Tuesday, March 31, 2009

Albany to Business: "Hit the Road Jack!"

As Crain's has reported, the just concluded state budget basically poleaxes New York business: "The business community is bitterly disappointed with the state budget agreement reached Sunday in Albany, especially $7 billion in new taxes and fees. Many of the new revenues will make it more expensive to do business here, according to Ken Pokalsky, senior director of government affairs for the Business Council of New York State."

Make no mistake about it; this is a full, all out offensive against the private sector-with the governor in a foetal position, much like a man looking to avoid the physical effects of the worst possible kind of beating. A beating, is quite clear, expertly administered by that Albany black belt-Assembly Speaker Sheldon Silver.

It's almost impossible to see any sunlight in all of this: "The new budget raises the cost of health care, energy and taxes, which are the areas where businesses most need relief, he said. “On all three of those top issues, this budget makes the state less competitive,” Mr. Pokalsky said from his Albany office. “It’s hard to find the positives.”

And what's beneath all of the "shared sacrifice" rhetoric? The reality that government continues to balloon while the private sector prepares for a new version of planned shrinkage: "Kathryn Wylde, president of the Partnership for New York City, which represents many large corporations, said, “The problem is that the state is spending more than the tax base can support.”

And not only that; as we take a look at our little piece of the poisoned pie-the state's food and beverage industries under the new expanded bottle law regime. We haven't even begun to add up the costs of the new regs; but consider the following:

(1)Mandatory RVM’s - Dealers who are part of a chain of 10 or more units who have between 40,000 and 60,000 square feet must install and maintain at least three (3) reverse vending machines, between 60,000 and 85,000 square feet must install and maintain four (4) reverse vending machines and dealers who have over 85,000 square feet must install and maintain eight (8) reverse vending machines. This provision becomes effective March 1, 2010;

(2)Handling Fee – The handling fee is increased from 2¢ to 3.5¢. This provision is effective April 1, 2009;

(3)Collection Materials – The bill provides that it will be the responsibility of the deposit initiator or distributor to provide the dealer or redemption center with a sufficient number of bags, cartons or other containers, at no cost, for the packing and handling and pick-up of empty containers that are not redeemed through reverse vending machines. Additionally, a distributor or deposit initiator may not require a dealer to load their own bags, cartons or containers onto the distributor’s vehicles;

(4)State Seizing Unclaimed Nickels – Deposits must be placed in an interest bearing segregated account for New York State. Each deposit initiator shall file a quarterly report with the Commissioner of Taxation and Finance. The state will seize 80% of the balance of the account at the close of each quarter. Where a deposit initiator pays out more nickels than they collect, they may apply for a refund from the state, but there is no guarantee that reimbursement will be paid;

(5)Registered Labels – Beginning June 1, 2009, each deposit initiator must register the container label of any beverage offered for sale in the state.

Examine each of the above regulations and you'll find an increased cost of distribution embedded like rusty spike-a harbinger of higher prices, reduced sales and less productivity; not to mention potential bankruptcies for small, ethnic bottlers.

And, as Crain's underscores, the lawmakers eschewed the one positive, revenue generating proposal that was before them: "Ironically, legislators junked the one proposed revenue enhancer that many in the business world wanted: A fee that beer-selling stores could pay for the right to sell wine. Instead, liquor stores will maintain their monopoly on wine sales."

It all makes for a rather grim prospect for job growth in one of the highest taxed, and over regulated, states in the entire country. Who knows, perhaps we can all go to work at the plethora of new redemption centers that NYPIRG envisions will flourish-claimed under the pretense of job creation-with the extra penny and a half handling fee for deposit containers?