This document outlines 10 essential reforms needed to improve New York's financial situation. It discusses capping property tax increases and state spending, ending the double standard of higher pay for public employees, and trimming Medicaid costs. The state's Medicaid program is the most expensive in the nation at $47.6 billion annually despite serving fewer people than California or Florida. Immediate action is needed from state leaders to control costs and ease New York's heavy tax burden in order to stop the flow of jobs and residents to other states.

1. Ten Essential Reforms We Can’t Live Without
ROCHESTER BUSINESS ALLIANCE

2. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
TABLE OF CONTENTS Steps to Survival
steps to
SURVIVAL
PAGE 4
Cap the Taxpayer Burden
PAGE
Stop Unfunded Mandates
5
PAGE 6
End the Double Standard
PAGE 7
Trim Medicaid’s Excess
PAGE 8
Control the Debt
PAGE 9
Improve the Competitive Climate
PAGE 10
Reform Economic Development
PAGE 11
Encourage Innovation in Education
PAGE 12
Reduce the Size of Government
PAGE 14
Lower the Cost of Energy

3. Ten Essential Reforms We Can’t Live Without
INTRODUCTION New York Is in Peril
NEW YORK IS IN PERIL. WE
NEED QUICK ACTION FROM
OUR LEADERS TO SURVIVE.
The pressure building from years of excessive The Rochester Business Alliance welcomes these
government spending and irresponsible state budgets leaders to office. But we must warn that our state’s
has reached a breaking point. Our ability to restore financial condition is critical. Without a major change
financial health is in jeopardy. in fiscal policies—starting with the 2011 budget
process—taxing and borrowing will continue to go
Even before the recession, jobs and families were up, while jobs and population continue to flow out.
leaving New York for more business-friendly states. As other states grow slowly out of the recession,
From 1993 to 2008, a net total of more than 120,000 New York may not recover.
jobs moved elsewhere—including 50,000 to New
Jersey, 18,000 to Connecticut and 17,000 to Florida.
120,000 1
More than 1.7 million people have moved from New rank among
#
York to other states in the past decade, the largest all states for
spending on
out-migration from any state.1 education and
Medicaid
net jobs lost to other states from 1993–2008
With the recession came more job losses and reduced
state revenues. But instead of curtailing spending,
$6,419
6.4%
of personal
our leaders have increased the state budget more than income owed
$30 billion over the last five years. State borrowing in state debt,
has grown by 25 percent over that time, creating a second highest
among large
debt burden second highest among large states.2 in state and local taxes for every resident, states
the nation’s second-highest tax burden
New York spends more per capita on Medicaid
and public education than any other state, and This guide identifies 10 critical priorities to stop the
our compensation of public employees is among financial bleeding. We propose specific policy changes
the highest in the nation. The cost to taxpayers is to ease the tax burden and help create jobs, which
extreme. New Yorkers pay more to their state and are the lifeblood of every state’s economy. Most of
local governments than the residents of any other our recommendations can be implemented relatively
state but New Jersey. Still, New York is projecting quickly; we will track the state’s progress and report
deficits of $40 billion over the next three years. on each priority in the months ahead.
Our hopes for survival are pinned on the state If our leaders take these steps, 2011 can be remembered
leaders we elected in 2010. Governor-elect Cuomo as the year the Empire State regained its financial
and Lieutenant Governor-elect Duffy, with their footing. If not, it will be the year that our state ignored
Plan for Action, have proposed hundreds of good the final warning signs on the path to economic ruin.
ideas for reforming state government and restoring 1 EnterprisingNY: Tracking firms,
jobs and economic growth in the
fiscal responsibility. Many newly elected or reelected Empire State, Empire Center for
legislators have promised to support similar reforms. New York State Policy, 2010
2 Debt Impact Study, March 2010,
Office of the State Comptroller, p. 2
3 State and Local Tax Burdens: All
States, One Year, 1977–2008,
Tax Foundation

4. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE Cap the Taxpayer Burden
WE’VE ENDURED THE NATION’S
SECOND HIGHEST TAX BURDEN
LONG ENOUGH.
We must get our State’s fiscal house in order by immediately
imposing a cap on state spending … committing to no increase
in personal or corporate income taxes or sales taxes, and imposing
a local property tax cap. ~ Andrew Cuomo
No change would do more for our state’s survival Like any healthy diet after a binge of overeating, the
than enacting this pledge, a key element of the action caps will cause discomfort. But they will force honest
plan published by Governor-elect Cuomo during discussions about what services people really need,
the campaign. and which ones we simply can’t afford. All taxpayers
should do everything they can to help Governor-elect
A HEAVY TAX LOAD These words promise essential relief to New York Cuomo make good on his pledge, and require state
taxpayers, who shoulder the nation’s second heaviest legislators to support him.
tax burden. At $6,419 per person, the state and local
taxes paid by New Yorkers are more than 40 percent
New York higher than taxes on Pennsylvania residents, more
$6,419
than 75 percent higher than taxes in North Carolina steps to
SURVIVAL
and more than 85 percent higher than Florida taxes.4
11.7 percent of per capita income Local property taxes are especially high. They fuel
school spending that has grown far faster than the Cap property tax increases at no
rate of inflation for years, giving New York the highest more than 2 percent or the rate of
per-pupil costs for K–12 education in the nation. inflation annually, whichever is lower
When property taxes are measured as a percentage of
U.S. Average home value, New York is home to nine of the nation’s Impose a state spending cap
(also 2 percent or the rate of inflation)
10 most heavily taxed counties, and 15 of the top 25.5
$4,283 A cap on spending and all state taxes, as the
No increase in other taxes
Declare a fiscal emergency and
9.7 percent of per capita income governor-elect has proposed, is critical. Without this
freeze pay for all state employees
comprehensive approach, the legislature will continue
(see page 6)
a cycle of spending, taxing and burden-shifting that
has ballooned state finances out of control.
Taxpayers in New York spend 50 percent
more than the national average on state and
local taxes. (2008 Tax Foundation data)

5. Ten Essential Reforms We Can’t Live Without
ISSUE Stop Unfunded Mandates
COSTLY RULES WILL SINK
TAXPAYERS.
Controlling unfunded mandates on school districts, NEW YORK STATE SPENDING OUTSTRIPS INFLATION
local governments and businesses must go hand in
hand with the tax and spending caps. When the 400
All Funds Spending (86–87=100)
state creates a requirement that somebody else pays CPI (June 86=100)
Spending Index (86–87 = 100)
350
to implement, the cost of government still goes up.
The burden is just being shifted, giving affected 300
organizations less control over their own budgets. 250
200
School districts, health insurers, local governments,
utilities and private businesses are subject every year 150
to new state laws and regulations, many of which
100
create a cost burden.
50
The issue is not that every single mandate should be
86–87
87–88
88–89
89–90
90–91
91–92
92–93
93–94
94–95
95–96
96–97
97–98
98–99
99–00
00–01
01–02
02–03
03–04
04–05
05–06
06–07
07–08
08–09
09–10
10–11
paid for in the state budget. It’s that the cost of laws
and regulations must be analyzed up front. Policy State government spending has grown far faster than inflation over the past 10 years and is rising
makers, legislators and voters should make informed out of control. (State comptroller data)
decisions about whether the benefits of a change justify
its expense, and who should pay.
There are structures in place to do this. Governor steps to
Paterson’s Executive Order 25 required state agencies
under his direct jurisdiction to “evaluate, reform,
or repeal ... rules and paperwork requirements in
SURVIVAL
order to reduce substantially unnecessary burdens, Appoint a strong leader for the
costs and inefficiencies.”6 The Governor’s Office of Governor’s Office of Regulatory
Regulatory Reform is charged with enforcing the Reform with high-level support from
the governor
order. Our new governor needs to appoint a director
with the talent, resources and authority to tackle By the end of 2011, produce a report
this challenge aggressively. detailing mandates on public
schools and their costs
Similarly, legislative actions require a fiscal impact Delegate a review of all fiscal notes
assessment, embodied in the legislative “fiscal notes.” to the Division of the Budget and
Yet fiscal notes are often driven by the bill sponsor publish the results
(or beneficiary) and the quality is uneven. A 2007
law requires an expert panel, the Healthcare Quality Require the comptroller to produce
an annual report on the cost of
and Cost Containment Commission, to analyze
mandates
the impact of new health care mandates. After three 4 Tax Foundation, 2008 analysis
years, the commission has yet to be formed. Seat the Healthcare Quality and of state and local taxes
Cost Containment Commission so 5 Tax Foundation, 2010. The nine
it can vet the benefits versus costs New York counties are Monroe,
Taking steps to make the existing structures work Niagara, Wayne, Chemung,
will reduce the budget turbulence that unfunded of any healthcare-related mandates
before legislative action Chautauqua, Erie, Onondaga,
mandates create for other governments and private- Steuben and Madison.
sector employers. 6 www.state.ny.us/governor/
executive_orders

6. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE End the Double Standard
PUBLIC EMPLOYEE PAY IS UNFAIR
AND UNSUSTAINABLY HIGH.
State workers have an unfair advantage. The old Public employee unions retain unfair bargaining
notion that government employees are paid less than power, because there is no penalty for failing to
their private sector counterparts, but receive slightly agree to new contract terms. As our chief negotiator,
better fringe benefits, is no longer true. Statewide, Governor-elect Cuomo should strike a hard line in
excluding New York City, salaries for state and local 2011. Our state is an employer facing a financial
government employees are 15 percent higher than crisis, and we cannot afford a compensation system
the private-sector average.7 that rewards public employees at standards far above
the private sector.
Taxpayers also fund fringe benefits—including health
insurance, paid time off and pensions—for public
employees that far exceed private-sector norms. For
example, almost all public employees have defined-
benefit pensions, compared to only 20 percent of the steps to
SURVIVAL
private sector, where 401(k) accounts are prevalent.
In Monroe County, taxpayers would save more
than $40 million annually if school districts and Let the Taylor Law’s binding
local governments matched the national average for arbitration provision “sunset” in 2011
employer contributions for health insurance. Every
contract exceeded the private-sector average for paid Use private-sector benchmarks
time off—39 days for a 10-year employee—with a for salary increases and benefit
sharing in contract negotiations
median benefit that ranged 20 to 60 percent higher.8
Change the Triborough Amendment
Pensions cost the state nearly $1.5 billion, an amount so that pay and benefits remain
expected to grow to $2 billion by 2014. The average fixed if there is no contract
pension received by police and firefighters retiring Following the SUNY/CUNY model,
in 2010 ($61,295) is more than double that of regular immediately offer defined-
7 Payroll and employment 2009 data, civilian employees ($25,440).9 contribution retirement options
U.S. Bureau of Labor Statistics. for new employees, and pass the
Median private-sector pay is about Employee pay and benefits represent roughly two- bill moving all non-civil-service
$43,000 annually, compared to thirds of spending by state and local governments. employees to defined-contribution
nearly $50,000 for workers in state We cannot close the state’s budget gap without plans
and local government
addressing the issue. Make defined-contribution retirement
8 “Public vs. Private Sector Employee
Benefits: A Summary Analysis of mandatory for new employees by
School and Local Government There will be an opportunity to do that in 2011, when phasing in Tier VI as proposed by
Union Contracts in Monroe the governor renegotiates expiring contracts with many Governor-elect Cuomo
County,” CGR report, June 2009 of the state’s largest employee unions. In New York, Stop including overtime in final
9 “Things New Yorkers Should Know however, two unique statutes—the Taylor Law and salary calculations for pension
About Public Retirement Benefits the Triborough Amendment—combine to ensure purposes
in New York State,” Citizens Budget
Commission report, October 2010
that public employees continue to receive pay and
10 Medicaid & CHIP spending data, benefit increases even when they have no contract.
Kaiser Family Foundation,
www.statehealthfacts.org
11 “Medicaid in New York 2006,”
Citizens Budget Commission

