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Unshackle Upstate 2011-12
Mid-Term Progress ReportA Review of Progress on
Budget and Legislative Issues
November 2011
NEWYORKSTAXPAYERSAND
JOBCREATORSWANTA2%PropertyTAXCAP
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INTRODUCTION
In recent years, businesses and amilies have let
Upstate New York in record numbers. Private
sector job losses have devastated our communities.New York States leaders have not shown a
commitment to job creation and economic
development. In act, our image over the last
decade has been quite the opposite we have one
o the worst business climates in the nation.
It is beyond dispute that the states policies havecontributed to our economic problems by ailing
to meet the economic challenges we ace. Inmany cases, Albany hasnt just ailed to act state
government has actually adopted policies that have
made our economic situation even worse.
This report takes a hard look at what New York
State has done right since the beginning o 2011,
and what additional steps will address the high costo doing business in the state.
A NEW DAY AT THE CAPITOL
Overall, 2011 has been a good year or taxpayers
and employers perhaps the best year in recenthistory.
New Years Day 2011 began with the inaugurationo a new governor and the promise o changing
Albanys dysunctional ways. Immediately upon
taking oce, Gov. Andrew Cuomo spoke o the
many challenges acing New York State including
a $10 billion state budget decit. The governor also
made it clear that he intended to ollow through on
his campaign promise to cap the growth o local
property taxes.
New Yorkers also returned the Republicans to the
majority in the State Senate, and Senator Dean
Skelos (R-Rockville Centre) was elected Senate
Majority Leader. This new leadership brought
with it stability and predictability representing a
welcome change rom the chaos and dysunction
that characterized the Senate in 2009 and 2010.
Much remains to be done. Upstate New Yorks
economy did not crumble overnight, nor can it
be revitalized immediately. Restoring the Upstate
economy will require a long-term, sustained eort
by state government to understand and address
the needs o the business community and o the
taxpayers who help make our communities thriveand prosper.
Gov. Andrew Cuomo delivered his State o the Stateaddress across New York in January 2011.
Unshackle Upstate Executive Director Brian Sampsonspoke alongside legislative leaders during a pro-propertytax cap event in April 2011.
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UNSHACKLE UPSTATES CORE PRINCIPLES
Unshackle Upstate continues to ocus its work on the ollowing principles:
Reducing State and Local Spending
Government spending continues to be a major issue or New York State. While the 2011-12 statebudget reduced spending by 2 percent, the downward trend must continue in order to right size
state spending. Additional savings must continue to be explored by consolidating and streamlining
services. Spending on education and Medicaid - which make up a signicant majority o the state
budget - were capped in this years budget, but additional recurring savings must be ound or the
uture.
Reducing Mandates
The tangle o laws and regulations that makes New York notoriously unriendly to business and jobcreation also saddles local governments with expensive requirements, typically without unding to
pay or them. The result: a tax shit to local governments to cover the cost o paying or a range o
services all at the expense o the taxpaying public.
Reducing State Borrowing
Also included in this years state budget were signicant corrections to the states uture debt and
borrowing policies. For example, the governor and Legislature reduced the 2012-13 projected
budget decit rom $15 billion to approximately $2 billion. As it continues to reduce its spending,the state should avoid relying on irresponsible borrowing and long-term debt.
Reducing Taxes, Fees and Assessments
The 2009-10 and 2010-11 state budgets included $9.2 billion in new taxes and ees. This yearsstate budget did not include any new taxes or ees. This action was a signicant rst step toward
improving the states economic climate, and the 2012-13 state budget should continue reducing the
tax burden on New Yorkers.
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REVIEW OF THE 2011 LEGISLATIVE SESSION
How did Albany lawmakers do in 2011? Whencompared to recent years, they did extraordinarily
well.
New Yorkers saw an on-time state
budget that not only reduced
spending, but successully
addressed a $10 billion budgetgap. The governor signed
into law an historic 2-percent
property tax cap which also
established a Mandate Relie
Council that can address and
provide relie rom costly and
burdensome regulations thatthe state has imposed on local
governments.
