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State-of-the-State: Governor's themes need follow-through
January 13, 2009

Last week, Governor Paterson delivered his State of the State address with what we heard as two primary themes: (1) understand the fiscal crisis the state is in and (2) make smart, albeit tough, decisions about it. From the business community's point-of-view, New York's fiscal situation is something that Albany should have understood and addressed a long time ago. Nonetheless, we give the Governor much credit for using his bully pulpit to set the tone for aggressive and necessary change in the way New York State government functions.
 
There are some particular points in the governor's message that we hope the state legislature heard and will follow in its work. First and foremost is addressing the state budget now, as Governor Paterson put it, "like families across the state - make painful choices about what we can and cannot afford." It's a good analogy, but with a caveat - families can't raise taxes and fees like the state can (and has, in abundance), so the governor's expression of "getting one's house in order" is one that we hope will resonate with legislators. As I've stated before in these bi-weekly e-mails, this fiscal crisis is an extraordinary opportunity to change how Albany operates.
 
Governor Paterson also touched on several proposed economic development initiatives which warrant strong support:

• An increased number of collaborations with the private sector - as outlined in the preliminary report from the Commission on State Asset Maximization, before whom the Partnership testified. In Buffalo Niagara, such public-private partnerships (P3s) are a key component of the UB2020 program.
• Reaffirmation of the state's commitment to revitalizing Upstate, including programs and projects identified in the Upstate Revitalization Fund and ESD's directive to identify transformational projects in Upstate communities, such as tourism in Niagara Falls and the academic medical center in Buffalo.
• Pursuing energy reform from an economic development perspective, in addition to an environmental one.

On the negative side is a phrase - "sharing the pain" - that's being thrown around regarding the host of proposed new taxes and fees designed to make up for state revenues lost from Wall Street's meltdown. I cannot overemphasize a point we continue to make: "sharing the pain" is not a responsible solution. New York State employer and citizen taxpayers already have endured enough pain - evidenced by the many who have fled - and additional new taxes and fees will only add to that. Instead of a widely felt "death by a thousand cuts," there needs to be targeted reform of ineffective and inefficient state government programs and the reduced spending for them which should (must!) result.

Moreover, reforms can be directly helpful for individual economic development initiatives, in addition to making the business climate more competitive. For example, the Partnership led the charge to reform a brownfields program that was abundantly generous to downstate projects, and thus fiscally irresponsible - the outcome is revised, clear criteria more in line with Upstate's remediation needs. We also are working on reform of the Empire Zone program that has been a boon for certain businesses, but does not use this generous state incentive in the most strategic way to bring sustaining economic growth into our communities.

Finally, through Unshackle Upstate, we continue to advocate for structural changes, reform and creative solutions in Albany - particularly for solutions that have long been staring decision-makers in the face. Progress in reforming Taylor and Scaffold Law and repealing Wicks Law would enliven the economy - not simply in Upstate, but statewide. We have yet to be met half-way on any of them.

On January 2, the Brennan Center released its latest report on New York State government, "Still Broken: New York State Legislative Reform 2008," which identifies many of the systemic problems in Albany that continue to exist. Newly-elected Senate Majority Leader Malcolm Smith has promised reform of how the state legislature operates. Such an approach could open the door for greater discussion and reform of issues that continue to make New York State uncompetitive.

Governor Paterson focused heavily on a "family finances" analogy in his State of the State, including recognizing an "everyday" family of five from Cicero to emphasize his point. It is a good model for the state, if Albany remembers that real families balance their household budgets by modifying how they live.

Andrew J. Rudnick
President & CEO