Ok, I get it that some rank and file members of the New York State Legislature don’t want to talk about the “controversial” issues for fear of drawing the ire of the long entrenched “we like the status quo” groups that walk the halls of the Capital.  But to quote Cris Carter, an ESPN reporter and former NFL player, “Come on man!”

Take a look at this video of Assemblyman Bill Magnarelli.  Fast forward to about the 4:50 mark and listen to the question asked by the reporter Liz Benjamin.  And then listen closely to the answer given by the Assemblyman.  I was floored by what I heard.

I have one response to his statement that things like the Taylor Law, the Triborough Amendment and the Wick’s Law don’t impact his constituents…”SERIOUSLY?  Is that what you honestly believe?”  If that is the case, then Mr. Magnarelli is way out of touch with his constituents and his knowledge of the impact of these laws.  Taylor and Triborough dictate the terms and conditions for collective bargaining which, as you can read in this blog and all over the Internet, do nothing but drive up the cost of local government by tilting the playfield to benefit the union leaders as they negotiate.  The Wick’s Law has long been shown to increase construction costs for public projects by as much as 20-30%.  So to say that these things don’t impact his constituents is, well, WRONG!

It is time for our elected officials to finally take on these tough issues.  We can no longer afford the cost of state and local government.  And we should no longer have to pay for things (like guaranteed pensions) that we ourselves do not receive.  We want to create affordable communities that we are proud to call home.  It is time to unlock our future by fixing antiquated and unfair state laws!

In his budget address, Gov. Cuomo noted that the single most important question of government is how to spur private sector job creation while maintaining fiscal discipline. A daunting task for certain, but there are some ways that this can be done.

There is an economic development tool available to New York that fits seemingly well with the Governor’s vision of creating the type of public-private partnerships as outlined in his budget plan. This tool is Tax Incremental Financing (TIF).

TIF is a financing tool that empowers municipalities to issue revenue bonds, which are then repaid by the increased value of the projects they fund. This requires no increase in taxes and importantly – relies on no hand-outs from the State. The bonds issued are known as “TIF bonds.”

New York law restricts the use of TIF, save for a limited number of allowable economic development purposes. TIF law encompasses the development and/or redevelopment of blighted areas (broadly defined); but is focused on development that could not be done by private sector investment alone – creating a recipe for the type of public-private partnerships that many Upstate communities need. Because of the restrictions for use of TIF, it also creates opportunities for municipalities and investors to work together to identify a plan that best fits their community.

TIF has been used quite successfully in U.S. cities with a similar make-up of areas like Binghamton, Buffalo and Rochester – i.e. cities that once had a large industrial presence that must now reinvent themselves as part of the “new economy.”  TIF does not require cash-strapped local governments to use their general revenues to pay back TIF bonds; and encourages private sector development by allowing the marketplace to determine the value of planned projects. Thus offering a preview of what the value of a project may be. Most importantly, it allows local governments and private investors to work collaboratively to put forward redevelopment plans that make sense to their communities.

New York is one of forty-nine states that have TIF legislation on the books, but because of a glaring defect in the law, it is widely underused.  As it is currently written, TIF does not allow incremental school property tax revenues in school districts that benefit from increased revenues of redevelopment projects to be used to pay back TIF bonds. Making these funds available would go a long way to spur private development in many communities.

For several years, there has been legislation to correct this flaw in TIF that has stalled in the Assembly. The simple fix is to enable a voluntary opt-in for school districts located where a TIF redevelopment project is planned.   Last year, the Senate passed TIF reform legislation and language correcting TIF was included in an omnibus bill that included the tax cap and rent regulations. Yet, as we begin 2012, this simple, yet critical fix, still has not been made.

Unshackle Upstate has outlined TIF reform as a “must-do” in 2012. UU is not alone in its support for TIF reform. Many other business and trade organizations, local governments and school districts have expressed their strong support to begin using TIF in their communities. Language regarding TIF reform has also been outlined in many of the state’s regional economic development council plans as an important strategy for growth.

Let’s finally get TIF done this year. Let’s give our local governments an important tool to attract new investment and get the Upstate economy moving.