But by virtually every measure,
the Upstate economy is still struggling. There is still
much more that needs to be done. The mandate
relie provisions which will save taxpayers more
than $125 million annually, according to theDivision o Budget included in the property tax
cap law were woeully inadequate.
And while it is too early to say
whether the Regional Economic
Development Councils will
succeed in promoting private-sector job creation, we are
pleased that the eort is a
regionally-based one that will
take advantage o the unique
attributes and strengths that each
part o New York State has to
oer.
The remainder o this report looksat what Gov. Cuomo and the
Legislature accomplished during
the 2011 legislative session, and also discusses what
remains to be accomplished during 2012.
2011 BUDGET REVIEW
WHAT HAPPENED UU OPINION
Overall 2011-
2012 State
Budget
Lawmakers enacted an on-timestate budget that cut spending by 2percent and closed a $10 billion decitwithout increasing taxes or state debt.
This years state budget representsa huge improvement over the 2009-10 and 2010-11 state budgets, botho which increased taxes and state
spending.
State Agency
Consolidation
The governor advanced andachieved a number o state agencyconsolidations through the state
budget, saving over $50 millionduring the current scal year. Thegovernor also achieved passage o theExecutive Reorganization Act o 2011,which allows him to submit an agencyreorganization plan to the Legislaturethat must be voted on.
These state agency consolidationsthat were achieved represent anexcellent rst step toward right-
sizing state government.
The Executive Reorganization Actcanbe an important tool in achievingadditional agency consolidation andsavings or state taxpayers.
(cont. on next page)
Unshackle Upstate Executive DirectorBrian Sampson discussed the
organizations advocacy eforts withmembers o the Capitol press corps.
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WHAT HAPPENED UU OPINION
Spending andGovernmentEfciency (SAGE)Commission
The governor launched theSAGE Commission in mid-Aprilto undertake a comprehensivereview o every state agency ostate government and recommend
structural and operational changesto it. The group held two meetings,but did not advance an agencyreorganization plan or considerationby the Legislature.
The SAGE Commission is the meansthrough which the governor willpropose an agency reorganizationplan to the Legislature. Unortunately,while the SAGE Commission began
its work, it did not present an agencyre-organization plan by the statutorydeadline.
The governor should direct the SAGECommission to begin working againto ensure that it is able to present anagency reorganization plan to theLegislature in 2012.
Recharge NY The state budget included the
Recharge New York, which made thePower or Jobs Program permanent.
Making this program permanent
which was long overdue willprovide low-cost energy to job-creating businesses and not-or-protorganizations across New York State.
Sales TaxExemption
The enacted state budget renews thestate sales tax exemption or clothingpurchases under $55. Next year, thestate sales tax exemption will apply toall clothing purchases under $110.
This is an example o a tax reductionthat will immediately benet amilies,and it will also benet businessesclose to the states borders by keepingshoppers in-state.
ReducingMedicaidSpending
Governor Cuomos Medicaid RedesignTeam (MRT) recommended some$5 billion worth o cuts to theprogram, and to cap the states shareo Medicaid spending. Most o theMRTs proposals became law.
The enacted budget provides or atwo-year Medicaid appropriation,providing or a xed rate o growthor the 2012-13 budget.
This represents a huge step orward reductions in Medicaid spendingwere long overdue.
However, the ailure o the governorand Legislature to reach agreementon medical malpractice reorm which was recommended by the MRT represents a missed opportunity.
EducationSpending
The governor proposed a $1.5 billioncut in education spending, and theLegislature restored about $230million.
The enacted budget provides or atwo-year appropriation or education,providing or a xed rate o growthor the 2012-13 budget.
Ending the practice o increasingstate aid each year regardless othe states ability to support suchspending is critical to restoring thestates long-term economic well-being.