7. Ten Essential Reforms We Can’t Live Without
ISSUE Trim Medicaid’s Excess
THE NATION’S MOST EXPENSIVE
MEDICAID PLAN IS DAMAGING
OUR STATE’S HEALTH.
New Yorkers pay the highest bills in the nation for New York can no longer afford the nation’s richest
Medicaid, the government insurance program designed Medicaid program, but we don’t need a hatchet to
to provide medical care and long-term care services fix it. By trimming excessive benefits to more closely
for low-income and disabled people. With spending match national norms, the state can save billions
of nearly $52 billion this year, projected to grow of dollars.
another $1.8 billion next year, our Medicaid costs
are more than twice the national average per capita. SWOLLEN MEDICAID PLAN
Taxpayers should support the governor-elect’s proposals steps to
New York
SURVIVAL
to restructure the program and make it more efficient,
while encouraging steps that can be taken more quickly
to trim excessive costs. One step is to manage Medicaid
at the state level. Benefits today are administered by Administer Medicaid at the state
level; minimally, set reimbursement
$47.6b
the 62 county governments, with varying levels of
rates at the state rather than
efficiency and little incentive to trim costs. county level
California
Another is to change New York’s “spousal refusal” Eliminate New York’s unique
provision, which allows any married adult to qualify
for Medicaid long-term care services if the spouse
spousal refusal option for long-term
care eligibility $38.7b
(or parent of a sick child) refuses to pay. Spousal refusal Pass legislation that increases tax-
credit incentives for people to buy
is a major contributor to New York’s extremely high
costs for long-term care. State spending for Medicaid
private long-term care insurance Florida
Reduce the authorized number
$14.7b
long-term care was $1,058 per resident in 2008,
of personal care services hours
compared to a national average of $378.10
to 17 per week
New York also provides coverage for many services Change other optional benefits
to bring them more in line with
that aren’t required by the federal government, which New York spends more on Medicaid
other states
matches state Medicaid payments. One example benefits than any other state—$9,610
is personal care services for Medicaid recipients per enrollee compared to a U.S. average
of $5,830. (Kaiser Family Foundation)
who need assistance with daily living tasks, such as
housekeeping and shopping. By reducing the average
number of hours from 30 to 17 for this optional
service—still 50 percent above the national average
for personal care—taxpayers could save about
$1.5 billion annually.11

8. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE Control the Debt
WE ARE TRAPPED
IN A CREDIT SWAMP.
BUY NOW, PAY LATER Rather than cut spending during the economic The state’s increased reliance on borrowing hurts
downturn, state government has expanded the taxpayers in multiple ways. It increases the amount
debt pool to pay for services, which restricts our of money we must pay each year to service the debt—
2008 DEBT PER CAPITA
financial flexibility. among the largest states, New York is surpassed only
by California and Illinois in the ratio of debt service
New Jersey Over the past five years, state-funded debt rose 25 to total revenue. It prevents state leaders from making
percent, from $48.5 billion to more than $60 billion. the hard choices required to live within our means.
$3,621 The state comptroller projected in 2010 that debt
will rise to $67 billion in the 2014–15 fiscal year, an
And it constrains future taxpayers by making them
pay for today’s services.
increase of 38 percent since 2005.12 In 2008, New
York’s state debt per capita was $2,925. In 2009–10,
New York the outstanding debt rose to $3,100 per person and
6.4 percent of personal income.13
$2,925 The Debt Reform Act of 2000, a law designed to
steps to
SURVIVAL
limit the state’s use of debt, obviously hasn’t worked.
It permits “backdoor borrowing” by state authorities, Do not increase debt caps
Illinois without voter approval, which currently accounts
for 94 percent of the state’s debt load. Though the Limit the total of state-funded debt
$1,877 law prohibits the use of debt for non-capital projects,
nearly $8 billion has been borrowed to pay operating
to 5 percent of the state’s personal
income
Ban backdoor borrowing by state
costs since it passed.14
authorities, so that new debt is
approved by voters
California
Support efforts to restrict use of
$1,805
long-term debt to capital projects
Florida
$1,115
12 Debt Impact Study, March 2010,
Office of the State Comptroller, p. 2
New York’s rising use of credit has saddled
13 Ibid, p. 14
taxpayers with a state debt burden of more
14 Ibid, p. 1
than $2,900 per person, second only to
15 EnterprisingNY: Tracking firms,
New Jersey among the 10 largest states.
jobs and economic growth in the
(State Comptroller)
Empire State, Empire Center,
Oct. 25, 2010, p. 5
16 Ibid, p. 5

