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Buffalo News reporter Jerry Zremski traveled to Albany to discuss upstate New York's troubled economy with Gov. Pataki and Assembly Speaker Sheldon Silver. Here's what the state's top Republican and its top Democrat had to say.

[Gov. Pataki interview] Q: Why is it that, since 1990, the economy in upstate New York has not come back the way it has in other parts of the Rust Belt?

Pataki: I don't think it's overly complicated. From 1990 to the end of 1994, we continued policies that were driving jobs, particularly manufacturing jobs, out of the state.

When your taxes are too high, your energy costs are too high, your workers' compensation rates are too high. When you have a criminal-justice system that leads to a destruction of the quality of life, you're going to lose jobs. And we've changed everything from the criminal-justice system, to the welfare system, to the tax structure, to the workers' compensation system, to the energy system, and it's beginning to work.

We just got the numbers for '97, and for the first time in a decade, manufacturing jobs are up. They're not up tens of thousands, as we'd like to see them; they're up a handful of thousands. But you don't turn around a battleship in a bathtub. It takes time.

Q: Yet complaints persist about taxes -- especially property taxes. You have the STAR plan to use state revenues to reduce local property taxes. Are you confident that STAR, in and of itself, will be enough to bring us back into line with other states?

Pataki: I never think we can do enough in lowering taxes, and I would never say that the STAR plan is all we have to do. Every day, every week, every year, we're looking at ways where we can continue to drive down the tax burden. For the last two years, we've cut taxes more than any other state.

As we increase aid to local governments and school districts, we're hopeful that the entire attitude toward property taxes will change. We've seen counties lower their property taxes, and I hope we see a lot more jurisdictions look to lower property taxes as we go forward.

Q: Let's talk about electric utility rates. How harmful do you think they were to the manufacturing base?

Pataki: Extremely harmful. I hear it all of the time. From Day One, we've been working on energy. We're not to where we want to be yet, but at least we're beginning to head in the right direction. Niagara Mohawk's proposal is to lower industrial rates by 25 percent, commercial and residential by 3 percent. Is that enough? Of course not. It's not even close to enough, but at least it represents the change in thinking.

We also are aggressively moving toward competition. We're requiring utilities to operate in a competitive climate, and the market is going to drive down rates significantly.

Q: Business relocation consultants also say there are so many industrial development agencies in the state that they've really become a part of the problem rather than the solution. Can we live with this many IDAs?

Pataki: We can certainly live with it, but is it the most efficient way to function? The answer is equally clear that it's not. But by having the state take a proactive role, and identifying all of these different sites, neighborhoods and buildings where we can put a deal in place, and by working with the local IDAs, we can cut through a lot of the duplication.

Q: Many economists laud your efforts to cut taxes -- but they still rate New York toward the bottom in terms of future job growth. Do you buy that?

Pataki: Not at all. I think it's hard for people to forget the failings of the past and not project them forward into the future.

When you talk now about Western New York, or Rochester, or Syracuse, I am very confident that their best days are ahead of them. We're going to work to ensure that that's the case.

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