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(cont. on next page)
2011 LEGISLATIVE REVIEW
WHAT HAPPENED UU OPINION
Property Tax
Cap
The governor signed into law a 2-percent property tax cap (Chapter 97
o 2011) that exempts some pensioncosts and tort costs. The cap allowsor growth, and includes an overrideoption that would allow or the taxlevy to exceed the cap when 60percent o voters (or school districts)or 60 percent o the total votingpower o the governing body (or
local governments) approve such anincrease.
This historic law, while not perect,should provide most Upstate
New Yorkers with relie rom ever-increasing property taxes.
The sunset date built into the lawmeans that it will have to be approvedagain in the coming years.
But the ailure to achieve real
mandate relie this session (discussedbelow) will put a great deal opressure on local government ocialsto live within the property tax cap.
SUNY The governor signed into law the
NYSUNY 2020 bill, which includesa Challenge Grant Program toencourage economic developmentplans on SUNY campuses andthe surrounding communitiesand a rational tuition program opredictable tuition increases which
will benet the SUNY campusesthemselves.
This will strengthen SUNYs ability to
provide quality aordable education,enable students and parents ensurethat they can aord their education,and will enable SUNY campusesacross the state to become enginesor economic development.
Health Insurance Two proposals would have increasedhealth insurance premiums theHealth Care Reorm Act (HCRA)surcharge and a bill that would haveallowed or collective negotiations
by health care providers (S.3186-A/A.2474-A) were not approved.
As the cost o health insurancecoverage continues to rise, theLegislature should not approve anylegislation that will increase costs orthose with private health insurance.
We note again that the Health CareQuality and Cost ContainmentCommission does not appear tohave met since it was enacted intolaw in 2007. We urge the governorto appoint the members o thisCommission to analyze the costs andquality o proposed health insurance
mandates as soon as possible.
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(cont. on next page)
WHAT HAPPENED UU OPINION
Article X Siting The Power NY Actincluded a newpower plant siting law to streamlinethe decision-making process with
respect to the construction andoperation o new major electric
generating acilities, or the re-powering o existing acilities.
The new power plant siting law willencourage the construction o newelectric generation and help reduce
rising energy costs incurred byUpstates manuacturing industries
and other large energy users,providing a much needed boost tothe Upstate economy.
Workers
Compensation
The Legislature introduced severalbills that would erode cost reduction
components in the 2007 WorkersCompensation reorm package,including S.3741/A.6294 (whichpassed the Assembly, but did not passthe Senate).
It is critical that the 2007 reormlaw be implemented as intended to
ensure that it provides the savings tobusinesses while ensuring access tomedical care and benets or injuredworkers. Bills that undermine thehistoric 2007 reorms such as S.3741/A.6294 must be rejected.
Project Labor
Agreements
During the nal negotiations onthe property tax cap/mandate relielegislation, attempts were made toencourage the use o Project LaborAgreements (PLAs) by enablingproject owners to require them
instead o going through the separatebidding process otherwise required
by the Wicks Law.
Mandating or encouraging the useo PLAs arbitrarily increases publicconstruction costs since bids mustinclude antiquated and costlyunion rules that increase labor costsand render the majority o local
construction workers ineligible towork on the project in avor o hiring
only union construction workers.Proponents argue that PLAs ensurethe speed and quality o constructionplans. But PLA projects cost taxpayers,on average, 12-18 percent morethan projects awarded by open,competitive bidding.
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WHAT HAPPENED UU OPINION
Union Contracts Governor Cuomo reached agreementwith the leadership o the statestwo largest unions (CSEA and PEF)on contracts that included pay andhealth care concessions in exchange
or avoiding layos.
CSEA and PEF members haveapproved their respective contracts.
The 2011-12 state budget refectssavings that are to be achievedthrough a reduction in labor costs,and the governor negotiated aircontracts with CSEA and PEF given
the states nancial situation. Thegovernors determination that thestate government must tighten itsbelt will help put New York State on astable nancial ooting in uture years.
