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What About Upstate? What’s New in Spitzer’s New Budget

 

What About Upstate?    What’s New in Spitzer’s New Budget

By Stuart H. Brody

Governor Spitzer’s new budget unveiled a substantial package of reforms.  The budget is notable for sweeping policy changes on several fronts, and, most important to us,  represents a positive direction for upstate New York. 

Among the budget items of greatest concern to upstaters are increased property tax relief targeted for middle class taxpayers, strategic investments in health care, including reforms to provide access to health insurance coverage for all children, $50 million increase in targeted aid to distressed cities, towns and counties, and a $300 million nanotech initiative. 

While these initiatives help all New Yorkers, they hold the potential to benefit Upstaters in ways not seen before. The needs of upstate/rural NY ARE different despite the tendency of most politicians to lump them together.  Let me provide a few examples. 

Property taxes are far more crushing upstate than in downstate because they comprise a higher percentage of residents’ incomes. High taxes resulting from decades of federal and state indifference, including irresponsible tax cuts, have placed tens of thousands of rural New Yorkers at risk of losing homesteads held in their families for generations.

Rising fuel costs may be obnoxious to downstaters, but if you live in rural New York and must travel 40-60 miles one way to your job, or if you pay nearly $3.00 per gallon for home heating oil on near poverty level incomes, fuel prices are definitely more challenging.

The gaping hole in the safety net caused by not having health insurance is more acutely experienced when virtually no private employer in rural New York can afford to provide it to its employees.  In upstate New York, where commercial loans are always difficult to obtain, aspiring entrepreneurs are faced with a banking policy known as “external obsolescence” which means that the value of collateral is automatically discounted 25% because it is located in an economically depressed area.

Mr. Spitzer’s budget, which addresses property taxes, Medicaid costs, and health care costs, is likely to result, indeed, he has fashioned it to result, in relief for homeowners and families.  We think it is a good bet that his attention to upstate New York will continue and manifested in other ways.

Yet this is a good time to reiterate the gargantuan challenge he and his policy makers face in addressing the root problems of upstate New York. 

Steady capital movement away from the region for more than a hundred years has created an infrastructure vacuum leading to state and federal “largess” as the means of assuring rural subsistence.  Transfer payments constitute 75% of all federal and state spending in rural New York, 50% greater than in urban areas.

The result is a population dependent on a declining stock of hand me down’s and give-a-ways, while balkanized economic development agencies compete for an insubstantial pot of benefits.  The loss of rural economic vitality has led to the abandonment of traditional rural values and social and political demoralization.  Consider this depressing fact: member items—the ultimate anti-democratic grab bag—have become an accepted substitute for planned economic development.

Consider this depressing fact: member items—the ultimate anti-democratic grab bag—have become an accepted substitute for planned economic development.

Most political leaders have simply not educated themselves concerning the unique features of the upstate economy.  County by county or region by region analysis of primary economic engines are sparse and largely anecdotal.  Accordingly, rural policies tend to be top down, one-size-fits-all solutions – often in the form of grants having little to do with inherent structural problems. 

For instance, one North Country community received a Small Cities grant to install electric poles and wires to low income homes, but there was no money to fix the wiring inside the home to accommodate the power, thereby actually increasing the hazards to the households.

   What is needed is a new policy approach to upstate economic regeneration: The largesse-based approach to upstate problems must be eradicated and a self-sufficiency model built in its place. 

The largesse-based approach to upstate problems must be eradicated and a self- sufficiency model built in its place. 

What would such a model mean? For one each region/community must develop its own inventory of resources, define its own future and yes, even raise much of its own capital.  The state’s role would be to facilitate that process and prime the pump for its initiatives.  For instance:

  • revamp technical assistance grants to help regions identify their inventory of resources, formulate regional strategic plans, and raise local capital.
  • leverage investment to stimulate local capital formation to make and sell products marketed outside the region.  
  • Use of the $300 million budgetary allocation for nanotech to promote rural nano technology products and processes, including university technology incubators.

 

It is also critical to remember that employment opportunity is not the sum total of self-sufficiency.  The future “self-sufficiency” model of upstate/rural development must also encompass  affordable property taxes, affordable housing and health care costs, sustainable education (including training geared toward regional specialization), energy efficiency, equitable distribution of energy and renewable energy alternatives,  and reliable and affordable transportation and communication networks.  Without steps to achieve these goals, gains through economic investment and job opportunity can be quickly eroded.   

We will examine these issues in the coming months. Looking forward to your feedback.  Stu Brody

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