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State Budget 08
State Budget Far from Perfect April 10, 2008 As our staff sorted through information on the state budget passed yesterday by the Legislature, we came across a quote from a downstate Assemblymember: “It’s not a perfect budget, but…”; a sentiment echoed by Governor Paterson. In Albany, where both the widely-criticized budget process and resulting budgets are defended by state electeds, it’s a small comfort that no one there is under the illusion that this budget is “perfect,” because it is far from it, particularly if you live and do business in Upstate. First and foremost, the state has virtually guaranteed that the cost of doing business in New York will increase by raising spending, imposing new fees and expanding existing taxes - $882 million in additional taxes and fees, to be precise. Specific examples include: new bank and credit card taxes (especially detrimental to many Upstate economies for which financial services has been identified as a target industry poised for significant growth), raising existing taxes on health insurance and corporations, as well as filing fees for forming businesses. In sum, Albany’s actions give businesses already here even less incentive to expand, and businesses considering relocating to Upstate even less incentive to do so. We are very concerned with regard to any increased spending in the face of a widely expected additional downturn in the state revenues as a result of reduced revenue from Wall Street, etc. Indeed, the budget passed yesterday, with its nearly 5% increase in spending, was pushed for approval prior to April 15, when the next report of actual tax receipts is due. As you have heard me say before, in a climate of competing interests, state leaders must examine all spending and be willing to make responsible decisions to ensure that taxpayer money is used for the highest priorities. Additions to the budget, such as $700 million in Upstate revitalization funding – investments in projects that can create much-needed jobs – should have been offset by spending reductions elsewhere in the $124 billion budget. In this context, here are some specific points regarding the Partnership priorities: Regional Agenda: Two state funding priority items from the 2008 Regional Agenda were included in the budget – the Buffalo Revitalization Initiative and operational funds for the NYS Center of Excellence in Bioinformatics & Life Sciences. Still on the table – and we will continue to lobby for their inclusion in the Upstate Revitalization Fund – are the Niagara Experience Center, the Buffalo Cultural and Heritage Tourism Experience program, and the Erie County Shovel-Ready Sites Initiative. Regional Agenda - UB2020: The University at Buffalo has secured approximately $200 million for capital projects critical to the success of UB 2020. The funding will allow UB to move forward on an extensive number of construction and renovation projects, including a $150 million investment in the facilities and infrastructure on the South Campus, and the build-out of the Downtown Gateway and adjoining Educational Opportunity Center. Unfortunately, the budget also cut away important operational funding for UB, and failed to take action on any of the important policy changes necessary to advance UB2020. Unshackle Upstate: Brownfields reform – once anticipated to be addressed within the budget – was not. Unfortunately, included in the budget bills was a 90-day moratorium on new entries into the Brownfield Cleanup Program. While we’re optimistic that the 90-day limit indicates action on brownfields reform before the end of session in June (which is just about 90 days from now), the moratorium also negatively affects a number of projects in Buffalo Niagara. There are still two full months in this legislative session for our elected officials to make serious headway in addressing the economic needs of Upstate. Through Unshackle Upstate, we continue to call upon our governor and legislators – in addition to enacting true Wicks Law reform – to enact laws for two key issues that Unshackle Upstate has identified as essential to revitalizing our economy – reforming the brownfields laws to spur redevelopment and adopting new policies that will make energy more affordable. Unshackle Upstate: Wick’s Law: We are dismayed by the continued lack of transparency in the budget process, which once again involved late-night, last-minute horse trading for pet projects and resulted in such initiatives as the three-tiered Wicks Law provision being included in the final bill without any airing, much less discussion. Unshackle Upstate called for true reform of Wicks, which drives up taxes by raising the costs of public construction projects, and thus the coalition was firmly opposed to – and lobbied against – the bill as adopted. It sets an artificially low threshold Upstate, which will not provide the region with measurably lower costs and thus tax relief, and mandates project labor agreements (PLA), which likely will more than offset any cost savings. Unshackle Upstate immediately urged Gov. Paterson to take corrective action and realize real Wicks Law reform before the end of the legislative session. Enhanced Driver’s Licenses (EDLs): The necessary authorization for the State to proceed in implementing EDLs to meet the requirements of the Western Hemisphere Travel Initiative (WHTI) in time for the June 1, 2009, deadline was approved. Unfortunately, in the culture of fees and taxes that has exemplified the 2008 budget, the fee was set at $30, rather than the $20 that was anticipated, in order for it to become a “revenue enhancer” for the state. A lack of transparency, mass increases in taxes and fees, a failure to hold the line on – much less reduce – spending, and horse trading away Upstate’s economic viability… That’s “not perfect”… By a long shot. Andrew Rudnick President & CEO
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State Budget 08
