It’s The Economy
From the Capital Tonight morning memo:
New York does not have the best reputation when it comes to taxes and attracting new businesses.
That sounds like something of an understatement for those in the business community, especially for many who live and work upstate, where property taxes as an overall percentage of home values are out of whack, the population is shrinking and graying and the jobs are scarce.
So every budget session the business groups push for a range of changes to regulations governing labor contracts, taxes and fees, etc.
Inevitably the suggestions run into a minefield of opposition and go nowhere in Albany.
To be sure, in a Nixon-goes-to-China moment, it took a Democrat to push through a cap on property taxes, cut spending and create a new, less generous pension tier.
Nevertheless, broader changes sought by the business community such as suspending the Triborough Amendment to the Taylor Law, overhauling the Scaffold Law and others have been non-starters.
Meanwhile, cutting taxes is too expensive.
So Gov. Andrew Cuomo took a different route. Seemingly out of the blue this spring, Cuomo announced a proposal that would create tax-less zones around college campuses and some state-owned properties in order to attract new businesses.
The prebuttals were already in hand when the governor put the plan out there. A statewide reduction in taxes is too costly. New York’s income tax can’t be made competitive with states like Texas (where regulations are so low fire codes aren’t just non-existent, they’re actively discouraged in some cases).
As for the cost of the plan, then called Tax Free NY, Cuomo and his office did some hand waving. The proposal would generate economic activity for the state. Since it’s new jobs and businesses entering the state’s economy, it’s new money.
A bill memo attached to the plan did suggest a future loss in revenue, but that was given little coverage or attention by most lawmakers the press.
Nevertheless, the plan, rebranded START-UP NY, is indeed costing the state money.
A quarterly budget update from the state Division of Budget estimates the adopted plan will cost $323 million by the end of March 2017. The number wasn’t revealed publicly until Friday evening, when the governor’s budget office released the report.
For comparison sake, the proposal to send $350 rebate checks to taxpayers with children will cost $1.2 billion over the next three years.
Despite the amount of money the state is willing to spend to either entice businesses to stay here and return some cash to taxpayers’ pockets, the poor reputation continues to follow the state.
In the wake of Bausch & Lomb’s administrative headquarters leaving Rochester for New Jersey, the reflex was to blame New York’s tax climate.
And indeed, it appears New York officials were taken by complete surprise over the move, which could result in 500 layoffs.
But the company is moving to New Jersey, which is often lumped in with New York as having one of the worst business climates in the country. The Tax Foundation ranked New York 50th in business climate while it gave New Jersey the 49th spot.
Meanwhile, the state’s overall jobs picture shows a 7.5 percent unemployment rate, the lowest since 2011.
At the same time, New York is leading the nation in layoffs.
The point is New York’s economy is an ocean liner — a complex structure that includes dairy farms worried about the price per hundredweight of milk and the world headquarters of major financial institutions fretting over the impact of Dodd-Frank.
It can’t and won’t be changed overnight.
|Print article||This entry was posted by Nick Reisman on August 6, 2013 at 12:48 pm, and is filed under NYS Budget. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed.|