Site Selection recently talked with New York Gov. George E. Pataki (right) about the state's improved business climate, competitiveness, new economic development initiatives and more. Here's what the state's top executive had to say.
Site Selection: You've led the charge in improving New York's business climate since taking office in 1995. What changes have done the most to make a bottom-line difference to companies doing business in the state?
Gov. Pataki: Starting in 1995, we launched the most ambitious tax reduction program in the nation. Over the last five years, New York has cut taxes more than any other state in the nation -- with projected savings to taxpayers of US$52 billion.
Our pro-business, pro-growth philosophy offers companies job-creating tax cuts. We've cut the taxes that penalized investment and economic growth. We've reduced the cost of doing business in New York by cutting energy rates and reforming the workers compensation system. Workers compensation costs are now down more than one-third, saving New York businesses over $1 billion a year. More than 1,300 regulations have been eliminated or streamlined. Bureaucratic red tape has been removed from the permitting process so that businesses get expedited service statewide. Today, New York state's corporate tax rate is approaching the lowest level since 1970. It has been reduced from 9 to 7.5 percent. In four years, the cost of doing business in New York has dropped by 33 percent.
The results are stunning. By helping companies unleash their economic potential, we've created a solid foundation for growth. Our work force is compounding in size, companies are location or expanding here, and a renewed spirit of optimism pervades our state.
SS: Despite those business-climate improvements, some people still view New York as a high-cost location. But with lower corporate taxes and new incentives, especially for manufacturing, isn't it true that many areas in New York are now competitive with neighboring states in terms of operating costs?
Pataki: Yes, we believe New York is very competitive. And not just with our neighboring states, but also states around the country.
In helping businesses make their location decisions, Empire State Development sometimes estimates the cost of doing business at each of the potential sites. These estimates have found that over a 15-year period, the sites in New York state are usually competitive with the other sites being considered -- and frequently are the lowest-cost locations. These same conclusions are seen in many industries and at most locations in New York state, including New York City.
Labor costs are a major ongoing expense for most businesses. We have found that in most areas of the state we are highly competitive with our competition and frequently have lower wage rates. In many cases our highly educated and motivated work force improves this advantage even further. New York has one of the most productive work forces in the nation.
Our corporate franchise (income) tax rate is among the lowest in the Northeast, and will be further reduced over the next two years. In addition, many businesses can take advantage of tax credits that reduce the effective tax rate to as low as the statutory minimum tax.
New York also provides sales tax exemptions for research and development property, manufacturing machinery and equipment, fuels and utilities used in the manufacturing process, and computer hardware used to develop software and Internet web sites. Businesses locating in an EDZ are afforded state and local sales tax exemptions for purchases of certain building materials. Additional sales tax exemptions may be available to companies working through a local industrial development agency.
SS: Are still other business climate-boosting initiatives in the works? What new programs or actions at the state level can we expect to see later this year?
Pataki: Earlier this year, I unveiled my 2000-2001 Executive Budget. An important component is the elimination of all gross receipts taxes on energy. The plan calls for a gradual elimination of the tax for business and residential consumers across the state -- targeting industrial and manufacturing businesses first to create jobs. When fully effective, this proposal would provide $500 million in annual tax savings statewide and dramatically improve our efforts to attract and retain jobs across New York state.
My budget also suggests a new $10 million Biotechnology Industry Growth Fund that would build upon the successful efforts to develop New York's research infrastructure by providing start-up companies with a source of needed capital to commercialize innovations that emerge from the laboratory -- turning ideas into high-wage jobs. The Biotechnology Industry Growth Fund would give New York an edge over other states in the increasingly competitive race to attract and retain high-skill, high-wage biotechnology jobs.
The proposed budget also includes $1.7 million for the creation of the Empire State Technology Employment Program. This program would encourage graduates of the state's leading engineering, computer science and applied science programs to make their careers in New York by enabling employers in targeted industries to offer prospective employees cash incentives worth $3,400 annually for up to four years.
My new budget also recommends targeted tax cuts such as a small business tax rate reduction, the elimination of S-Corp differential tax, new brownfield clean-up tax credit and the rail access tax incentive. These tax-cut initiatives would apply across the state, but would particularly benefit job creation and economic development efforts in upstate New York.
SS: If you were talking with a CEO of a major corporation considering a large facility investment in New York, what are the key points you'd emphasize in making the case for locating in the state? What does that executive need to know about today's New York?
Pataki: Companies from across the state, across the nation and around the world are expanding their operations and investing in their futures in New York. Since December 1994, private-sector jobs have grown by 662,000. In fact, the overall number of private-sector jobs has now reached an all-time high. The business community's renewed confidence in New York is real proof of our strengthened economy and pro-business, pro-growth commitment.
Our policies of cutting taxes, controlling spending and eliminating red tape are working. According to Site Selection magazine, New York ranks among the top five states in new business facilities and expansions. New York also ranks second in new business incorporations according to Dun & Bradstreet.
There's never been a better time to do business in New York state. I remain committed to pursuing the policies that have transformed New York into a national leader in creating business opportunities and jobs. New York's innovative business approach has positioned it to continue flourishing in the 21st century.