So, not everyone is happy with the governor’s 2012 budget proposal.  We’re quite pleased (read Unshackle Upstate’s response) but others, like PEF (Public Employees Federation), and CSEA (Civil Service Employees Association are a little less thrilled.  Both groups are radically upset about the proposed pension reform.

Governor Cuomo proposed that Tier VI be added to the pension system.  It offers the choice between a traditional defined benefit plan or a defined contribution, 401K style option.  Both of these options would be provided to NEW EMPLOYEES (meaning any employee already working for the state or local government are safe).  For the defined benefit plan, future workers would have to contribute a higher percentage of their pay…4-6% based on their annual wages.  They would also have to retire later (at 65 rather than at 62) and would no longer be able to pad their pension by working overtime.  The Defined Contribution Plan (like a 401K) would allow new employees to put up to 10% of their annual salary into the plan and would allow them to take their plans with them if they ever changed careers.  Both are reasonable and responsible options.

But not everyone shares our opinion.  CSEA President Danny Donohue, in a statement he released, said, “The governor’s proposal of a 401K style option as part of Tier VI would certainly be attractive to highly paid political appointees who could max out their contribution, have it matched by the public employer and take it with them as they come and go. It’s a lot different for front-line career employees who have to worry about whether being at the mercy of Wall Street ups and downs.”  True.  You can’t argue the fact that the market plays a factor.  But why should the public sector be any different than the average middle class taxpayer. 

Mr. Donohue also called Tier VI,  “an assault on the middle class and a cheap shot at public employees.”  REALLY?  Putting aside the fact that we are talking about people who are not currently employed, what about the middle class who do not work in the public sector yet carry the  burden of supporting the current pension programs?  They are being “assaulted” with escalating property tax bills.  By implementing Tier VI taxpayers across New York State will save nearly $80 billion over the next 30 years.  That is not an insignificant sum.  And taxpayer should no longer be forced to pay for something that they themselves do not receive…a guaranteed pension.

Another naysayer, PEF President Ken Brynien, also complains about the proposed defined contribution system, “The Tier 6 proposal is nothing more than a false choice of accepting severely reduced pension benefits or joining an inefficient 401k style pension system. It would force public employees into a pension gamble that virtually guarantees a lower level of benefits.”  Again, why shouldn’t public employees “gamble” the same way private sector employees have to?  We cannot create a protected class of workers.  That is simply unfair to the roughly 92% of New York residents that are not employed by the state or local governments. 

And let’s for a moment talk about choice.  Why shouldn’t future public employees, perhaps even current employees, have a say in how their retirement money is invested?  Everyone works to earn their retirement.  And pensions were never meant to be the sole source of income for people when they retire.  So let’s allow people the choice of where they invest their money and allow them to maximize that investment.

It seems to me to be quite disingenuous to try and protect people that are not currently employed while those of us today foot a heavy bill for current retirees.  Without Tier VI, the state, and taxpayers, won’t be able to support public pensions anyway, so it won’t matter.  We need reform not only so taxpayers across the state can continue to afford to live here, but also so public employees already in the system can receive the pensions they’ve already been promised.

So the gauntlet has been dropped and the battles will begin.  But let’s not forget that anyone who started their career and counted on the current pension system to support them in retirement doesn’t have to worry.  We’re talking about future employees.

Governor Cuomo’s State of the State a few weeks ago and his Budget Address yesterday certainly makes it appear as though he is willing to dig in his heels and control the costs of taxpayer- funded things like public pensions, Medicaid, etc. Controlling the rate at which the costs of those programs increase is most certainly a step in the right direction. And kudos to him for his willingness to take that step. But we ultimately have to do more than control the rate at which costs increase. We have to actually decrease the costs that the New York taxpayers are stuck paying. When costs are too high, it’s great to stop them from going any higher, but in the end, they’re still too high. We have to actually CUT costs if we are to ever dig ourselves out of the economic crisis that we all agree we are in. 