9. Ten Essential Reforms We Can’t Live Without
ISSUE Improve the Competitive Climate
JOBS ARE A STATE’S MOST
BASIC FORM OF SUSTENANCE.
High taxes, overzealous regulations and unreasonable Health insurance premiums in New York are another WAVING BYE-BYE TO
mandates create a hostile environment for the major burden, and state mandates on private insurers $38 BILLION OF INCOME
employers who fuel economic growth. This hampers are a significant cost driver. The new administration
the ability of all businesses to compete, and it causes needs to hold the line against any new insurance
some to fail. New York lost more jobs than any other mandates, at least until an independent scoring process
state from 1993 to 2007.15 is in place and the insurance changes mandated by
federal health reform legislation take effect. Florida
Other employers move to friendlier climates. While
New York gained almost 272,000 jobs over 15 years
from businesses moving in, we lost 392,000 jobs to
There are many other legislative proposals to increase
business costs—extending prevailing-wage standards
-$11.7b
other states—the third-greatest net out-migration of to private-sector workers, increasing time-off mandates,
jobs in the nation.16 To reverse the trend, lawmakers and enabling employees to sue for enduring a “hostile
and state agencies must help to lower the cost of doing workplace” even if they have never reported a concern.
business in New York. The new administration must say no to these proposals
and create a friendlier environment that supports the New Jersey
A new workers’ compensation law, passed in 2007, growth of jobs.
promised to help. At that time, New York had a
workers’ compensation system with one of the highest
costs but lowest benefits in the nation. Payments to
-$7.4b
claimants have increased, but efficiency gains crucial steps to
to long-term cost savings have yet to be realized.
The lack of progress on reform, coupled with an
increase in new administrative requirements, has
SURVIVAL Connecticut -$3.5b
increased participant frustration and system costs. Complete workers’ compensation
medical, treatment and impairment
North Carolina -$2.5b
guidelines, and control permanent
The Great Recession has brought New York’s disability costs Pennsylvania -$1.9b
unemployment insurance trust fund to bankruptcy.
In response, many legislators propose increasing Support unemployment insurance
models that minimize the impact
benefits and requiring businesses to pay more for on employers, separate fund 41 other states
each employee. Some proposals would increase taxes solvency from benefit levels,
on employers by 14.7 percent in a single year! That
reduces the incentive to hire and runs counter to
the best unemployment solution—creating jobs.
and offer employees additional
wage-insurance options
Reject new health insurance
-$11.5b
The administration should explore new models mandates, prevailing-wage
for unemployment insurance that address fund mandates and other mandates
that increase the cost of doing
solvency and benefit levels separately. business
From 2000–2008, $38.4 billion in
taxable income migrated to 46 other states
as jobs and people moved away. New York
had a net income gain from only four states
totaling $310 million. (Tax Foundation)

10. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE Reform Economic Development
TOO MANY PROGRAMS AND
AGENCIES ARE ATTRACTING
TOO FEW JOBS.
If success in economic development were measured The Rochester Business Alliance supports the proposal
by volume of effort, New York would be a winner. by Governor-elect Cuomo to create regional councils
Our state has 28 government agencies, 115 industrial that review economic development plans and reduce
development agencies, 618 local development unproductive local competition. We especially support
corporations, 72 Empire Zones, 50 business districts, his announced plans to place economic development
49 urban renewal agencies and 10 regional councils authority in the hands of someone who understands
with staffs and programs designed to promote the challenges of the upstate economy—our new
economic development.17 lieutenant governor and Rochester’s outgoing mayor,
Robert Duffy.
Attracting and retaining jobs is the real measure—
and unfortunately, New York’s job growth has been
far slower than other states. Over the past 20 years,
the number of private-sector jobs in New York has
increased by only 4 percent, while jobs nationwide steps to
have increased 18 percent.18
SURVIVAL
Economic development incentives are not the only
Centralize responsibility for
reason that employers choose to expand, or to locate economic development initiatives
in one state over another. It is more important under the lieutenant governor,
for government to get the basics right—strong ensuring a statewide focus with
an understanding of upstate needs
infrastructure, efficient services, good schools,
reasonable taxes and a friendly business climate. Ensure that the new regional
councils have real authority, with
But in a nation and a world where governments the ability to approve or deny
economic development grants
compete with each other to attract jobs, New York and loans
needs to do better. The hundreds of state and local
organizations involved in economic development Support sectors and institutions
with track records of creating
are not pursuing a coherent strategy. To the contrary, globally competitive jobs that
they often pit neighboring communities against each add value to the economy
other, creating a shell game that moves jobs around
without creating new ones.
17 From multiple sources cited in
The New New York Agenda: A Plan
for Action, Andrew Cuomo, p. 95
18 U.S. Department of Labor,
Bureau of Labor Statistics
19 National Center for Education
Statistics, 2009
20 U.S. Census Bureau

