Is there any wonder why New York has not been especially effective in generating economic growth or employment?  Well our tax system looks like a pretty big reason.  So how should New York grow its employment?  How should it build its economy?  How can it unlock New York’s potential?

The regulatory environment in New York continues to deter new businesses from coming here and send existing businesses across state lines.  Taxes and cost matter to businesses.  If a state has a more competitive tax system odds are that’s where the jobs will head.  While the governor’s Three-Way Agreement on Tax Reform, back in December, was a good start to help the middle class and manufacturers, it was not enough.  The burden on businesses comes from absurd regulations that add to cost, and nothing else.

Let’s take, for example, the Unemployment Insurance Base Period.  This regulation raises the unemployment rate for many businesses unfairly.  They often must fund unemployment insurance for an employee who quit, took another job, or was fired for cause and then was laid off from a new job.  The law then says that the previous employer is responsible for unemployment even though the person quit or got fired.  So why should the original employer see their rates go up?

Okay, if you need even more evidence, let’s look at Workers Compensation.  Workers Compensation (like Unemployment Insurance) shouldn’t go away, it’s necessary.  But it’s important to reform the regulation so it works like it’s supposed to.  Injured workers enter a system that is full of costly litigations and long waits.  There are no treatment guidelines, which, along with the lengthy waits, can lead to extensive periods of unemployment.  Employers watch as their insurance premiums skyrocket.  It’s costly for businesses, and costly for workers.  Reform would be good all around.

And, our newest example, the Wage Theft Prevention Act.  What is it?  It’s literally when your employer has to send you a letter with your rate of pay on it.  You then have to sign it (so your employer and the state know it was sent to you) and send it back to your employer who then has to keep it on file for years.  I think most people are aware of their rate of pay, and, if they forget, they can look on the paystub that usually comes with their check.

Want even more examples?  You can look at Unshackle Upstate’s 2012 Policy Agenda.  New York isn’t the 49^th worst tax climate in the country because of some mysterious gigantic hidden fee for corporations, it’s because of small silly regulations that just need to make sense.  It’s time to make New York a business leader again.  It’s time to Unlock NY.

Manufacturing Success: Policy Changes Can Return United States to Prominence
By Randy Wolken
President, MACNY, The Manufacturers Association

Manufacturing is getting a lot of attention. President Obama highlighted the importance of manufacturing and its growth as major factors in our nation’s economic recovery during his recent State of the Union address. Thanks to our ability to adapt and compete in the evolving global environment, our New York state manufacturing sector remains successful. It remains essential to the efforts of our state and nation to emerge from our current economic crisis.

With that, I felt it necessary to respond to last Monday’s editorial questioning the future of our nation’s manufacturing sector. The editorial drew its conclusions from the examples of Kodak and Apple. These companies have very different histories, chose very different paths and today deal with very different challenges. The editorial fails to mention the broader issues and trends affecting advanced manufacturing in America and worldwide.

While Kodak and Apple each have success stories, each company also has distinct shortcomings. Kodak’s trouble stems more from its inability to develop the next generation of products and services after film was replaced with digital photography — which it helped create, but failed to develop fully — than its economic model for production.

Unlike Kodak, which chose to invest, grow and support manufacturing in America, Apple primarily chose to develop its products in America and sell to Americans, but invest in manufacturing elsewhere, primarily China. Therefore, Apple’s production model has primarily benefited China, where over 700,000 jobs were created. Although that economic model has produced handsome profits for the company and its shareholders, it has not been nearly the winner for American workers.

Apple’s argument that there are not enough skilled workers in America is unfounded. We have a highly-skilled work force that is ready and willing to learn new skills and work under suitable and fair conditions to produce quality, well-manufactured products. What America is not willing to do is succumb to poor working conditions or take away the quality of life of its people in order to meet production demands.

Kodak did not fall short due to the lack of a skilled work force; it fell short due to the inability to stay ahead of its own game. Apple, on the other hand, is ahead in the game of innovation, research and development, but chooses not to invest in American manufacturing and the economic development success of our nation.

Despite challenges in the manufacturing sector, the United States is still the world leader in manufacturing. Its most successful production today is generally business-to-business production, not consumer products. iPods and iPads are not produced in America — but they could be. To do so would require the help of both the U.S. and state governments and its citizens. Asia is the primary producer of consumer products — such as the iPad — today. Many of these nations have tilted the scales in their favor by manipulating currency, imposing trade barriers, stealing intellectual property and adding value-added taxes. This speaks nothing about the way they treat their workers.

If we want good-paying, middle-class jobs, we need the support of policymakers to create environments where these jobs thrive. We need to lower the costs of production — and that does not mean wages. These unnecessarily high costs are related to the highest corporate tax rate in the developed world, high energy costs, high costs of frivolous lawsuits and the high costs of many outdated and counterproductive regulations. We also need outstanding schools teaching math, science, technology and skills like entrepreneurship and teamwork. We need certificate retraining for out-of-work employees who need additional 21st century, high-tech skills. We need a broadband infrastructure and maintenance of our transportation infrastructure.

Companies do not compete in a vacuum and they react to the very economic conditions that exist in each country. As a community and nation, we need to value manufacturing and its middle-class jobs more than other places they can locate. When we do so, we will again see the return of many good paying, advanced manufacturing jobs right here in the United States of America.

So what is a mandate?  A mandate is a law or regulation passed by the legislature that often must be implemented by local agencies with no funding from the state.

But what exactly are we talking about when we say it’s important for the State of New York?  For the next few weeks, we will be posting one mandate every week day as an example of how mandates impact our businesses and local governments.  They raise costs, delay projects, and complicate matters for no reason.  They are…well…BURDONESOME!

We hope that you will continue to return to this page for more information (and a full list of mandates) as they are released.  And we really hope that you will share it with your friends, family and colleagues.

1)  Wage Theft Prevention Act.  This mandate on businesses requires that they prove they are paying wages to their employees.  So even though an employer provides a paystub, they still need to get an employee to sign a sheet of paper acknowledging their rate of pay.  What an over reach by the state.

2) Unemployment Insurance Base Period.  This mandate on businesses currently allows employees who have been fired, quit, or who have accepted and then left another job to still claim Unemployment Insurance through their original employer.   This raises the $ employers must contribute to UI and thus inhibits their ability to create new jobs and employ new workers.

3) Wicks Law.  This mandate on local governments requires that, pursue the use multiple contractors for public projects even though studies show Wick’s adds about 20-30% to the cost of a project.  This makes public projects even more expensive and in essence, wastes taxpayer $$$.

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!

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.

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.

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.

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!

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?

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?”