For too long here in New York, taxpayers have been forced to pay too much for public construction projects, because big labor special interests have traded their political support for special agreements, called project labor agreements (PLA), that earmark all of the labor on public construction projects to construction workers who are union members. These agreements virtually shut out thousands of local construction companies from the opportunity to work on public construction projects that are funded in part, but their own tax dollars, simply because those companies employ workers who have freely chosen to NOT be a member of a union.

As a construction industry employer in Upstate New York, my ability to maintain and grow employment opportunities within my company is contingent on my company having an equal opportunity to perform work on construction projects financed with taxpayer dollars. PLAs strip away that opportunity from my company, because I employ construction workers who choose not to be union members. My company will not consider working under the terms of a PLA because it requires us to ignore our own highly skilled local workforce and instead employ workers from the union hall.

As a small business, our employees are a part of our extended family, and we can see no reason to take away from them an opportunity to work and provide for their families in order to provide opportunities for their union counterparts. If my company were to work under a PLA, we would have to force the few workers that we would be allowed to employ from our own workforce to pay union dues and essentially “join” the union for the duration of the project. Our employees have FREELY decided that union representation is not in their best interest. So working under a PLA is a losing proposition for them, and we as a company value and respect them too much to force that on them.

So, our only option as a company is to avoid working on PLA projects. Our tax dollars and the tax dollars of our employees, pay for these projects, but simply because we as a company and our individual workers choose to work in an environment where we communicate directly with one another and we value productivity and performance over seniority, we are stripped of the opportunity to work, and our employees lose the opportunity to provide for their families. There are thousands of companies like ours here in New York that feel the same way, and as a result, when PLAs are enforced on public construction projects, competition to perform the work required for that project is severely limited .

 And you don’t have to be an economic expert to know that when competition is limited, prices go up. It is an absolute fact, but a fact that big labor has spent years denying. So, let’s take all of the rhetorical arguments off the table, and let’s approach public construction in New York State a little differently, so we can really determine the impact of project labor agreements on the bottom line cost of public construction. Let’s bid projects both with and without a PLA, and let’s let the numbers speak for themselves. If PLAs are as good as their proponents (big labor) say they are and if they truly are about building projects in the most cost effective way, that will be proven when a “bid it both ways” approach is implemented. It will all come down to the numbers, and let’s face it, the numbers are what the taxpayers are ultimately on the hook for.

There is a bill floating around the halls of the State Legislature that would implement this “bid it both ways” approach, and if the Governor is serious about controlling costs, this is one way to insure that New York taxpayers are getting the biggest bang for their tax dollars where public construction is concerned. The Governor and the Legislature should seize this opportunity by expeditiously passing the Public Construction Savings Act (S4121/A.7855). New York State taxpayers deserve a cost effective approach to public construction.

This week the Empire Center released a report on New York’s Triborough Amendment.  The report goes into great detail about how the Triborough hurts taxpayers across the state, and the economy.  To get down to the basics, the Triborough Amendment basically means that all public employees who belong to unions maintain any perks in their old contracts even when they haven’t negotiated new contracts.  Unions don’t really have to negotiate at all.  For example, unionized teachers still receive “step increases” even when working without a new contract.  A step increase means that a teacher who reaches a certain milestone (years of service, new degree) gets a raise.  This hikes costs by hundreds of millions of dollars a year for local governments, even when unions refuse to negotiate.

Unshackle Upstate sees reform of the Triborough Amendment as a part of significant mandate relief to ease burdens on our taxpayers and, specifically, our schools in 2012.  As part of the joint “Let NY Work” agenda Unshackle Upstate suggests that, at the very least, salary step increases be held when no contract is in place.  It would help even the playing field for union contract negotiations and save millions when negotiations stretch over time.

The Triborough is an important place to start with mandate relief, but it is not a solution by itself.  As the governor mentioned in his State of the State address, pension reform is key in 2012.  Creating a Tier VI Defined Contribution Plan would save the state and taxpayers dollars.  But mandate relief goes far beyond teachers and unions.  We need to spur job creation as well as make our communities more affordable.  In Unshackle Upstate’s 2012 agenda, released today, we focus on the importance of small changes that can have a big impact. 

