Monday, January 03, 2011

Small Business Aid is Key

We have been discussing the  new governor's economic recovery agenda, and in the Times Union this morning (via Liz) F. Michael Tucker weighs in and points out the importance of small business to the prospects of NY's turn around: "Gov. Andrew Cuomo's ability to define and implement progressive policies in a time of fiscal challenges will dictate his administration's ultimate success. Citizens should look for Cuomo to bring a renewed sense of clarity to state government. From the Center for Economic Growth's perspective, key success measures for our new governor will include promoting small business, fostering regional innovation and training a 21st century work force."

How important is small business in this equation? Tucker lets us know: "Since 70 percent of all net new job growth comes from businesses with less than 50 employees, attention to small business needs is crucial. With unemployment and underemployment affecting so many New Yorkers, job creation will be at the forefront of the governor's assured success story."

The unanswered question is, what strategy is best for promoting the job growth that the small business sector can bring about? Tucker highlights tax credits: "With a clear strategy to create, retain, and attract new jobs, Cuomo's NY Works agenda is dedicated to improving New York's business climate. He plans to offer businesses a tax credit of up to $3,000 for each unemployed New Yorker hired for a new job..."

In our view, the better solution-one that Cuomo has begun to outline-is dramatically reducing the cost of doing business here. Tax credits are fine, but are no substitute for tax reductions-along with a regulatory reform that makes it easier to comply with state regs without onerous fines and sanctions. The first step, as Cuomo has told us, is to reduce the cost of government-a cost that is inordinately borne by the state's small businesses.

E.J. McMahon lays this out in the Times Union this morning: "As Cuomo said during his campaign, "raising taxes is not an option." State taxes and fees already have been raised by at least $9 billion in the past three years. Meanwhile, counting temporary federal stimulus aid, New York's state operating funds budget has grown by 11 percent since fiscal year 2007-08, when the Great Recession began. To clean up the budget mess, Cuomo must push for deep reductions in recurring "baseline" spending. Temporary cuts won't be enough; as former Lt. Gov. Richard Ravitch put it, New York has a massive "structural" problem demanding fundamental changes to the way government does business."

 On a more practical level, Cuomo could immediately take charge of the Indian cigarette tax fiasco-and if he can tame these scofflaws, it would boost the bottomline for thousands of NY's bodegas and convenience stores. He could also put a stop to the Willets Point land grab-one that would put hundreds of small businesses out to make way for a mall and, who knows what else? Mike Bloomberg's economic development strategy has been the death knell for the city's small businesses-and Governor Cuomo could make a big impression by putting the kibosh on this last big Bloomberg boondoggle.

But to really aid small businesses, the governor needs to partner with them-and listen to what their various needs might be. Empowering the people shouldn't be a top-down exercise-but a two way street where communication flows; and real policy change is implemented as a result. Cuomo has just begun this process, and he has many years of malfunctioning government to overcome. That being said, you have to start someplace, and it helps to start in the right place-exactly where Andrew Cuomo finds himself today.