Business wants friendly reforms, Cuomo may oblige
As we heard from Emma Jacobs earlier this week, New York relies heavily on perks like tax breaks to encourage businesses to come or grow here. According to a study by the Fiscal Policy Institute, the state handed out more than $5 billion in tax incentives last year alone.
But business groups say more structural changes are needed if New York wants to boost economic development.
They may have a receptive ear in Andrew Cuomo.
Mark Peterson's job is to sell companies on setting up shop in and around Rochester.
The CEO of Greater Rochester Enterprise says New York has a lot to offer: a high-quality workforce, access to major markets and plenty of logistical support.
"So there's a lot of reasons why doing business in New York is a great play for companies," says Peterson. "But they really gotta batten down the hatches and say, 'Gosh, I gotta really deal with the massive paperwork and regulation and mandate system that's in place.' And that can be debilitating."
Peterson says high taxes and layers of regulation can make doing business in New York a costly proposition.
Last year, New York placed dead last in the Tax Foundation's ranking of how friendly state taxes are to business.
Calls for making the state more economically competitive have grown increasingly louder ever since.
"First and foremost, we have to cut spending."
That's the word from Sandy Parker, CEO of the Rochester Business Alliance. Earlier this month, her organization presented an economic "Survival Guide" to Albany lawmakers.
The RBA's three main demands of state government are pretty standard for pro-business groups: cuts in spending, cuts in burdensome regulations and no new taxes.
It's a formula that Parker says will make New York more attractive to business, and so far it's a message that Governor Andrew Cuomo has seemed to take to heart.
Parker was on Cuomo's transition team, and she's also on the board of the powerful state-wide business group called the Committee to Save New York (which also includes Cuomo's newly appointed head of Empire State Development).
Parker says the committee's goal is to make the case that deep spending cuts and business-friendly reforms are necessary if the state wants to be on a "positive pathway."
"There's going to be a tremendous push from public sector special interest groups to push back on that," she says.
With a projected budget deficit of about $9 billion, early indications are that Parker's prediction could be spot-on.
Recent media reports said Governor Cuomo was considering laying off between 10,000 and 15,000 state workers in his forthcoming budget.
In a bind
Many of those layoffs would come from the ranks of New York public employee unions, like the Public Employees Federation (PEF). PEF responded to the job cut rumors by saying that such cost-cutting measures would be devastating.
"Even to discuss the possibility of laying off 10,000 or more state employees," says PEF Director of Public Relations Darcy Wells, "[will require the state to] ask which services are taxpayers then willing to do without."
Wells says state workers shouldn't have to shoulder the burden of the massive budget gap.
So here's the choice the governor is faced with: cut government spending in an effort to make business in the state more affordable. Or raise some taxes (or fees) to maintain services like education and Medicaid for an already-strapped working class.
Frank Mauro, head of New York's Fiscal Policy Institute, says the state is in a bind.
"States don't have any easy choices," says Mauro. "During recessions, to balance their budgets states have to either increase taxes or cut services. Neither of those are good for the economy."
Cuomo has pledged not to raise any taxes. Mauro says that's emblematic of the governor's so far pretty one-sided approach to fixing the budget, which seems to largely favor business interests at the expense of services.
Mauro also says Cuomo and his pro-business lobby are playing down certain positive economic indicators, while playing up the magnitude of the fiscal crisis.
"The deficit is being pictured as more daunting than it really is," Mauro says. "I think it's being done in order to justify more radical solutions than would otherwise pass muster."
The governor is expected to present his budget in Albany on Tuesday, Feb. 1. Business, labor and watchdog groups can expect to find out then just how business-friendly Cuomo plans to be.