The Unemployment Insurance “Base Period” currently requires that the original employer pay the Unemployment Insurance for employees who quit, or who accepted and then left another job.  A small reform would save money for businesses across the state and put money into the hands of the unemployed who really deserve it.

The Diesel Emission Reduction Act of 2006 is a mandate that requires all on and off-road heavy-duty diesel vehicles owned or under contract to NYS to use ultra low sulfur diesel fuel and have retrofit technology.  This prohibits smaller businesses from working for the state (since they can’t afford the retrofit tech) and raises contractor prices (so larger businesses can install retrofit tech) making projects more expensive.  If this act was repealed it would lower the cost of construction and put work into the hands of businesses of all sizes.

The simplest change of all could come if the state would finally seat the Health Care Quality and Cost Containment Commission.  This Commission was created in 2007 (over 4 years ago) to review proposed mandated benefits and study costs before the legislator took action.  This Committee has never met.  Maybe they should.

Small changes can make a big difference in New York, and we’re ready for big differences this year.  To learn more about mandate relief and what the Legislator can do in 2012 to lower taxes and create jobs check out Unshackle Upstate’s brand new policy agenda.  Let’s take 2012 and Unlock NY!

The DEC is ready to close a chapter in the debate on high-volume hydraulic fracturing today with the expiration of the public comment period. It is estimated that more than 18,000 comments from both sides of the debate have been submitted, with that number likely higher, given the final surge of comments submitted between yesterday and today.

I fully appreciate the efforts made by DEC Commissioner Martens and his staff to understand the science of hydraulic fracturing and the potential impact drilling will have on our natural environment. This is certainly not an enviable job.  I remain confident that New York will provide the model for effective regulations with regard to drilling.

After four years of research, discussion and debate, New York stands at a crossroads and it is incumbent on the DEC to direct the path New York will take. While I recognize that it will take months for sufficient review of the comments, the process must be expedient and the DEC must forge a path for New York in 2012.

In his State of the State, Governor Cuomo spoke of New York as a leader in tourism, economic development and good government. Why not New York as a leader in natural gas production? What role does New York want to play in the bigger energy picture?

The top five U.S. states in total energy production (2009) are: Texas, Wyoming, Louisiana, West Virginia and Kentucky. (Pennsylvania is ranked 6^th).  New York is ranked 21^st, despite sitting on the nation’s largest gas reserves with the Marcellus and Utica Shale plays.  In natural gas production, New York drops down to 22nd. The question is, where do we see New York in this energy picture?  Among all the rankings, how important is this one?

In 2009, shale gas made up 14% of total U.S. natural gas supply and it is estimated that production will constitute 46% of U.S. gas supply by 2035. Again, where does New York see itself in this scenario? Will we capitalize on or continue to delay this opportunity?

Four years into the discussion and I remain concerned that we are no further along than when we began.  Special interests continue to galvanize the media, while painting the gas industry as the evil empire. I ask you, what other industrial process will be regulated with such scrutiny?  New York can do this right and needs to do it now. How long will we deny the abundance of energy just under our feet?

Wednesday Governor Cuomo gave his second State of the State address.  We can all agree we want New York to succeed.  Last year the legislature successfully passed the 2% tax cap and new tax reforms.  This year the Governor hopes to balance the budget, reform public pensions, and promote economic development, including a second round of regional economic development awards.  No one can cover everything in one speech, but there are worse things we could have heard.  Take a look at some of the responses from our Leadership Team, Partner Organizations, and Let NY Work Coalition Members:

Unshackle Upstate Executive Director Brian Sampson: “Unshackle Upstate is pleased to see Gov. Cuomo’s State of the State address reflect many of the issues that we have long pushed for in our agendas – particularly his call for fiscal discipline, the need to balance the state budget without new taxes or gimmicks, and his advocacy for pension reform and essential mandate relief.”

Manufacturers Association of Central New York (MACNY) President Randy Wolken: “I applaud Governor Cuomo in his continued mission to lead New York State out of fiscal distress and transform New York State’s economy. One of the key focus areas outlined by the Governor was his commitment to not raise taxes on the hardworking people of New York. MACNY has long advocated for tax relief on manufacturers and businesses and is pleased to see that the new administration understands the importance of this critical issue.”

