THE BLOG

How Albany Kills Job Creation

07/20/2010 01:15 pm ET | Updated May 25, 2011
  • Kathryn Wylde President & CEO of the nonprofit Partnership for New York City

The New York Post published this op-ed on July 19, 2010

The only good way to end New York state's fiscal crisis is job creation and economic growth -- but much of state government doesn't seem to have gotten the message.

While the governor and legislative leaders struggle to close a $9.2 billion budget deficit, others in Albany are going out of their way to promote laws and regulations that seem perversely designed to discourage business investment -- and so make our state's fiscal and economic problems even worse.

Take the new requirement that health insurers get "prior approval" from the state Department of Insurance for the amount they reimburse hospitals. This will be expensive and time consuming for both insurers and health-care providers, with the added costs being passed right along to employers and consumers.

High health-insurance costs are among the main factors that discourage hiring and job creation in New York. Yet this measure became law not only despite protests from insurers, but without regard for its impact on the broader economy. Plus, given the national health-care debate, it raises the specter of the state actively dictating reimbursement rates. That risk becomes another reason to avoid doing business here.

There's a similar "chilling effect" from measures that don't become law -- but might, a year or two down the line. For example, the state Senate recently passed a bill (with bipartisan support and no public vetting) that would make New York the only place in the country where employers can be sued for maintaining an "abusive work environment."

This bill goes far beyond the anti-harassment provisions of federal labor law. It would make employers liable for anything that a worker interprets as threatening -- loud voices, mean looks, whatever. That the Assembly round-filed it doesn't change the fact that too many New York lawmakers clearly aren't at all worried about creating an abusive business environment.

Similarly, the Assembly passed a bill that would impound 40 percent of the proceeds of merger and acquisition deals executed by telecom companies. The supposed logic here is that the state has a right to trump the interests of shareholders in private companies that were once part of the Ma Bell system. But that system is long gone.

The Senate is poised to rush through the same bill this week. Yet the law would certainly discourage telecom companies from investing in broadband and other communications infrastructure that New York desperately needs. Our state will see jobs and telecom operations move to locations where companies can operate on a fair, competitive basis.

And businesses in other sectors will worry that lawmakers are looking for any excuse to grab anything they can from the private sector.

Another bill that has passed both houses of the legislature and is awaiting the governor's signature would require New York's electric utilities to pay more to contracted maintenance and security workers. Meanwhile, the Department of Environmental Conservation has issued an order that would force the operators of Indian Point, which produces about 40 percent of New York City's electric supply, to build two new cooling towers at a cost of over $1 billion. The plant operator suggested a lower-cost, equally effective alternative -- but the DEC won't have it.

Such actions will further push up electricity prices -- in a state where energy costs are already twice the national average. This cannot be good for economic growth.

The fiscal crisis is the single biggest issue confronting Albany. But we cannot afford to ignore the impact that other state actions -- even those that affect a single company or industry -- will have on the local economy, and thus on the state's tax base. Keep beating the cow and you won't get much milk from it.

New York needs to discipline its legislative and regulatory processes, subjecting every proposed action to an analysis of its impact on jobs and economic growth. Greater care here will translate to much less need to cut funding for schools and health care -- or to raise taxes. Economic growth will take care of the deficit.