2011 uu progress report

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Unshackle Upstate 2011-12

Mid-Term Progress ReportA Review of Progress on

Budget and Legislative Issues

November 2011

NEWYORKSTAXPAYERSAND

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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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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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2011 LEGISLATIVE REVIEW


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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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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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.


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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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2011 uu progress report

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