ALBANY—New York's lingering budget problems are a result of poor economic performance influenced by a bad business climate, topped with unsustainable growth in government spending.
In the last decade, New York went on a massive spending spree, with total state spending up by nearly $70 billion. As a result, New York spent far more than other states on major programs like Medicaid and school aid, with no proportional improvements in outcomes.
New York taxpayers are paying the price. Even with the lingering effects of the deep national recession, state tax and fee receipts in New York are up $12 billion over the past five years. Thanks to more than 130 separate tax and fee increases (adopted prior to 2011), we are taking proportionately more money out of a shrunken economy. Yet we face another multibillion-dollar budget gap.
This cycle of ever increasing taxes and spending was broken this spring. With Governor Cuomo's leadership, the state passed the first budget in decades with an actual reduction in spending and no new taxes.
New York needs jobs and this is the time for Albany to focus on our tax policies to help create them. In 2012, lawmakers must continue to reduce the cost of government, with further reforms in major state spending programs, and mandate relief that reduces the cost of local government.
But most important, the state's long-term future requires renewed economic growth in high-value sectors.
Between 2000 and 2010, New York suffered a massive loss of middle and upper-middle income jobs – and the tax revenues that go with them. Over this period, the state lost 496,000 jobs in the state's top paying private sector industries - finance/insurance, management/administration, utilities, information, professional/technical services, wholesale trade, construction and manufacturing. These sectors pay high salaries and produce significant tax revenues and economic spin-offs.
In contrast, virtually all job growth in New York over this ten-year period was in below-average wage sectors, including those like health and social services that rely on significant government funding.
New York has been replacing high paying jobs with lower paying jobs. Jobs that compete in the international economy are being replaced with jobs that are tied to regional markets and state and local government funding.
Going forward, New York needs to make the state more attractive for private sector investment in higher wage occupations. New York needs to lower state-imposed costs on business and capital, and remove regulatory and procedural barriers to new private sector investment and job growth. Renewed economic growth will benefit workers and families, and produce the tax revenues needed to finance necessary public services. An improved business climate – jobs - needs to be Albany's top priority in 2012.
- Heather Briccetti, acting-president and CEO, The Business Council of New York State, Inc.