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State officials' budget choices have failed small business

Rochester Business Journal
April 17, 2009
The new taxes and the increased spending in the 2009-10 state budget were enough to make anybody angry. In fact, they made a lot of people angry, according to a Quinnipiac University poll released last week. That poll, conducted statewide and across multiple party lines, found that by 60 percent to 16 percent, voters said they disapproved of the budget. And of those polled, 64 percent said they didn't like the decision to raise income taxes on families earning more than $300,000 a year.

The lack of leadership in Albany was also a disappointment, as reflected in 65 percent of the poll's respondents saying that the state's elected leaders lacked political courage. I guess the process of drafting the budget with a level of secrecy unprecedented even for Albany, then putting it to the Senate and Assembly for a perfunctory vote, just didn't sit well with these folks.

There's a lot not to like about this budget. But I guess if I had to sum up what bothers me most, it's that with this budget, our state leaders added to the obstacles already faced by an overburdened and underappreciated segment of our community-small businesses and their employees.

It bothers me because everywhere I look, I see small businesses working tirelessly to get ahead. The small-business owners I know work long hours, nights and weekends, investing not just their time and energy but their own financial resources to build companies and create jobs.

At events hosted by the Rochester Business Alliance and other community organizations, those business owners and their employees turn out in great numbers to network with potential customers and make connections essential for their growth. On May 14, 11 local chambers of commerce, including the Rochester Business Alliance, will host a Mega Mixer at the Rochester Museum & Science Center to bring together businesses from across the community and promote our economy.

It's not news that small business is the engine of our economy, both locally and nationally. In the nine-county Greater Rochester region, more than 97 percent of the businesses have 100 or fewer employees and more than half employ one to four workers, according to the federal census. Nationwide, small businesses create 80 percent of all new jobs.

Rep. Chris Lee, who represents New York's 26th Congressional District, has organized a Rochester Small Business Advisory Board, and at a recent meeting, business owners told him they are not seeking a handout or even a hand up in this tough economy. They're just asking government not to make their task any harder, to look for ways it can reduce the taxes and mandates that make it difficult for businesses to grow and be successful.

Our state Legislature did just the opposite. The increase in the personal income tax rate is no more than a surcharge on many small businesses, since it affects the 75 percent of our state's small businesses that are formed as S corporations. That means the businesses' income or losses are divided among and passed through to the owners, who must then report the income or loss on their individual income tax returns. With this new surcharge, 350,000 small businesses will now be subject to higher taxes on their profits, meaning they'll have less money to reinvest in their businesses and create much-needed jobs.

How else did the state Legislature hurt small business? With more than $850 million in new assessments on health insurance, fees that are sure to raise premiums. Rising costs for health care and insurance are among the top concerns of businesses. And then there are the surcharges on gas and electric utility companies, which will end up costing consumers at least $525 million. Health insurance and energy are two of the most expensive items for businesses in Upstate New York.

Business leaders spoke out frequently and forcefully, trying to get our legislators to hear the concerns of small business and understand the damage this budget would do to an already struggling yet vital segment of our economy. But they just didn't listen.

Small business is the answer to our economic problems. Yet our legislators, the very people who could have helped pave a smoother road to recovery by easing the burden on small businesses, helping them flourish and create jobs, instead chose to raise taxes, which many experts have said will lead to nowhere good.

As a voter, a lifelong resident of this state and a business leader, I find that decision very tough to accept.

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

04/17/2009 (C) Rochester Business Journal

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