With the right kind of reforms, New York’s declining economy, weighed down by an inflated tax structure and high costs, can recreate itself, Assemblyman Joseph D. Morelle (D) of Monroe County told RBA members at this month’s membership luncheon.
A long-time friend of the RBA, Morelle is the author of a new economic development report, "Creating a State of Innovation," that proposes New York regenerate its economy by encouraging small business development, especially through the development of the technology sector. The effort and expenditure of attracting mega-corporations to the state is a waste compared to the returns that would be experienced from this kind of surge, he said.
His 30-minutes speech before about 100 RBA members at the IBM Conference Center in Palisades, glanced over some of the main points of that report, which concentrates on four "entrepreneurial economy principles":
Entrepreneurship and Innovation - The report said this would require promotion of "home-grown" and "high-growth" businesses; encouraging businesses to invest in improvements that boost productivity; creating entrepreneurial support networks and better organizing available business resources.
Workforce Development - The report suggests increasing the number of science and technology graduates; investing to improve the skills of the existing workforce; and working to attract a new "creative" class to the workforce.
Infrastructure and funding - The report calls for increased access and investment in high-speed broadband internet service and an expansion in the availability of financing "including early-stage capital, using pension funds, tax incentives and ‘angel’ investor networks."
Accountability and benchmarking – Once implemented, strategies should be closely monitored and their effectiveness reviewed. Goals must be defined and include a "quantifiable" measure of results.
Morelle told members the whole state should be a turned into an Empire Zone, which are zones or areas set aside by state government for business development. These zones receive tax incentives and other benefits that help businesses grow. He expressed amazement that few politicians have been able to put together that if it is necessary to create Empire Zones that means there is something inherently wrong with the system to begin with.
The state’s decline has, in fact, largely escaped the notice of state politicians. "They tend to think not for the long term, but in 2-year terms," Morelle said.
While the economy is cyclical, each peak has been less than the last. From 1993-2003 27.6% of the state’s manufacturing base was lost. There are only 600,000 jobs left in manufacturing down from a peak of over 2 million. Property taxes in New York are an average of 55% higher than the national average, energy costs are very high and the Medicaid system is among the priciest in the country, Morelle said.
A reason for these problems is that for a long time New York’s leaders were so confident in their position among states they believed businesses would not leave even if they were overtaxed and regulated. That has changed and politicians have been slow to catch up, he said.
As a result the state is losing population growth and representation in Congress. New York now has less than 30 electoral votes, down from a peak of 43. Upstate New York’s population grew only 1% in the 1990’s compared to 13% nationwide. Furthermore, 30% of new population growth was attributed to the construction of maximum security prisons.
Morelle said the extreme experience of upstate New York applies in principle to the entire state. Where once New York was considered the top state in the union politically and economically, it is now in the middle of the pack, behind states like California, Texas and Florida.
"It’s a real shame," Morelle said.
The fact that 2/3 of New York’s new jobs are created by taxpayer money is another problem Morelle cited. "Hopefully the government will not have to create any jobs, but create the environment so you can do it," Morelle said. He cited the Hudson Valley Center for Innovation in Kingston, brainchild of Les Neumann, Co-chair of the RBA Technolgoy Initiative as a project that will help the economy. |
Morelle said his strongest wish was that state politicians hold themselves accountable and create a system to benchmark results and progress of whatever they do. Morelle’s ideas have been greeted with a lot of interest and affirmation from all over the state from people in the business community; now he seeks to reach the rest of society.
"The challenge is to try and change the minds of people," Morelle said.
The principles that he outlined can apply to every level of government including the county level, he said. County Executive candidate and Rockland Legislator Ellen Jaffe agreed. She said she found his presentation very interesting and planned to look through the report, which she was holding in her hand, and see how the ideas could apply to Rockland County.
The response of the RBA membership to Morelle’s presentation was strong. "I was particularly interested in his proposal to encourage broadband development," said Howard Reiss of Hudson Valley DataNet, a company that offers broadband internet service in the Hudson Valley area.
The luncheon was sponsored by Union State Bank, represented at the luncheon by RBA treasurer Harold Peterson and Bruce Mason.
"This is a very important topic for the business people of Rockland County, hopefully we will gain a lot of insight," Peterson said.
"It was great to have Joe speak here today. His ideas are so timely and relevant," RBA President/CEO Al Samuels said.
"Just simple common sense. His point about Empire Zones was so simple and yet brilliant. Why do we have to have Empire zones? Because regular state policy discourages business development, so why not fix state policy and turn the whole state into an Empire Zone," Samuels asked.
While in the legislature Morelle has served as Chairman of the Tourism, Arts and Development committee and Chairman of the Small Business committee. He is also a member of the Economic Development committee. He had been kicking around these ideas for years and decided to write them down over a course of 18 months. He is now becoming a leader in the movement for a new state economy.
Besides Morelle’s presentation and a great meal served by the kitchen at IBM’s Palisades Conference Center, the luncheon was also a time to chart the RBA’s progress and agenda.
Samuels introduced 13 new member companies to the crowd. Eight were on hand to be greeted including Rabbi Michael Gisser, Executive Director of the Holocaust Studies Museum and Sal Patel, of Super-8 Hotel.
RBA membership has now increased to 867 companies, well on the way to the year-end goal of 900. Samuels thanked VP of Development Roger Scheiber for his good work in coming closer to this goal.
Samuels said the 3 big issues the RBA is working on right now were the County’s Empire Zone plan, combating the Living Wage movement and serving on the Bi-County I 287 Task Force.
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