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Lawmakers must stop running from tough fiscal choices

Rochester Business Journal
May 15, 2009
The daily news is filled with stories on the ups and downs of the stock markets and economic indicators, the crisis in America's auto industry, the personal impact of unemployment and mortgage foreclosures.

Coping with the recession has narrowed our focus. We find ourselves fixed on getting through today, with little energy to think about tomorrow.

But the truth is that economies run in cycles. While even the most scholarly and experienced economists and businesspeople can't seem to agree on a timeline, we can say for certain that one day this recession will be behind us. And that means we need to find some energy now to ensure that our businesses and our economy are well positioned to take advantage of the upturn, whenever it comes.

As regular readers know, I didn't find much in the 2009-10 state budget to cheer about. I believe this budget, with its increased spending and new taxes and fees, will hurt already-overburdened taxpayers and businesses and stifle economic growth. And that clearly won't help upstate or any part of New York to be economically competitive in a national arena when the boom cycle comes.

I'm not alone in these thoughts. In its recent report, Rich State, Poor State, the American Legislative Exchange Council, a conservative think tank, looked at the economic performance and outlook for all 50 states. The economic performance ranking was based on three important measures-personal income per capita, domestic migration over time and growth in non-farm payroll employment. By those measures, New York came in a poor 43rd of 50.

And our economic outlook? That was even more dismal-a depressing 50th in the nation, down from 49th a year earlier, largely because of high personal and corporate taxes, a bloated state payroll and a climate that's unfriendly to business.

But ever the optimist, I still believe there's a chance to change this. Let me tell you how.

Citing the enormous and growing budget gap-and unwilling to make the kind of cuts needed to bring state spending in line with revenues-our state lawmakers said they had no choice but to help fill state coffers by doing such things as raising the personal income tax rate on those earning $300,000 a year or more, increasing assessments on utilities ($525 million) and health insurers ($850 million) and instituting other fees and taxes. Those assessments will almost surely be passed on to consumers in the form of higher premiums and utility bills, which merely adds to the pain.

OK, so the budget is passed. The damage is done. But it doesn't have to be this way forever. I believe our elected officials should be working now on ways to trim state spending so that next year they can roll back the tax rate and eliminate those assessments.

While they're at it, they should seriously study how they're going to implement a cap on school property taxes and enact some of the other proposals recommended in the Suozzi Commission's report on property tax relief.

And they should follow the advice of Unshackle Upstate and support an idea Gov. David Paterson put in his budget-but then backed away from because of union opposition-of creating a Tier 5 benefits program for future state employees, estimated to save the state $48 billion over 30 years, making it a top priority.

What else do I think must be done? We have to take a serious, thorough look at our Medicaid system, which delivers some of the most generous benefits in the nation, yet without significantly better results for clients than states that offer less.

Unshackle Upstate has proposed a Temporary Medicaid Reform Commission, a panel of experts that would review the Medicaid program's design, eligibility criteria and resource allocation across the state and in comparison to what other states provide. The commission would be broad-based and non-partisan and would undertake an independent review of the system, with an eye toward recommending reforms that would ensure high-quality, affordable and accessible care that can be delivered in an efficient and cost-effective manner.

The state Legislature has just a few more weeks before ending this session. On some of these matters, such as the Medicaid commission and the Tier 5 program, there is still time to act. So we need to tell our legislators that we expect them to get to work on making this happen.

Let's also remind them that we'll be back next session to push for the rest of these changes.

A strong economy is the basis for everything we want for New York-excellent schools, good jobs, outstanding health care and a strong safety net for people in need. Without a thriving economy and the tax base it provides, we will only struggle. Tell our elected officials to work today so New York can be in a position of strength tomorrow.

Sandra Parker is president and CEO of the Rochester Business Alliance Inc. Contact her at SandyP@RBAlliance.com.

05/15/2009 (C) Rochester Business Journal


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