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Gordon speaks out on Indian Point closure

Marsha Gordon, president and CEO of The Business Council of Westchester, and member of our board, wrote an excellent OpEd in the Journal News which highlights the impact of the impending closure of Indian Point Energy Center and recognizes the plant’s owner, Entergy, for their significant contributions to the community.

From the OpEd:

“As we have long stated, the power generated at Indian Point has played a direct role in stabilizing electricity costs in Westchester and the State of New York.  We have repeatedly called for the plants to be relicensed, a process that has been unnecessarily dragged out for 15 years and counting.  We are disappointed that this lack of action, coupled with the related massive legal costs, has contributed to the decision to shut down the facility.

We recognize that for some members of the community and a number of elected officials, the announcement is good news. Unfortunately, the shutdown poses an entirely new set of questions with no certain answers, including the loss of nearly 1,000 high-paying private-sector jobs and massive tax losses to the local community and school district.

Gov. Cuomo has repeatedly called for the plant’s closure.  We wait to learn how he intends to deal with the prospect of increased electric rates, the reliability of electric supply for Westchester, the Hudson Valley region and New York City, and the myriad of environmental and other issues the shutdown inevitably will bring.

We thank Entergy for its generosity and support of countless community groups, non-profit organizations and families across the area.  In short, Entergy has consistently displayed the best of corporate citizenship.”

We whole-heartedly agree with the sentiments expressed by Ms. Gordon. Entergy is a longtime and valued member of our own organization, and we look forward to continuing that relationship.

In response to news of the closure, Entergy sent the following message to shareholders, we encourage you to click the link and read it: http://www.bcnys.org/inside/energy/2017/Entergy-Message-to-Stakeholders-Indian-Point.pdf.

The story of Richard Katzman

For those who are unaware, or simply don’t remember, Richard Katzman was the CEO of Kaz Inc., once a major Columbia County employer. Way back in 2005 Richard Katzman–in a fit of extreme anti-development NIMBY-ism that’s become all too common– cheered when a plan to create a $300 million cement plant in Greenport was blocked by New York’s secretary of state, Randy Daniels. At the time, The Albany Business Review quoted Mr. Katzman as saying he was “delighted” by the decision. Mr. Katzman went on to say, “”My feeling and the feeling of other business people in the community is that this project was so out of scale with the existing mix of businesses and industries in the area that it would seriously hurt the quality of life and therefore hurt all our businesses.”

Mr. Katzman’s joy became all the more ironic when just three years later he announced his company was shutting down it’s manufacturing in Hudson, eliminating 300 jobs along the way. In announcing the closure, Mr. Katzman’s “delight” went away, instead he said this was a “hard decision” and “we’re not the bad guys here.”  To add insult to injury, press reports at the time noted that Kaz’ manufacturing activity would be taken over by a Spokane, Washington-based business that “does the majority of its manufacturing in Mexico.”

So, why are we bringing this up now? Well, we couldn’t help but notice that incoming Senate Minority Leader Chuck Schumer held a news conference in Hudson touting a new development plan for the still vacant former Kaz Inc. site. That’s right, nearly a decade later, Mr. Kaz’s property that he was at one time “delighted” to protect, has been left to rot since he moved on to greener pastures. Unfortunately, stories like these are all too common in New York State.

IBM CEO urges focus on “new collar” jobs

Ginni Rommety, the CEO of IBM (a member of The Business Council) is out with a new opinion piece in the USA Today urging U.S. policy makers to focus on policy decisions that will help prepare today’s youth for tomorrow’s jobs. In the piece, which you can read in full here, Ms. Rometty specifically cites the P-TECH model as one to follow. We here at The Business Council have made no secret of our affinity for this program. If you’re unfamiliar, here is Ms. Rommety’s decription:

“But in many other cases, new collar jobs may not require a traditional college degree. In fact, at a number of IBM’s locations spread across the United States, as many as one-third of employees don’t have a four-year degree. What matters most is that these employees – with jobs such as cloud computing technicians and services delivery specialists – have relevant skills, often obtained through vocational training.

Indeed, skills matter for all of these new positions, even if they are not always acquired in traditional ways. That is why IBM designed a new educational model that many other companies have embraced – six-year public high schools combining a relevant traditional curriculum with necessary skills from community colleges, mentoring and real-world job experience. The first of these schools – called Pathways in Technology Early College High School, or P-TECH – opened five years ago in Brooklyn. It has achieved graduation rates and successful job placement that rival elite private schools, with 35% of students from the first class graduating one to two years ahead of schedule with both high school diplomas and two-year college degrees.

