, and there is business as usual in what used to be the great state of NY.
Sorry, comments are closed for this article.