Public Forum/Town Hall Manufacturing Regulatory Reform - To Learn from Businesses and Industry Experts Which Regulations Are the Least Useful, Least Cost-Effective; And, Therefore, Should Be Eliminated

CenterState CEO 13 (Corporation for Economic Opportunity) 14

Laura Miller 67 73 15 General Manager

Darco Manufacturing, Syracuse, New York 16

Kipp Hicks 76 84 17 Executive Director

Madison County Industrial Development 18 Agency (aka/IDA), Syracuse, New York 19 20 21 ---oOo--- 22 23 24 25 1 SENATOR VALESKY: All right, we're going to 2 get started. We're just a few minutes late. 3 We have a number of speakers who will be 4 participating today, so we'll get going. 5 I'm Dave Valesky, the Chair of the 6 Senate Standing Committee on Small Business, 7 Commerce, and Economic Development, and one of the 8 co-chairs of a Senate Majority Coalition series of 9 public hearings that we're holding across the state, 10 to look at the other issue, the other side, of the 11 business-climate situation in New York State. 12 My colleague Senator DeFrancisco is joining 13 us as well, who chairs the Finance Committee. 14 He's focusing his efforts this fall primarily 15 on the tax structure, and we are looking at 16 regulatory reform. 17 And, this is the third of those 10 hearings. 18 We're looking to hear testimony we'll be 19 receiving today, as the third of those hearings, as 20 to what regulations are making it difficult for 21 businesses to be successful: to retain jobs, to add 22 new jobs, and to grow their business, which, in 23 turn, grows the New York State economy. 24 Co-chairing the hearings with me is, 25 Senator Pat Gallivan, from Western New York. He 1 heads up the economic-development efforts for the 2 Senate Republican Conference; 3 And, Senator Kathy Marchione, from Saratoga. 4 She is the Chair of the Administrative Regulations 5 Review Commission. 6 So, delighted to welcome them both to 7 Syracuse. 8 And before we begin, I would just ask my 9 colleagues if they have any opening comments that 10 they would like to make. 11 Pat? 12 SENATOR GALLIVAN: Thanks, Senator. 13 Good morning, everybody. 14 I appreciate the fact that you took time out 15 of your day to be here, or to travel here. 16 A recent U.S. Chamber of Commerce report 17 ranked New York State 50th out of 50 states 18 regarding its business climate and it's business 19 environment. 20 And it's no secret why there's problems. 21 Senator Valesky touched on both of them: 22 we're among the highest taxed and highest regulated 23 in the state. 24 So, we are conducting that series of 25 hearings, focusing, chaired by Senator DeFrancisco, 1 on tax reform, and, then, the panel before you, 2 conducting the series across the state to deal with 3 the rest of it, that so-called "death by a thousand 4 cuts," in hope that we can do this in an 5 industry-specific manner, where you can help us 6 drill down beyond those big things, beyond 7 worker's-comp issues, beyond Scaffold Law, beyond 8 Wage Theft Prevention Act; get down to things that 9 stand in the way or prove to be impediments to your 10 businesses, your industry, on a daily basis. 11 And our goal, of course, is to put out, 12 publish a report sometime, probably late in 13 November. 14 It would be part of our set -- our -- a part 15 of our priority and our agenda as we move into the 16 next legislate session, in hopes, that at least with 17 the regulatory reform, that all these little things, 18 that we can look at the outdated regulations -- the 19 ones that make no sense, the ones that are 20 duplicative, the ones where the costs greatly 21 exceeds the benefit -- in hope that we can take all 22 of these, and they can add up to have some sort of 23 meaningful change. 24 To give you an idea, there's, I think the 25 number is 83 volumes of rules and regulations in the 1 state, over 140,000 pages. 2 So, we certainly think that there's room for 3 improvement. 4 I'm sure you do, or else you wouldn't be 5 here. 6 And, I'm anxious to hear your testimony, and 7 hopeful that you can help us in this initiative, 8 which I think ultimately, of course, helps the 9 manufacturing industry and New York's economy. 10 So, thank you. 11 SENATOR VALESKY: Thank you, 12 Senator Gallivan. 13 Senator Marchione? 14 SENATOR MARCHIONE: Thank you. 15 It's an honor for me to be here with you this 16 morning, and I look forward to hearing your 17 testimony on regulations relative to manufacturing. 18 As the Chairman of the Administrative 19 Regulations Review Commission, I've stated a number 20 of times that the red tape, our regulations, travel 21 about 12 miles when you lay the volumes end to end. 22 Senator Gallivan was talking about, for me, 23 that's from Albany to almost my home in Half Moon. 24 We really do need to do something about that. 25 It is what prevents our businesses from being 1 able to expand and, perhaps, land here in New York. 2 And it's very serious to us; thus, the reason 3 for this hearing. 