There will soon be 100 schools of this kind. Governors and mayors from across the political spectrum have become champions for this new approach, and at IBM, we have committed to work with states to open at least 20 more P-TECH schools in the next year.”

Ms. Rommety closes by saying that the onus should not fall on lawmakers alone. It is incumbent on stakeholders from across the public and private spectrum to work on developing curriculum and strategies that harness the potential of these “new collar” jobs and ensure our children and grandchildren acquire the skills necessary to fill these needs

New poll shows widespread support for ride-hailing

A new poll, sponsored by the ride-hailing industry, shows 80 percent of people living outside of New York City support the legalization of services like Uber and Lyft. The poll found support remained consistent across political parties and different regions of the state. Residents of Westchester and Rockland counties had the highest support, approaching 90 percent. In the polling industry, they call those “Mother Theresa” numbers.

Support for ride-hailing has always been high. A Siena poll from earlier this year found nearly 70 percent of all New Yorkers supported legalization.

The Business Council of New York State, and our president, Heather C. Briccetti, have been extremely vocal in our support for the legislation. It was one of our top legislative priorities last year and will remain at the top of our list for 2017. But, what are the chances of it actually passing? That remains to be seen. Governor Cuomo and key members of his staff have been outspoken in their support, and leading members of the state Legislature have also said they would like to see it passed. Unfortunately, certain special interests are opposed to the bill as currently structured.

We remain hopeful the legislation will get approved next year and will do all we can to support its passage. Meanwhile, Uber recently relaunched an online petition aimed at showing the widespread support for ride-hailing. You can sign that petition here.

New report highlights New York’s woefully uncompetitive Workers’ Comp rates

Earlier this week the Oregon Department of Consumer and Business Services released an analysis of workers’ comp rates across the country. Not surprisingly, New York, with a cost rate of $2.83 per $100  in payroll (almost a dollar more than the median rate),  is near the bottom of the pack. In fact, our rate went from the fourth highest in the nation to the third highest.

From the Insurance Journal: “The authors of the report compared each state’s rates to the national median rate of $1.84 per $100 of payroll, which is a drop of less than 1 percent from the $1.85 median in the last report.

Rates ranged from a low of 89 cents in North Dakota to a high of $3.24 in California. California’s rates were 188 percent above the national median, according to the report.

The report is based on methods that put each state’s workers’ comp rates on a comparable basis by using a constant set of risk classifications.

The study used classification codes from the National Council on Compensation Insurance. To control for differences in industry distributions, each state’s rates were weighted by 2010 to 2012 Oregon payroll to obtain an average manual rate for that state.”

Analysis of workers’ comp rates across the country

While each study of this nature computes costs differently, one thing is for certain, New York’s move from fourth most expensive in the nation to now third at $2.83 per $100 in payroll, paints a picture of a state with an enormously expensive comp system that is unquestionably detrimental to job growth and economic development.

The time for comprehensive workers’ compensation reform in NYS is now!

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Former lawmaker gets it right

Have you seen former state Assemblyman and Suffolk County Executive Steve Levy’s OpEd in today’s Times Union?

It should be required reading for all state lawmakers. In the piece Mr. Levy lays out a list of policy initiatives that, if enacted, would reduce state and local government costs; provide the local government mandate relief promised, but never delivered, as part of the real property tax cap; and provide tax relief for employers and residents alike. Taken together, they would greatly improve the business climate of New York State. If many of these look familiar, it’s because we have been talking about them for years.

You can read the full OpEd here, but we’ve included a portion of it below.