Buffalo Niagara Partnership CEO Andrew J. Rudnick: “There still are a lot of devilish details to be addressed in order to understand precisely what this means and precisely how the community can best take advantage of these resources.  But it’s easy to get lost in those details and miss the enormous commitment from the highest level of state government this is for Buffalo’s future.  It’s an exciting opportunity.”

National Federation of Small Business (NFIB): “Today’s State of the State address reaffirms Governor Cuomo’s commitment to revitalizing New York’s economy and reigning in state spending, a message that is encouraging to both small business owners and taxpayers alike.  Through bipartisan cooperation, great strides were made in 2011, but the work is not finished.  The agenda brought forth today aims to continue the positive momentum and position New York as a national leader in these difficult economic times.”

The Business Council of NY:   “Governor Cuomo’s State of the State address shows his strong commitment to creating jobs and reviving New York’s economy. After years of overspending and overtaxing in Albany, it is clear that this Governor ‘gets it.’ Governor Cuomo and business leaders are on the same page when it comes to creating business opportunities, retaining skilled workers, encouraging private-sector jobs and investment, as well as reducing the cost of doing business in New York.”

Associate General Contractors of NYS CEO Mike Elmendorf:   “Governor Cuomo’s continued focus on infrastructure and his clear understanding that investing in infrastructure creates jobs and sustains our economy is very good news for all New Yorkers.”

State School Boards Association Executive Director Timothy Kremer:
“Governor Cuomo and school boards certainly agree on one thing: The future of our state depends on our public schools … The first place to start is mandate relief.  For too long, meaningful mandate relief has stalled in Albany, as powerful special interests have stymied every attempt to change the status quo.”

New York State Council of School Superintendents (NYCOSS) Deputy Director Robert Lowry: “There are a lot of people who would disagree with the governor’s rhetoric and parts of his analysis, but would agree with the big picture.  How do we produce more learning for students with the resources our taxpayers can provide?”

The Rockefeller Institute of Government came out with a report this week about the regional distribution of revenue and spending in the 2009-2010 New York State budget.  Basically, they said that New York City and its Downstate suburbs contribute more money to the state’s budget than they get back.  Upstate takes a portion of the tax and revenue money contributed by the city and its surrounding suburbs, receiving more from the budget than it contributes.  Sounds unfair, right?

 Let’s remember that everyone pays taxes.  The state collects on everything from income tax and university tuitions to drivers’ license fees.  Each region pays more in specific areas. Per capita income is lowest in the Upstate region, so Downstate contributes a higher percentage to the state’s income tax.  While Upstate does not generate as much economic activity and income as Downstate does (despite having the second-largest population in the state), it does contribute a higher percentage to the state in the forms of motor fuel taxes as well as alcohol and cigarette taxes.  At least this makes it look like we have more fun!!

 There are other reasons for the discrepancy.  New York City receives a larger share of state-funded assistance for both transportation and Medicaid.  Think of the subway it needs to maintain and that starts to make sense.  Upstate, on the other hand, receives more of the state’s operations expenses because a disproportionate amount of prisons and universities are located in the region. 

 The reality is that we in Upstate live in a regulatory environment that is largely driven by Downstate.  What they can afford, we can’t.  It is that simple.  What we need to fix are the crazy laws and mandates that continue to hinder this process.  We can start by looking at Unshackle Upstate’s joint Let NY Work agenda and reducing the costs of construction on public and private projects.  We can readjust the pension system and employee health insurance contributions to make doing business in Upstate, and all over the state, more affordable. 

 The numbers from the Rockefeller report are not judgments, they’re facts.  There are differences in budget distribution because there are differences within the regions.  These numbers can be read as unfair or one-sided, or as a relatively balanced policy.  They can also be read as a road map.  If Downstate wants to see a larger contribution from its Upstate neighbors, then they need to support our recommended changes so our economy can thrive and we’ll have more to give. 

