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Albany must unshackle upstate

With Election Day behind us and new leaders preparing to assume state government positions next month, now is the time to focus on improving the business climate to create jobs and economic growth in upstate New York.

We all know that globalization has changed the competitive balance for many industries -- and in many regions -- across the United States. These seismic changes in the global marketplace have made it much less feasible to forge steel in Buffalo, assemble cameras in Rochester and manufacture air conditioners in Syracuse.

But many other parts of the old American industrial heartland have managed to adapt, adjust and rebound. Why not upstate New York? In considering that question, one cannot ignore the fact that upstate's rate of job growth is much lower than the national average -- while our tax rates and government spending are much higher.

Between 1995 and 2005, the number of private-sector jobs in upstate New York increased by an average of just one-half of one percent -- far below the national average of 1.3 percent. And the news is getting worse: Last year, upstate jobs grew by only two-tenths of one percent.

Viewed as a separate state, upstate would have ranked 47th in the country in job growth. Private-sector job growth in Rochester ranked 99th out of 100 U.S. cities -- only post-Katrina New Orleans fared worse.

While private-sector job growth remains stalled, government spending continues to grow at a breakneck pace. Over the past 10 years, when the overall U.S. inflation rate totaled 27 percent, state spending increased by 79 percent. If state spending had been limited to the rate of inflation over that period, New York's fiscal 2007 budget would be lower by 29 percent or $33 billion.

Along with spending, public debt has also been increasing -- from $33.1 to $50.6 billion over the past 10 years. That's a 53 percent increase.

High levels of spending, taxes and debt, of course, reflect high levels of public employment -- from 1990 to 2000, local government jobs increased by 11.7 percent in upstate New York -- levels made all the more expensive by state legislation, such as the Taylor Law, that increases the likelihood that labor agreements with public employee unions will be more costly than private-sector contracts, not only in pay but in benefits as well.

A recent study conducted by the Buffalo Fiscal Stability Authority found that private-sector employees in Western New York contribute 23 to 30 percent of the cost of their own health insurance, and private-sector retirees pay 25 to 38 percent of their health insurance costs. For Buffalo city and school employees and retirees, that contribution is zero.

In Buffalo, public employees are entitled to free cosmetic surgery -- and from 2003 through 2004, taxpayers paid for city employees to have 318 eyelid tightenings, 666 liposuction procedures and 4,963 skin treatments. Buffalo's public employees are even entitled to special "summer hours," giving them the formal right to leave a half-hour early in the summer.

Not surprisingly, this period of flat job growth and increased taxes, spending and debt has coincided with a sharp decline in the population of young people in upstate New York. From 1990 to 2003, more than 324,000 young people between the ages of 20 and 34 moved out of upstate New York -- almost equal to the total populations of the cities of Rochester, Albany and Binghamton combined!

In Rochester, this measure of young people fell by 9 percent, in Albany by 10.4 percent, Syracuse by 13.7 percent and in Buffalo, this demographic decreased by 17.8 percent.

What would it take to make them stay? That is the question New York State's leaders must find a way to answer. We know this: We do not need more programs of state or federal aid.

Instead, our elected representatives must take steps to lift the burdens of regulation and taxation that hinder us in our quest to compete. In upstate New York, we need relief from high taxation, over regulation, excessive workers compensation costs and artificially high energy costs.

I do not raise these issues to seek higher profits for my own company -- or, indeed, for any individual enterprise. The true cost of these stifling levels of taxation and regulation, rather, must be measured through an immeasurable statistic: the number of businesses that have died before they were born and the number of good ideas that fled with those departing young people and, instead of creating jobs upstate, have generated prosperity elsewhere.

Such changes will require our legislators in Albany to work together as a group -- as an upstate caucus -- with the goal of doing what it takes to unshackle upstate New York and unlock the competitive spirit that first built our economy.

Robert G. Wilmers is chairman of Buffalo-based M&T Bank Corp.

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