  1. Enact pension reform by installing a 401(k) –type defined contribution pension for new public sector employees, as opposed to the present defined benefit pension, which keeps taxpayers on the hook for a guaranteed rate of return.
  2. Cap mandatory arbitration awards that have propelled law enforcement salaries over the $200,000 mark.
  3. Eliminate overtime from being factored into the base of a pension for all employee tiers. This practice has allowed for pensions to be dramatically inflated. Six-figure pensions are now quite common.
  4. End the Triborough Amendment that provides for automatic step salary increases in the public sector, even after a contract has expired.
  5. Control Medicaid benefits in New York to levels no greater than required by the federal government. New York taxpayers expend more than a billion dollars above the standards established by the Feds. For instance, while the Feds allow Medicaid to be made available to legal immigrants here more than five years, New York voluntarily waived the five-year threshold.
  6. End the Wicks Law. This relic from the early 1900s was originally enacted as a way to supposedly counter fraud in the letting of contracts. Instead of allowing the general contractor on public works projects to choose certain sub-contractors, the Wicks Law mandates that the subs be hired through a bidding process outside the control of the general contractor. It has been estimated by numerous budget experts that the law increases by up to 30 percent the cost of constructing public buildings in the state.
  7. End the Scaffold Law that holds building owners liable for accidents occurring at their construction sites even though they might not have been negligent in any way. Any employee contributory negligence is discounted. New York is the only state that has such absolute liability.
  8. End disability abuse that allows for some workers to get 3/4 of their pay tax-free if injured on the job. This has resulted in some employees (mostly in law enforcement) getting more staying home than if they are actually working, thereby eroding incentive to get back to work. Also end the “presumption” that heart and lung ailments are necessarily job related.
  9. End sick day abuse. Some local governments allow for employees to cash out huge amounts of unused sick days upon retirement. Some Long Island police, for example, get 26 sick days a year, and many of those not used can be banked for payment upon retirement. The employee is paid for the day at the salary rate he or she has in the last year of service. This has led to some employees getting severance packages of almost a half-million dollars. The New York City policy for sick days of “use it or lose it” should apply.
  10. End 20-year retirements. While the idea of allowing “20 years and out” policies in New York may have in the past been palatable, it is hard to justify such a policy with folks living so much longer today. By the time an officer age 23 reaches 83, the taxpayer could be funding one active and three retired officers (through their pensions) for that one position. It is simply unsustainable.

PPI Series: The Most Important Reason that Higher Standards Are Here to Stay … is YOU! You Can Join in Supporting College and Career Readiness in Your Community

PPI Common Core: Here to Stay?

New York’s business community is making strategic investments in education.  Businesses can send an important signal about their priorities by supporting the Common Core standards.  Employers in every industry sector and every region across the state are showing their support for college and career readiness.  In the coming weeks, the Business Council of New York State and the Public Policy Institute of New York State will launch an occasional blog series, “Spotlight on Employer Support for College and Career Readiness,” showcasing our members’ work in their own communities.  Are businesses and employers in your region working with educational institutions to increase student achievement and preparedness?

We’d love to hear about it. Please contact our director of communications at zack.hutchins@bcnys.org.

Please click here to read part fourteen.

Hard to find logic in DFS move

Much has been made recently about Howard Zemsky, the chief executive of Empire State Development, and his recent defense of Start-Up New York’s advertising campaign, which he said was “…paying dividends to New Yorkers in more intangible ways, including reversing…the state’s decades-old reputation as a place unfriendly to businesses.” Millions of dollars in advertising notwithstanding, we are very concerned with communications from other members of the administration, whose recent activities send a very chilling message to employers in New York.

In a recent letter regarding Anthem’s proposed acquisition of Cigna, Superintendent of Financial Services (DFS), Maria T. Vullo, took some unprecedented steps that highlighted the department’s inconsistent philosophies regarding the cost of healthcare in New York. Moreover, the letter sends a very strong and negative message to employers desiring to expand operations in New York, which is especially disconcerting given the significant longstanding economic presence these businesses already have in the state. Such actions should concern any of us trying to do business in New York.

As a representative of New York’s employers, I find it especially troubling that DFS dedicated much of their professed concern discussing the future market share of the commercial self-insured market. These are companies that opt to insure their employees out-of-pocket, rather than purchase insurance. Such insurance arrangements are typically entered into by sophisticated businesses in a very competitive and price sensitive market, and this is a market already regulated by the federal government through ERISA. While tensions between the state and the federal government over ERISA plans are not new, this letter signals a new attempt by a state agency to regulate employers in matters that fall far out of its jurisdiction.

Also deeply concerning is the DFS’ confusing logic on controlling the costs of healthcare for consumers in the state.  DFS simply assumes that a carrier’s increased market share will somehow have a negative impact on the value-based payment model being promoted by the state, leading to higher costs for consumers, despite the fact that there is no evidence to support such an assumption.

This logic is flawed in several ways. The letter says that competition in the health insurance industry is needed so that providers (doctors, hospitals, etc.) can negotiate with various insurers to maximize their income. Perversely, this will naturally lead to an increase in health care premiums, an issue to which the DFS should be particularly sensitive. The fact that increasing the income of healthcare providers is not part of the mission of the Department of Financial Services aside, this statement simply misses the point. While the verdict on the cost-savings of the value-based payment model is not yet in, such a model never envisioned a marketplace where healthcare providers are given endless leverage to negotiate universally higher fees.

Further, the letter fully ignores the reality of healthcare provider mergers and acquisitions in the state. Last year alone there were 940 healthcare service transactions in New York, up from about 480 in 2010. This increase is at an unprecedented pace in New York; one which is likely to only accelerate. Numerous recent studies show that such mergers create upward pressure on healthcare costs. If the Department of Financial Services is concerned with the cost implications of diminished competition, why isn’t this side of the equation being considered?

