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If you haven't looked closely at New York for a while, you'll be pleasantly surprised by what you'll find: lower taxes, less red tape and several new initiatives designed to sharpen the state's competitive edge even further.

"Like most state economic development agencies, we do a side-by-side cost analysis, identifying what it costs to be in a site in a particular part of (our) state as opposed to another state. We find that many times we can offer a total cost of operating a business that's lower than in other states, and that's why businesses come here."

The comments of a state economic development executive from the South? Or perhaps from a rural Plains or Midwestern state?

Nope.

Those are the words of John Bacheller, senior vice president for policy and research, Empire State Development -- in Albany, New York.

Whoa, you say. New York? Isn't New York a terribly high-cost place to do business?

In a word: No. First, because New York City (admittedly, a high-cost area) is so large and dominant, people often tend to equate New York state with New York City. But there's much more to New York than the Big Apple alone. (And New York City, it should be noted, is doing quite well in attracting corporate facilities, even if it is a pricey address.)

Second, thanks largely to the leadership of Gov. George E. Pataki, a great deal has been accomplished during the past five years to reduce operating costs in New York. The overall state tax burden, for instance, has been reduced by a staggering US$28 billion. New tax incentives have been created. As a result, New York is leaner, meaner and ready to compete.

Indeed, more and more companies are learning that today's New York has a lot to offer. In 1999, for instance, Site Selection recorded 934 new and expanded corporate facilities across the Empire State. That kind of performance reflects a sea change compared to the New York of 1995, when major corporate facility locations were as rare as Tiger Woods' losses on the golf course.

Back then, says Bacheller, in the early days of the Pataki administration, Empire State Development (ESD) conducted a number of focus groups around the state. "Certainly there was the perception among some companies that it just wasn't worth the hassle to do business in New York state," he recalls. "What we heard is that the two issues bothering them most were taxes and regulations. So that's been the major focus of the current administration -- to do the things that will make New York state a more attractive location."

In the tax arena, Bacheller says, "there's just been an incredible reduction of the burden on taxpayers, both business and personal. Since 1995, the overall tax burden in the state has been reduced by more than $28 billion. In just the current fiscal year, which we're completing in April, there is $9.4 billion in tax reduction for New Yorkers. There's been a substantial change in the tax burden, and people living here have reaped the benefits. They have more money to take home in their pockets."

Business tax reductions have been equally impressive: $8 billion during the past five years. New York's business taxes are now very competitive with other states in the region. In fact, within the next year or so, New York will have the lowest maximum corporate tax rate of any state in the region, Bacheller reports.

Businesses also asked the state for regulatory help, and they got that too. "One of the things Gov. Pataki did was establish an office with the responsibility of changing the regulatory process and making it fairer to business. That process has been changed, and as a result businesses have saved almost $3 billion." Workers compensation reform alone has saved businesses about $1.7 billion, and lower unemployment compensation costs has saved another $600 million.

"If you look at where New York stood in the Site Selection rankings in the early 1990s, we were pretty far down the list," Bacheller says. "But when you look at where we are now, in the top five, clearly there have been results. Those results take place because companies find that New York is a cost-competitive location."

Others around the state see it the way Bacheller does.

"Companies are reinvesting, retooling and hiring new workers," reports A.J. (Chris) Wood, Binghamton-based manager of economic development for New York State Electric & Gas. "Seven or eight years ago, that retooling or reinvestment for the most part would be taking place in the Southeast or Southwest. But now we're seeing companies investing here again because the state's business climate is dramatically improved. Wage rates are in the middle nationally, productivity is up, workers compensation rates are down, unemployment compensation rates are down, local property taxes are stable and the state offers very generous incentive packages. So we are increasingly competitive.

"Companies also are chasing a quality labor force, and the Northeast is not as tapped out as the Southeast and Southwest. So with improved operating costs, a better business climate, a good work force and educational institutions that are turning out the technicians at very significant levels, the state remains prime territory for continued growth."

Joe Russo, Syracuse-based manager of economic development for Niagara Mohawk Power Corp., agrees. "The state is more competitive than we were prior to 1995. There have been some reductions in the personal income tax and the corporate franchise tax that are being phased in. Our energy prices, of course, have been reduced due to deregulation, so we're getting our energy costs in line."

More New Initiatives

New York, though, isn't resting on its laurels. It's continuing to create new value-adding programs for existing and prospective companies.

The latest new initiative is Jobs 2000 (J2K), a $522 million plan to boost high-tech business growth. "In order to remain competitive with the world and continue to create record numbers of jobs here in New York, it is critical that we invest in high-tech business development," Gov. Pataki says.

"Jobs 2000, like Silicon Alley in New York City and our ongoing Chip Fab and Build Now initiatives, will strengthen New York's position as a leader in high-tech industrial development and job creation," Pataki says. "This forward-thinking legislation is a testament to our ongoing partnership with the Legislature, especially Senate Majority Leader Joe Bruno, who has worked closely with me to create good-paying jobs across the state."

The newly created New York Office of Science, Technology and Academic Research will administer high-tech research and development programs, develop informational resources, assist academia in obtaining grants and help turn research into jobs.

J2K also nurtures new ideas, products and services through the New York State Venture Capital Program, created to provide investment in emerging businesses in the state. The plan expands the CapCo program, which provides tax credits to insurance companies that make capital investments in emerging technology companies.

Furthermore, a Strategic Training Alliance Program for private sector job retraining will enable professionals to upgrade their skills to handle new technology, and the Pipeline for Jobs Program will provide funding for infrastructure improvements to accommodate business growth.

Additionally, three related tax-cut programs which took effect in January 1999 are already promoting job growth in high-tech industries: the Emerging Technology Employment Credit, the Emerging Capital Credit and the Emerging Technology Investment Gain Deferral.

J2K is supported by plenty of financial muscle. New York's 1999-2000 budget includes a $156.5 million investment in high-tech academic research, $280 million in venture capital funds to invest in emerging businesses in the state, $34 million to retrain employees to operate new high-tech equipment and $51.5 million for infrastructure improvements to accommodate business growth.

Other new programs include the state's Build Now-NY initiative (see sidebar). It utilizes the same pre-permitting concept as the state's SEMI-NY program, established to attract the semiconductor industry. The state works with local officials to develop an inventory of shovel-ready sites, backed up with matching grants of as much as $50,000 to undertake necessary site preparation and permitting. Thirty sites have been selected in 28 counties to receive assistance under the program, and an additional 11 sites have been approved as shovel ready without requiring financial help.

"Build Now-NY will save expanding companies valuable time and money and position New York to attract new industries, new companies and new jobs for the future," says Gov. Pataki. This common-sense approach will give New York the competitive edge that we need to attract new business in today's global marketplace."

Yet another new offering is ESD's call center. Companies considering expanding or relocating in New York can dial 1-800-STATE-NY to speak with ESD staff and learn about the organization's full range of services. "Whether it's learning about New York's tax incentives, our highly trained work force or locating a potential business partner, ESD's Business Call Center can give them the information they need quickly and easily," ESD Chairman Charles A. Gargano says.

Initiatives like those (and others launched during the past few years), coupled with massive tax and regulatory reform, have helped New York regain its competitive edge and climb back into facility location's upper echelon.

While space won't permit a review of all the many new and expanded corporate facilities that Site Selection recorded in New York state last year, here's a review of recent activity in each of the state's 10 regions (see map). These location decisions collectively demonstrate a clear trend: growing corporate confidence in the new New York.