Business owners and groups across the state are giving reluctant endorsements or staying quiet in the race for governor.
View full sizeMargery Lange Keskin, president of J. Andrew Lange Inc., looks over blueprints at her office in East Syracuse. She hasn't decided yet whom she will support for governor.DeWitt, NY -- Company president Margery Lange Keskin is reading the fine print put out by the campaigns of Andrew Cuomo and Carl Paladino to decide who is best equipped to ease the burdens on small-business owners.
She employs 45 people at three DeWitt construction businesses, including J. Andrew Lange Inc., a wastewater-treatment firm started by her father in 1968. She’s looking for a smaller state government that gets out of the way of private businesses, has easier-to-navigate regulations and has less of a “gotcha” attitude.
With only seven days before the Nov. 2 election, she is still undecided. She likes what she hears from both candidates about cutting taxes and state spending. “They both have the right idea,” she said. “My question is: Who is going to do a better job at it? And that remains to be seen.”
Business owners and groups across the state are giving reluctant endorsements or staying quiet in the race for governor. Generally, they like Paladino’s aggressive talk about reducing the cost of doing business. He is CEO of a $500 million real estate business in Buffalo and employs 450 people. But people are wary of his temper and question whether he can really pull off such drastic cuts with a baseball-bat approach to the Legislature.
At the same time, many are not enthusiastic about Cuomo, son of former Gov. Mario Cuomo. Andrew Cuomo has published six books of campaign promises about keeping taxes and spending in check, but his campaign is fueled by public employee unions and other special interests.
The Business Council of New York State, a group of 3,000 businesses, endorsed Cuomo at a news conference. On the group’s blog, commenters questioned whether the group lost its marbles. “Shame on you for supporting the status quo,” one said.
Here are some specific economic development proposals from each candidate. The next governor must get the Legislature to go along with most of them.
View full sizeAndrew CuomoCuomo wants to expand the Excelsior tax credit program
Gov. David Paterson and state legislators created this program to replace Empire Zones, a set of tax breaks that strayed from its original job-creating purpose. Excelsior, a more focused program, is just getting started, but Cuomo said he wants to increase the value of some tax breaks and to get money to the businesses faster. For example, the program requires companies to make the jobs they promised before they can take tax breaks. Cuomo would pay businesses as they reach interim milestones.
The Business Council supports improving the design of the credits. For example, Cuomo’s plan would give businesses a tax credit based on the greater value of the improved property. Cuomo has not said how much this would cost.
Cuomo would start three programs to award grants to expanding businesses
He won’t put a cost on them, but Cuomo said they would “replace the vast sums of legislatively directed capital spending,” otherwise known as pork.
In recent years, governors and the Legislature have included in the state budget multimillion-dollar pots of money for discretionary grants for building industrial parks, sports stadiums, museums, fire departments, business projects and more. The governor and majority-party legislators decide who will win grants, often without competition.
Cuomo pledges to take away legislative pork for his own, more targeted programs. One would be used by new regional councils to “close the deal” on specific projects. Another would pay for teams of higher education and industry for projects that use university-based research.
Again, Cuomo has not said how much this would cost. In the past, the state has paid for these grants by borrowing hundreds of millions of dollars without voter approval. Cuomo’s campaign staff said more borrowing is an option.
E.J. McMahon, a senior fellow at the Manhattan Institute for Policy Research, said Cuomo’s new set of programs is “a classic rearrangement of deck chairs.” McMahon said grants do nothing toward reversing decades of corrosive policy choices that make it difficult for small businesses.
In general, business owners say they would prefer the state to cut taxes instead of offering grants and tax credits. “They want to keep more of what they earn. They want to be able to reinvest in their businesses,” said Mike Elmendorf, state director of the National Federation of Independent Business Owners, which has not endorsed a candidate. “They’re not interested in sending their money on a trip to Albany and having a tiny bit of it come back to them in the form of a new economic development program.”
Cuomo wants to create a network of regional economic development councils, saying ideas should come from the ground up
Also, he would put one-third of economic development funds under the control of regional councils and keep two-thirds for competition between regions.
Ten regional councils would by chaired by the lieutenant governor. Rochester Mayor Bob Duffy is Cuomo’s running mate. The councils are a nod to Upstate and recognizes that each region has unique “clusters of importance” to its economy.
Former Gov. Eliot Spitzer delighted Upstate business owners with a promise to appoint an Upstate economic development czar who would be equal in power to a Downstate leader. Dan Gundersen and business leaders all over the state came up with plans they called “regional blueprints.” The effort came with $700 million in grants.
The effort was short-lived. Spitzer left office, and Gundersen said he couldn’t get Gov. David Paterson’s attention. Eventually, he left and Paterson pulled the agency back under one Downstate leader.
Cuomo said he would use the Insurance Department’s new authority to require prior approval of increases in health insurance premiums
Earlier this year, the state assumed the power to approve rate increases for policies sold to individuals and small businesses, which is defined as those with 50 or fewer employees.
Business owners were not in favor of it. They were reluctant to have the government set the price for health insurance without doing anything to control the underlying costs. Bringing politics into the mix makes the cost of health care even more unpredictable.
“We would expect the Insurance Department to rule on premiums based on actuarial science and not political rate suppression,” said Michael Moran, speaking for the Business Council.
View full sizeCart PaladinoPaladino said he would eliminate all economic development grants and tax breaks, including Excelsior
Paladino has accepted Empire Zone tax breaks for his real estate. But he calls such incentives a “selective subsidy” that creates an unlevel playing field for any industry and gives the governor a political tool to use for friends. He says it is not fair for the state to lavish grants on a company that moves here, creating a disadvantage for its New York competitors that pay their taxes. Paladino said he would lower taxes across the board by 10 percent and “can” all existing programs.
Paladino wants to end a recent income tax increase in 2011, sooner than the 2012 date set by the Legislature. He also promises to decrease everyone’s income taxes by 10 percent in his first budget.
In the 2009-10 budget, the state increased income taxes for three years on incomes greater than $200,000 per year. Because New York allows the owners of some businesses to claim their incomes on their personal income taxes, business owners said it meant they had less money to reinvest in their companies. The new tax rate generated about $3.6 billion in extra income for the state in the first year. The state’s budget division estimates it will bring in $5.7 billion this year.
It would be difficult for the Legislature to cut a billion-dollar revenue source that quickly. Because the state faces such a huge deficit, McMahon said, the next time the governor and the Legislature will likely negotiate whether to continue the tax hike is during 2012 budget talks, after the tax has expired.
Paladino said he would save business owners $1 billion a year by eliminating the corporate franchise taxes for manufacturers, “creative industries” and farms. Cuomo said he would veto any tax increases.
The corporate franchise tax is the most volatile of the state’s three big revenue sources. (The others are personal income and sales taxes.) Businesses in the state paid $1.7 billion in 2004, then $4.2 billion in 2007 and $2.9 billion this year. Paladino said he would get the Legislature’s approval by including it in his budget proposal and refusing to negotiate. If the Legislature does not approve his budget, Paladino said, he would shut down government, except for essential health and safety services.
Paladino said he would require a supermajority of 60 percent of both houses for approval of any tax increase
This would require a constitutional amendment passed by two separately elected Legislatures and a yes vote by the people at a referendum after passage, Moran said.
Contact Michelle Breidenbach at mbreidenbach@syracuse.com or (315) 470-3186.