Venture capital, R&D centers, new tax policies alter
the economic landscape of the Empire State.
Joining Bausch & Lomb Chairman and CEO Ronald Zarrella, at the podium, for the announcement of an R&D facility expansion are Michael Finney, then- President and CEO of Greater Rochester Enterprise, far left; Praveen Tyle, B&L Senior Vice President – Research and Development and Chief Scientific Officer, second from left; New York State Lt. Gov. Mary Donohue; third from right; Monroe County Executive Maggie Brooks; second from right; and then- Rochester Mayor Bill Johnson, far right.
rmed with new capital, research centers and business tax cuts, New York is making a case to become the national leader in high- tech development.
Already the third- ranked "cyberstate" in America – based upon total high- tech employment – according to the American Electronics Association, New York is pursuing initiatives designed to add to its base of 300,700 technology jobs.
The largest boost could come from Gov. George Pataki's announced US$1.1- billion tax- cut plan. "We've proven over and over again that tax cuts create the financial freedom that creates new jobs and new opportunities for New Yorkers," Pataki said. "Whether it's cutting taxes by billions of dollars each year, creating the Empire Zone program or reforming worker's comp, we know that lowering the cost of doing business is the way to create new jobs and expand the economy."
The governor's plan would eliminate the alternative minimum tax, reduce the business income tax rate by 10 percent, increase the sales tax vendor credit by 43 percent and eliminate the tax on S- corporations. In addition, Pataki's plan would encourage new capital investments in New York by letting businesses immediately expense any new capital investments they make in the state – including new plants, facilities and equipment.
The Governor's Office also is pushing a comprehensive reform plan for worker's comp, with the goal of reducing costs for businesses by more than 15 percent.
The cuts and reforms are needed, the Governor's Office contends, to offset the perception among corporate executives that New York is not the most business- friendly state. The Milken Institute recently ranked New York as the state with the second highest cost of doing business, and the Tax Foundation ranks New York as having the second highest state and local taxes in the nation.
Even before the tax law changes, however, New York is proving adept at attracting new sources of capital for business investment. Venture capital investments in the state increased to $1.1 billion in 2005, up 47 percent from $728 million in 2004.
Last year, Bausch & Lomb announced plans to double its main research and development center in Rochester. The $35- million project will create a 75,000- sq.- ft. (6,967- sq.- m.) facility that will house lab space and offices. The company also will add up to 200 research jobs over the next two years.
"One of the deciding factors to expand our worldwide R&D center here in Rochester was the outstanding assistance from New York State, Rochester Gas & Electric, the City of Rochester, Monroe County and facilitated by Greater Rochester Enterprise," said Ronald L. Zarrella, chairman and CEO of Bausch & Lomb.
Thanks to announcements like this and others, New York continues to expand its base of high- tech industry.
According to the AEA, New York has the third highest high- tech payroll in the nation, at $22.1 billion, and is ranked fourth in total high- tech exports, valued at $9 billion in 2005.
"We are seeing positive indicators for the future," said Justin Wright, executive director of the AEA New York Council. "With tech exports up and venture capital investments soaring by 47 percent in the Empire State, we believe we will see growth in the high- paying jobs that will drive the state's economy in the future."
Among other positive signs for New York's high- tech economy, AEA research shows that the state ranks No. 1 in photonics manufacturing employment with 9,100 jobs, No. 2 in defense electronics with 10,700 jobs, and No. 3 in R&D and testing labs with 40,400 jobs.
According to the National Science Foundation, New York ranks second in the number of science and engineering doctorates awarded, with 2,131 such degrees in 2003 (second only to California's 3,405).
The NSF also reports that New York ranks fourth in the nation in total R&D spending, while PricewaterhouseCoopers shows that New York ranks fourth in venture capital investments.
Among the largest capital investments announced last year in New York were Verizon's $322- million telecommunications headquarters in New York, employing 1,171 people, and Northeast Biofuel's $142- million ethanol plant in Volney.