Employers in New York are saddled with some of the very highest costs of doing business in the nation. Everything from property taxes to workers’ compensation costs to the price of health coverage. In order to change New York’s poor business reputation, we need more than advertisements; we need policies that work to lower these costs for employers. We need consistency in policy across the state’s many regulatory agencies and we need regulators that stay within the jurisdictional limits set by law. It’s time that all of New York’s regulating agencies get on board to building a better economy for all of us.

PPI Series: The Common Core Standards Have Created Powerful Efficiencies in the Market for Educational Materials

PPI Common Core: Here to Stay?

Part fourteen of an ongoing series on higher standards in New York State.

Common Core critics sometimes argue that common standards are “one-size-fits-all,” to the detriment of our children, who are each unique and learn differently.  In the case of the Common Core, however, standardization is leading to greater variety in the educational materials available to teachers and students.

Before the Common Core standards, each state had its own set of learning standards and its own definitions of “proficiency” at each grade level.  These variations posed challenges for teachers, schools of education, test developers, and textbook companies when they were deciding what material to cover, and for students when they moved from one state to another.  Rather than custom-develop materials for each state, publishers of tests and textbooks sought to save on development costs and increase profits by developing generic materials that covered the common elements of multiple states’ standards.   In an attempt to cover multiple states’ standards in a single volume, textbooks often contained more material than could be taught in a single year.  Through a series of mergers, the educational publishing industry became increasingly concentrated in the hands of a small number of companies.

The Common Core standards have transformed the market for educational materials.  With the adoption of common ELA and math standards in more than 40 states, all the major publishers are competing to create Common-Core-aligned textbooks and tests, and newer/smaller developers are entering the marketplace as well.  Groups of states have formed consortia to share the costs of developing standardized tests aligned to the Common Core.  During the initial years of implementation, most teachers and districts have struggled to find good materials aligned to the standards, but over time, the Common Core standards are leading to a greater variety of innovative, high-quality materials at lower prices.  Entities such as the New York State Education Department and the non-profit Khan Academy are developing and disseminating free Common Core curriculum materials online, and individual teachers can develop and share their own Common Core-aligned resources with one another via the American Federation of Teachers’ Share My Lesson portal.  To aid districts and teachers in choosing among the many options, there are a variety of tools to vet Common Core-aligned curriculum materials, including an organization that provides online Consumer Reports-style reviews.

Thus, with publishers now benefiting from a larger market for each product they develop, and consumers benefiting from a larger selection of better-aligned materials at lower prices, there is tremendous economic momentum behind the Common Core standards.

Please click here to read part thirteen in this ongoing series.

PPI Series: Common Core Opposition Is Largely Based on Misconceptions and Testing Worries; Public Support for High Standards Is Strong

PPI Common Core: Here to Stay?

Part thirteen of an ongoing series on higher standards in New York State

Common Core polls are in and out of the news, and some reporters say that a majority of the public opposes the Common Core.  But a closer look at the polls tells a different story.  Whether Americans say they oppose the Common Core depends not only on how the questions are worded, but also on how well respondents understand what the standards are and what they are used for.  Polls that describe various attributes of the standards without using the name “Common Core” find high levels of support:

  • Seventy-nine percent of voters believe we should create high-quality academic standards or goals in English and math, and allow community to develop their own curricula. (Center for American Progress)
  • Ninety percent agree that the nation should raise academic standards to compete with other countries. (Center for American Progress)
  • The majority of Americans support adoption of “a set of education standards for English and math that have been set to internationally competitive levels and would be used in every state for students in grades K through 12.” (Wall Street Journal)
  • Only 16 percent oppose the following statement: “States have been deciding whether or not to use standards … that are the same across states” and that “will be used to hold public schools accountable for their performance.” (Education Next)

Nationally, most of those who say they are opposed turn out to have misconceptions about the Common Core.  According to multiple polls, large percentages of the public mistakenly believe:

  • that the Common Core standards were federally mandated;
  • that they were developed by the U.S. Department of Education; and
  • that they prescribe a national curriculum or limit what local teachers are allowed to teach.

At the state level, the New York Common Core Task Force found that “even vocal opponents of the Common Core have noted that although they may not support the implementation of and assessments related to the Common Core, they are in favor of high standards for students and accountability for schools and districts.”  So next time someone tells you he or she is against the Common Core, it might be worth asking a slightly different question.

Please click here to read part eleven in this ongoing series.