 Our 2012 policy agenda will be out soon.  It will outline very clearly what needs to be fixed either legislatively or through the regulatory process.  The plan should be embraced by all New York residents regardless of where they live.  The agenda is about unlocking our potential, so that we can get our economy moving…not our people.

Pensions are basically a pay check provided to retirees, in this case from public sector jobs.  Under the current public system those with pensions get a check every year for as long as they live (unlike many private sector 401K plans where you have an amount you’ve saved and that’s all). 

There’s an understanding that many employees who get pensions have some of our state’s most important and often dangerous jobs: teachers, firefighters, and policemen.  They deserve to be compensated for what they do.  They teach our kids and protect our communities.  But what’s there to teach and protect if we can’t afford to have kids or maintain our communities?  The state can no longer afford to support these public sector pension plans.

Pensions and benefits used to compensate for low salaries in public sector jobs.  However, public sector employees are no longer making less than those employed in the private sector.  In many cases public employees are making more.  In 2009 federal civil servants earned an average of $123,000 in pay and benefits.  Private employees only made an average of $61,000 in total compensation that year.  Public employees with pensions can also afford to retire earlier, garnering their pension checks much sooner than private sector employees could even think about dipping into their 401K’s.

Today tax payer burdens are especially exacerbated by the recession.  New York State’s own Common Retirement Fund (that holds the money that pays for pensions) lost $40 billion in 2007-2008.  New York State is responsible for keeping the third largest pension fund in the country afloat.  Yet, employees only need to contribute 0-3% of their salaries to their retirement plans where employers (largely state and local governments) must find a way to dole out nearly 16% of those salaries.  When asset returns are low (like during the recession) it is the taxpayer who is stuck paying the difference.

The pension system does not necessarily need to be scrapped, but it does need to be adjusted.  Employees need to contribute a higher percent of their own incomes to start.  They should also not be retiring quite as early as they have been.  New York tax payers cannot afford it.  These defined benefit plans don’t need to remain the only option to public employees either.  Defined contribution plans, like a 401K, would encourage employee participation and allow those who do not decide to spend their entire careers in the public sector to take their plans with them.

Our public employees deserve to be compensated for what they do.  But New York tax payers do not deserve to be punished in the process.  Public benefits were created to make public and private compensation more comparable.  Compensation needs to be comparable again.  The pension system must be redesigned to be predictable and affordable for the best interest of every New Yorker.

During Governor Cuomo’s extraordinary session this Wednesday and Thursday a bill to overhaul New York State’s tax code was approved by all but 8 members of the entire state legislature.  (Several members were also excused and at least one was on vacation.)  The bill has many positive components supported by Unshackle Upstate along with many local business organizations . 

Governor Cuomo has led the way to tax cuts for over 4 million middle class New Yorkers.  The bill also provides $50 million in extra relief for upstate areas affected by the recent flooding from Hurricane Irene and Tropical Storm Lee.  It presents $25 million in tax saving for upstate manufacturers and will allow construction projects to organize work under a single contract, known as Design Build, for an entire project (this can shorten construction time for projects by 9 to 12 months).

This is a first step in the right direction.  As mentioned in our joint “Let New York Work” agenda,  reducing the cost of construction projects through a Design Build delivery method is key to increasing building and development around the state.  Yet, while Design Build and tax cuts are crucial, there is still work to be done.  Spending in New York State continues to outpace the rest of the nation.  Tax cuts are not enough if we do not fix the state’s spending problem as well.   They have to be done in conjunction with each other.  And we still need regulatory relief for New York State businesses and mandate relief for our local governments.  Tax cuts and tax caps cannot work alone.

New York’s Middle Class Tax Cut and Job Creation Plan is beneficial all around the state.  The bill was passed with bipartisan support in both houses.    It reduces taxes for the middle class and manufacturers.  It invests in job creation and job retention.  We can still do more.

Cooperation will be the key to any success New York hopes to achieve in 2012.  Both sides, both parties, must continue to lower spending, implement regulatory overhaul, and apply meaningful mandate relief to local governments.  Those items will be on our 2012 agenda where we will unlock New York’s potential.