STATEMENT

by Kathryn S. Wylde, President and CEO
PARTNERSHIP FOR NEW YORK CITY

New York, New York
March 14, 2007

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Statement by the Partnership for New York City On the New York State 2007-08 Executive Budget

The Partnership is an organization of business leaders and major employers dedicated to working with government, labor and the not-for-profit sectors to strengthen the economy of New York City and State. The Partnership is generally supportive of the objectives reflected in the 2007-08 Executive Budget. We share Comptroller DiNapoli’s concern, however, that expenditures continue to grow at a rate that outpaces projected economic growth and will, therefore, contribute to deficit spending and on-going pressure to raise taxes. This, in turn, diminishes New York State’s ability to compete for business investment that generates jobs and a broader tax base. 

The following is a summary of key points that the Partnership hopes the Governor and Legislature will consider as they negotiate the budget and proceed through the legislative session.

Medicaid Reform

The Partnership supports the Governor’s effort to begin to contain growth in State spending on Medicaid, in recognition that this is a first step in restructuring New York’s inefficient health care delivery and financing system. Critical to reform is the continued consolidation of institutions in order to reduce beds and encourage a regional approach to provision of services -- an approach initiated by the Berger Commission.

The focus of the Partnership’s interest is not simply on spending less, but on spending more effectively to realize a better return on the State’s investment. The Partnership agrees with the Governor’s ideas about reallocation of state resources to programs that expand preventive and primary care, upgrade technology available to health care providers, and ultimately enable all New Yorkers to have access to basic health care coverage.

Research & Economic Development

The Partnership supports the Governor’s proposal to establish the Stem Cell and Innovation Fund Corporation, and commit $2.1 billion over the next 11 years to fund facilities and programs that keep New York at the forefront of innovation. The state’s world-class academic medical centers, in particular, are critical assets that must be treated as such. The Partnership urges New York State to restructure its economic development and research funding programs to promote greater collaboration between industry and academia -- a relationship that has enabled Massachusetts, California and Texas to out-perform our state by almost every measure. 

Equity for New York City

The Partnership supports the Governor’s proposed resolution to the Campaign for Fiscal Equity lawsuit, and believes that education funding proposed under the Executive Budget is allocated fairly and will be adequate to meet projected needs.  At the same time, the elimination of revenue sharing for New York City is not equitable. To punish the City for its fiscal discipline by removing the only truly flexible state aid that it receives would send the wrong message to local governments. The Partnership supports Mayor Bloomberg’s call for restoration of revenue sharing for New York City, even if it means that aid to education must be spread out over a few more years.  

Tax Revenues (“Loophole” Closures)

The Partnership urges reconsideration of some of the tax changes proposed in the Executive Budget as “loophole closures” which would actually eliminate tax incentives that make New York attractive to banks, media and manufacturing companies and headquarters operations. For example, the loss of certain deductions for manufacturing and media companies would significantly increase taxes for media companies that maintain extensive film or television production activity in the state, but have little impact on those that do production in Toronto or California. Affected companies also argue that the additional taxes imposed by the proposals would actually be much greater than the Executive Budget has projected. The Partnership urges recalculation of these items in consultation with industry experts.

The combined income tax rate for corporations doing business in New York City exceeds 17% -- double the tax rates in many competing jurisdictions.  A budget that increases the tax burden on business inevitably will affect the location decisions of employers and lead to loss of jobs and diminished economic activity. The only way to offset this negative impact would be to dedicate resulting revenues to across-the-board reductions in corporate and bank tax rates.  This would demonstrate that New York State is truly committed to improving its competitive status in the global economy.

Transportation

The Partnership supports an aggressive approach to improving mobility across the state, ranging from upgraded mass transit facilities, public-private partnerships to accelerate road and bridge improvements, and a major program of traffic relief in the New York City Metropolitan Region. A Partnership study recently determined that excess traffic congestion, due to over-reliance on private cars, is resulting in added costs and revenue losses of more than $13 billion a year to the regional economy.  

The current MTA, DOT and Port Authority capital funding plans are inadequate to meet the demand for improved and expanded rail, bus and ferry services, as well as additional airport capacity to support the Metro Region’s continued growth as an international business center. New York City and State must pursue new funding sources that are dedicated to investment in transportation infrastructure, including increased federal funding and utilization of value pricing, as a precondition for future economic growth.
 

With a mission to maintain the city’s position as the global center of commerce and innovation, the Partnership for New York City (www.pfnyc.org) is an organization of the leaders of New York City’s top corporate, investment and entrepreneurial firms. They work in partnership with city and state government officials, labor groups, and the nonprofit sector to enhance the economy and culture of the city. The Partnership focuses on research, policy formulation, and issue advocacy at the city, state, and federal levels by leveraging its network of CEO partners. Through its affiliate, the New York City Investment Fund (www.nycif.com), the Partnership directly invests in economic development projects in all five boroughs of the city.