11. Ten Essential Reforms We Can’t Live Without
ISSUE Encourage Innovation in Education
STRONGER CAMPUSES AND
CLASSROOMS WILL PROTECT
OUR FUTURE.
Good schools are catalysts for economic development. on the number of eligible in-state students, New
They train future workers, attract well-educated York enrolled 118 percent of its population share,
families and at the college level can serve as resources compared to 66 percent in California.20
HIGHEST K–12 SPENDING
or partners to help create new businesses. New York
has many fine school districts and institutions of higher The SUNY system, with 64 diverse campuses and
$15,981
learning, but we need to do better—and excessive many nationally recognized programs, is a strong
control from Albany hampers progress. contributor to this success. But Albany treats SUNY $9,666
like a state agency, setting tuition rates as part of the
At the K–12 level, New York spent $15,981 per budget, controlling purchase decisions and overseeing National New York
student in 2006–2007. That’s more than any school operations. The Public Higher Education average State average
other state, and 71 percent more than the national Empowerment and Innovation Act would allow
average.19 That investment does not translate to better SUNY schools to compete more effectively in the Spending per pupil,
2006–2007
educational outcomes: New York ranks 40th in academic marketplace and to partner more easily
the rate of high school graduation, with only about with businesses. Similarly, we need to encourage
two-thirds of students statewide receiving a diploma. collaborations with private colleges and universities
that help to create jobs.
LOW K–12 SUCCESS
Two solutions to reducing educational costs are
outlined elsewhere in this report: reducing unfunded By encouraging innovation and relaxing mandates,
mandates that don’t improve educational performance, New York can make public education the economic
73.2% 67.4%
and bringing employee compensation in line with engine we need it to be.
taxpayers’ ability to pay.
Charter schools can help to boost educational National New York
performance. Many of these schools are performing average State average
well, and the state has withdrawn charters from steps to Four-year high school
failing schools. The successful ones can serve as
incubators that assist districts in developing new
educational approaches. In Rochester, a unique
SURVIVAL graduation rate, 2005–2006
charter compact—signed by all public education Pass the SUNY Public Higher New York spends more money per pupil
stakeholders—encourages collaboration, with a Education Empowerment and on K–12 education than any other
Innovation Act state, but the four-year graduation rate
specific objective of “scaling up” successful charter
is among the 10 lowest in the nation.
methods in district schools. Eliminate the cap on charter schools (Census Bureau and National Center
Support job-creating initiatives of for Education Statistics.)
Higher education in New York is a success story. private and public-sector institutions
Our colleges and universities enrolled 101,000
freshmen in 2007, second only to California. Based

12. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE Reduce the Size of Government
OVERSIZED GOVERNMENTS
DEVOUR TAXPAYER DOLLARS.
The sheer size of government contributes to our state’s To make efficiencies happen, the governor should
high tax burden. We need a fresh look at delivering have authority to reorganize the executive branch,
services in the most efficient way possible, taming as is true in 31 other states.22 This would allow the
the growth of government before the cost eats governor to make changes in the executive branch,
taxpayers alive. which could be rejected by legislative vote. Before this
change, another step the governor can take is simply
According to an attorney general’s survey, New York not to appoint commissioners to state boards that no
has more than 1,000 state government entities.21 longer serve a useful purpose.
A patchwork quilt of overlapping agencies, authorities,
boards and commissions has evolved over our long Reforming and restructuring public authorities
history. The last significant reorganization of the state’s must be on the table in any review of government
executive branch occurred under Governor Al Smith efficiency. The first state authorities were established
in 1927, when the state employed 29,000 people. 90 years ago, as a way for the state to fund capital
In 2010, the state employed more than 228,000 projects without requiring a voter referendum.
full-time-equivalent employees. These numbers alone Today, hundreds of authorities operate as a “fourth
don’t suggest inefficiency, but any large organization branch of government,” delivering thousands of
should work to deliver services at lower cost, especially services that overlap with government agencies.
in tight budget times.
The Transportation Department, for example, shares
To his credit, Governor-elect Cuomo has made responsibility for meeting the state’s infrastructure
government efficiency a priority. His goal, which the and transit needs with more than 50 state and local
Rochester Business Alliance strongly supports, is to authorities. Low-income housing policy is not
reduce the number of state agencies, authorities and driven primarily by the state’s Division of Housing
commissions by 20 percent. Although streamlining and Community Renewal, but by four state housing
New York governments will take time, the steps authorities and nearly 200 local ones. Authorities
he has outlined to begin the process should be control 85 percent of the state’s infrastructure and
immediate priorities. account for 93 percent of state debt, without direct
oversight from elected leaders.
A first step is analyzing the current state bureaucracy
to identify efficiency improvements, with help from With more than 10,500 government entities at the
private-sector reorganization experts. Seventeen other local level, communities are served by many layers
21 “A New N.Y.: A Blueprint to
states have conducted similar reviews in the past decade, of overlapping services and functions. From tax
Reform Government,” Office but no state needs it more than New York. assessments to highway maintenance to delivering
of the Attorney General,
New York State, 2008, available
at www.ag.ny.gov
22 “The Book of the States: 2009
Edition,” Council of State
Governments, pages 190–91
23 “Local Government Efficiency
Program Annual Report 2008–09,”
New York State Department
of State

13. Ten Essential Reforms We Can’t Live Without
ISSUE Reduce the Size of Government
water, taxpayers would benefit from regional planning GOT GOVERNMENT?
and cooperative administration of services. But that
is difficult to do under our current structure.
57 62 932 556
The New York State Commission on Local
Government Efficiency and Competitiveness,
chaired by former Lieutenant Governor Stan
Lundine, offers good ideas for streamlining. Its 2008 Counties Cities Towns Villages
recommendations include requiring that collective
bargaining agreements be renegotiated when local 996 991 6,900+ Taxpayers fund more than
governments consolidate, converting many locally 1,000 state agencies and
10,500 local governments
elected offices (such as highway superintendent and across New York State
tax assessor) to appointed positions, and requiring (Attorney General)
villages with fewer than 500 residents to hold referenda School districts Authorities Special
in order to continue separate village governments. districts
& BOCES
On the subject of consolidation, many taxpayers want
to have it both ways. While decrying the high cost
of government, they reject proposals to save money
by consolidating services. The state should encourage steps to
SURVIVAL
communities to make their local governments
more efficient with steps that could include sharing
information on best practices statewide, creating joint
purchasing agreements, and providing grants to fund Reduce the number of state
consolidation studies. agencies, authorities and
commissions by 20 percent
Experience suggests that incentives like these offer Pass legislation giving the governor
a good return on investment. A study by the authority to reorganize the executive
Department of State found that $40 million spent branch, with changes taking effect
unless the legislature objects
assisting communities with shared-service and
consolidation projects is yielding $350 million Do not appoint new commissioners
in reduced costs to local government.23 to unnecessary state agencies
Support implementation of Lundine
Commission recommendations
Use grants, incentives and
information-sharing to promote
government consolidation and
regional planning

