New York State Exposed: High taxes, less business

Posted at: 10/07/2013 6:10 AM
Updated at: 10/07/2013 7:04 PM
By: Rebecca Leclair

Jobs are what drives the economy. Many people are out of work and others are worried about losing their jobs. That's why News10NBC's exclusive series: "New York State Exposed" is getting to the heart of why small businesses are struggling to keep people on the payroll. What roadblocks are preventing them from hiring? How can we stop companies from going to others states and leaving Rochester behind?

From 2000 to 2010, the Finger Lakes region lost 40% of manufacturing jobs, going from about 166,000 jobs to 66, 000 jobs, according to the New York State Labor Department.   Small businesses owners are trying to pick up the slack. But when News10NBC asked them what their biggest concerns are, they say too many taxes and regulations from Albany.

Albany has slick $140 million dollars ad campaign underway and it's called "New York is Open for Business". But you won't see the commercials in New York. They air in other states trying to convince new businesses to come here. But local business owners say "watch out, taxes and regulations in New York could put you out of business."

Bob Hewett and his cousin, Greg Young, opened Hewett Young Electric in Rochester 11 years ago. On average, there are about 50 people on the payroll. They just found out their state workman's compensation rate is going up by 23 percent on November 1. That means they will now have to pay thousands more to cover claims.

News10NBC's Rebecca Leclair asked, "As a business owner, do you feel somewhat trapped by the business climate?"

Bob Hewett said, "We have no say. What's our recourse, to close the doors and say we're not doing business anymore?"

In New York State, taxes are number one. They really impact a company's bottom line. The Tax Foundation, which compiles tax data, recently ranked New York the "Worst State in Terms of the Business Climate." The report says it's because taxes, including sales, property and personal income, are so high in New York. On the opposite end, the state of Wyoming. It's ranked the best for business climate because it has no corporate or personal income taxes.

After talking with business owners, News10NBC went to lawmakers. Assembly Minority Leader Republican Brian Kolb, who has owned businesses said more hurdles need to be eliminated.

Assemblyman Brian Kolb said, "I think New York State government has a bad reputation in terms of creating regulations, too many regulations, creating legislation that is detrimental to business, taxes obviously.  And that's why when I hear that phrase "New York is open for business". I say not quite yet.

So what's being done now in Albany?

Governor Andrew Cuomo said, "Job number one for a governor for state leaders is the economic health of the state."

Governor Cuomo is forming a commission on tax relief and he wants concrete ideas by December. There are also tax free programs for start up companies located near universities.

News10NBC spoke with Lieutenant Governor Bob Duffy, who is in charge of helping the upstate economy grow.

Lt. Governor Duffy said, "I do agree we must do a better job of lowering the costs of doing business in New York. It may not be as fast as people would like to see but we're trying very hard."

New York State just recently began Start Up-NY. It's a program offering businesses that locate within zones near universities, zero taxes for ten years. Something like that won't help the owners of Hewitt Young Electric.  It's not practical for them to relocate into one of these zones, so they will just have to keep on paying taxes as is. In fact, the state just notified them that their workman's comp rate will go up 23% November 1. They say it's just another example of "business as usual" in Albany.

Labor Law 240

It's not a secret. Businesses and jobs are leaving New York State. Families are concerned about the economy.

New York is ranked last for having the worst business climate in all 50 states and it's because of taxes. Business owners say it's an outdated law that's costing them a small fortune. Small business owners say they provide jobs for our community, but what we don't see are the struggles they face on a daily basis. They say they're overtaxed and overwhelmed by rules in New York State including one law law that is only on the books in New York, not in any other state. It almost caused one company to go under.

Structural Remedial Services, a construction company, is replacing sidewalks at the downtown Rochester Y. Just like it did across the street at the Eastman Theater. But seven months ago, SRS almost went out of business and 30 people would have been out of work. Just to pay her insurance bill and save jobs, owner Mary Ellen Belding had to re-mortgage her house. She blames New York State Labor Law 240.

Mary Ellen Belding, Structural Remedial Services, said, “No other state has this law any longer. If they did have it, they removed it because they realized how volatile it was to business.”

New York State is the only state to have a law like 240. It's called the Scaffold Law. Enacted in 1969, it allows workers who are injured in falls to sue. It goes back to when crews built skyscrapers without hard hats and safety harnesses. Every contractor News10NBC talked to says this law is “outdated”. yet continues to drive insurance rates sky high.

Mary Ellen says, last year, she had two million dollars in sale and so this year, her insurance bill is 33 percent of that, $660,000 just for the opportunity to bid on a construction project.

Is there a middle ground? News10NBC went to Rochester lawyer, Al Parisi, who has represented several construction workers. 

News10NBC's Rebecca Leclair said, “Is there a way to lower insurance rates for companies and still protect workers?”

Parisi said, “This whole business friendly environment, making it less safe for workers isn't fair and not right. Workers, obviously, don't go to work to get hurt, right, so the issue becomes who should pay? The taxpayer for the rest of their life? They pay for this quadriplegic individual or should it be the employer?

News10NBC wanted to know why legislators haven't modified the law. Assemblyman Minority Leader Brian Kolb, a former business owner, said lobbyists for law firms have a tight grip on the legislature.

Assemblyman Brian Kolb said, “Because of the power structure and the lobby of outside interests that don't want to see the light of day. That's what you're fighting constantly. No one wants to restrict the ability of a person, that's hurt and should have the opportunity to sue for damages necessary, but there's not enough balance to these laws and that's why there are such high insurance rates here in New York State.”

Assemblyman Joe Morelle has been trying for more than a decade to pass new legislation to help business owners cut their insurance costs. The bill never made it to the floor.

Morelle said his legislation “maintains necessary employee protection while removing one of the major regulatory obstacles that have stalled economic growth and job creation in our state."  

Related articles:

Commercial by Empire State Development to grow business in NYS
Comparing Tax Rates as impacting businesses by state NYS is #50
Governor Cuomo's Start Up NY initiative
Assembly Minority Leader's Blog on NYS Poor Business Climate
NYS Scaffold Law
Assembly Majority Leader Joe Morelle's statement on Labor Law 240 and his proposed legislation