MandateRelie or LocalGovernments
Governor Cuomo started well on this,issuing Executive Order #6 appointinga Mandate Relie Redesign Team(MRRT) in early January to look orways to reduce the costs o mandatedprograms on schools and localgovernments.
The MRRT held 6 meetingsthroughout the legislative session andissued a preliminary report on March1st. But the MRRT ailed to issue a nalreport, and did not reach agreementon mandate relie measures.
The property tax cap law (Chapter97) included some mandate relieprovisions that will save over $100million, but much more must bedone.
Under Executive Order No. 6, theMRRT must issue a nal report to thegovernor by March 31, 2012.
The state must provide or realmandate i local governments andschool districts are going to be able tolive within the states newly-enactedproperty tax cap.
But the mandate relie measures thatwere ultimately adopted as part othe property tax cap legislation arewoeully inadequate.
The new 11-member Mandate RelieCouncil, tasked with identiying andreviewing mandates that can beeliminated or reormed, may providesome relie in the uture. But that isuncertain.
Achieving real, sustainable mandaterelie or local governments andschool districts will be a major 2012priority or Unshackle Upstate.
(cont. on next page)
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WHAT HAPPENED UU OPINION
Economic
Development
In late July, Governor Cuomolaunched the Regional EconomicDevelopment Council initiative, whichhe says will redesign the relationshipbetween the state government
and businesses to stimulateregional economic developmentand create jobs statewide. TenRegional Councils throughout thestate are developing a plan or thedevelopment o their respectiveregions, and the state has committedto work with each one to help themcarry out their plans or development
and to distribute state economic
development unding.
While it is too early to gauge whetherthe Regional Economic DevelopmentCouncil approach will be successul,it is important that the state hasestablished a process by which those
closest to the communities in needcan work together in setting prioritiesor the allocation o limited stateresources.
Natural Gas
Development
There were a number o bills thatwould have banned or limited thepractice o using hydraulic racturingto drill or natural gas. Most werebased on ear and misinormation,rather than on science and a clearunderstanding o the practice and
its risks and benets. None o thesebills were enacted into law thissession.
The Department o EnvironmentalConservation (DEC) recently issuedits drat regulations or high-volumehydraulic racturing, and is now
accepting public comments on thembeore any drilling permits can beissued.
Unshackle Upstate believes thathydraulic racturing can be donesaely, and that New York State mustbe prepared to take ull advantageo this tremendous economicopportunity.
DEC should continue its science-based, comprehensive reviewo the potential environmentalimpacts o natural gas development,and determine whether its dratregulations strike an appropriatebalance between economicdevelopment and environmental
protection.
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LOOKING AHEAD
Unshackle Upstate believes that Gov. Cuomo is
committed to improving the environment or
amilies and businesses throughout Upstate NewYork, and we are committed to support those
eorts.
We recognize that the problems acing Upstate
New York did not occur over night, and that they
cannot be solved in a single legislative session.
We look orward to continuing to help move New
York State government in the right direction tocreate an economic environment that permits
private sector job creation and oers relie to
taxpayers.
Unshackle Upstate is looking or the ollowing rom
Albany:
Another fscally responsible budget
We look orward to a state budget that is enacted
on-time, that does not increase state spending, andincludes no new taxes, ees or borrowing.
Real mandate relie or local governments
Now that the property tax cap has passed, it is
essential to work with local governments and
schools on eorts to reduce costly state mandates.
Relie rom business mandates
It is long overdue or the state to provide relie or
business rom unnecessary, burdensome and anti-competitive business mandates.
Action rom the SAGE Commission
We look orward to the SAGE Commission
submitting a wide-ranging and comprehensiveplan to consolidate state agencies, authorities and
commissions that have overlapping unctions, and
to provide a road map to ensure that the remaining
ones provide better services to the taxpayers.
Economic development plans rom the Regional
Economic Development Councils
We have high expectations or what the Governorhas promised will be a new operating model or
New York State government that is intended to
stimulate economic development throughout the
entire state, while improving the business climate
statewide.
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