14. NEW YORK STATE ECONOMIC SURVIVAL GUIDE
ISSUE Lower the Cost of Energy
OUR STATE SUFFERS FROM THE
HIGH COST OF POWER.
The strain of utility taxes is a key reason that New One potential source is the Marcellus Shale, which
York loses businesses to competing states. Taxes fuel lies below a vast region covering the Southern Tier,
higher energy costs compared to other states. In fact, and contains huge amounts of natural gas. Extracting
New York has the highest average retail price for the gas requires hydraulic fracturing, which is being
electricity of the largest 15 states. Nationwide, only used at scores of drilling operations in Pennsylvania
Hawaii and Connecticut utilities charge more. At an just across the New York border. But the state
average of 16.57 cents per kilowatt-hour, electricity legislature has halted new permits for Marcellus Shale
costs in New York are 78 percent higher than in extraction until May 15, 2011. We need to accelerate
Pennsylvania, 97 percent higher than in Ohio and a negotiated settlement permitting gas extraction
more than double North Carolina’s.24 from Marcellus Shale. It will bring jobs and income
to New York, along with lower gas prices.
It’s critical to make New York’s energy costs more
competitive, but the state increasingly takes money
from utilities as a backdoor tax. Excess “18-a” utility
assessments, which are designed to pay for the Public
Service Commission, are diverted to the general fund, steps to
instead of being returned to utility customers. Funds
raised by the Regional Greenhouse Gas Initiative
(RGGI)—a cap-and-trade system for reducing
SURVIVAL
emissions from electricity-producing power plants Cut taxes on utilities, starting
in 10 states—are also being diverted to the general with the systems benefit charge
fund, which amounts to a new carbon tax. Reduce excessive 18-a utility
assessments
A good place to start lowering taxes is to eliminate Renew Article X so that we can
the systems benefit charge, which benefits programs bring new power plants online
administered by the New York State Energy Research safely but with minimum red tape
and Development Authority. These are worthy causes, Reach a legislative settlement
but they don’t justify reduced competitiveness. that will permit the extraction
of gas from the Marcellus Shale
The end of 2002 saw the expiration of New York State
Article X, which streamlined the process for siting
new power plants. Proposed legislation in 2007 that
would have revived Article X failed to gain bipartisan
support, but the effort should be renewed in 2011.
Article X would help our state develop new energy
sources, creating jobs and reducing electricity prices
for all New York residents and businesses.
24 Average Retail Price of Electricity
by State, 2008, U.S. Energy
Information Administration,
www.eia.doe.gov

15. Ten Essential Reforms We Can’t Live Without
SUMMARY New Direction
WE NEED QUICK STEPS IN A
NEW DIRECTION TO BRING
NEW YORK BACK.
For 20 years, the Empire State has suffered an New York’s economy can rise again, reversing the trend
economic decline that started gradually but has of people and businesses moving away. We can create
reached a crisis point. jobs and climb out of the recession as well as or better
than other states, if our leaders are willing to make
State government spends more than taxpayers changes now. If they don’t, we may never recover.
can afford, and our leaders have committed to
unsustainable annual increases. They borrow money State leaders are not the only ones who must act.
to help close the gap, while pushing costly new All taxpayers should fight for New York’s survival,
requirements onto school districts, local governments by demanding change from their state legislators
and businesses. The cycle goes on, year after year, even and other leaders. To get involved, visit the Rochester
as the migration of jobs and residents to other states Business Alliance website at www.RBAlliance.com
has grown from a trickle to a flood. and support the Unshackle Upstate effort at
www.UnshackleUpstate.com.
That’s business as usual in Albany. It’s a disaster for
the individual taxpayers and private-sector employers Look for more reports in the months ahead, and more
who are struggling to remain afloat. ideas to create jobs. Together, we can make 2011 the
year that the Empire State reverses its economic decline
The new governor and legislature that take office in and returns to a path of greatness.
2011 offer our last and best chance to survive. State
leaders must change business as usual from the day
they take office, focusing on the priorities laid out
in this report.
All the steps can be implemented with determination
and effort. Many of them involve just saying no:
NO TO NEW TAXES.
NO TO SPENDING PROGRAMS
WE CAN’T AFFORD.
NO TO INCREASED COSTS ON
EMPLOYERS.

16. Help New York Survive
As our new governor takes office in 2011, New York is in financial danger.
We must take steps immediately to control government spending and create jobs.
You can be part of the
SOLUTION
Contact your state legislators
Share this document with friends
and colleagues
Track progress and take action
at www.RBAlliance.com
© Rochester Business Alliance, Nov. 2010