4 Also, I'll let you know that the 5 Administrative Regulatory Review Commission, beyond 6 these hearings, has been looking itself at 7 regulations, to see what's there, and almost 8 spending our full time this summer working to do 9 that. 10 But, we need to hear from you. 11 And, you know, our only goal here is to find 12 solutions, real solutions. 13 And we believe that your testimony and what 14 you bring before us today is what will help us do 15 that. 16 So thank you so much for being here. 17 SENATOR DeFRANCISCO: I don't have really 18 much to add. 19 I mean, you wouldn't be here if you weren't 20 concerned about regulations, overregulations, in the 21 state of New York, and sometimes non-cooperation by 22 some of the agencies that you're dealing with. 23 And, we get a lot of calls about that issue. 24 It's a big government. 25 The big government, there's a lot of layers, 1 and a lot of layers sometimes don't speak to each 2 other. 3 But, what we want to be able to do, is be in 4 a position to make serious recommendations, real 5 recommendations, that actually get implemented, 6 because everyone, from the Governor on down, wants 7 to make this a better business climate in the state 8 of New York. 9 So from my perspective, I appreciate your 10 being here to give your perspective of what needs to 11 be done in the state of New York, and the more 12 specific, the better. 13 Thank you. 14 SENATOR VALESKY: Thank you. 15 We'll start today with Brian Sampson, who is 16 the executive director of Unshackle Upstate. 17 Good morning. 18 BRIAN SAMPSON: Good morning. 19 Thanks for having us here. 20 Senator Valesky, Gallivan, 21 Senator DeFrancisco, Senator Marchione, we thank you 22 for the opportunity to sit before you today and 23 present our testimony. 24 I want to thank you and your Coalition for 25 taking on this important issue of regulatory reform. 1 It is certainly one that we hear about often 2 as we travel about the 48 counties and the 3 40,000 square miles of Upstate New York. 4 In my testimony you have more detailed 5 regulations of some of the things that we're looking 6 at, so I won't go into great depth here today. 7 And I know that my good friends Deb Warner 8 and Karyn Burns will cover many of those. 9 So -- but, again, my name is Brian Sampson. 10 I'm the executive director of 11 Unshackle Upstate. 12 We're a non-partisan pro-taxpayer, 13 pro-economic growth, education, and advocacy 14 organization dedicated to the revitalization of 15 Upstate New York. 16 As an organization, Unshackled's purpose is 17 to push for policies in Albany that make upstate a 18 better place to do business. 19 I recently had the opportunity to present our 20 New Era Plan for upstate to two Senate Committees. 21 Senator DeFrancisco and Senator Valesky, you 22 were there last week. 23 That plan, which I won't detail here, is made 24 up of five proposals to provide broad-based tax 25 relief and stimulate job growth across upstate. 1 Senator Marchione, I think you were there 2 last week as well, so, thank you. 3 But equally as important to the success of 4 the upstate economy is the topic of today's hearing: 5 reducing State-imposed mandates on business. 6 Over the past few years, a new phrase has 7 frequently been heard emanating from the halls of 8 the Capitol in New York. 9 That phrase, that "New York is open for 10 business." 11 While progress has been made, it is far too 12 early to make such bold and provocative statements. 13 The reputation of New York is often seen as a 14 place where businesses tend to experience -- 15 Senator Gallivan, to your point -- a death by a 16 thousand cuts; those cuts being taxes. 17 Unfortunately it's a reputation that we have 18 earned, and we deserve. 19 Further, New York is widely regarded 20 throughout the nation as one of the states with the 21 highest levels of regulation. 22 You recall that earlier this year, 23 Texas Governor Rick Perry launched an advertising 24 campaign, focusing on our state's anti-business 25 regulations as a means to lure New York businesses 1 to his state of Texas. 2 I believe that it even included an iconic 3 graphic of "New York Loves Regulations." 4 Today I hope to provide you with a 5 perspective of the upstate business community on the 6 issue, and with some suggestions that will help you 7 change this, and to improve the state's 8 competitiveness and the perception that others have 9 of us. 10 I truly hope that this is a first step 11 towards reducing New York's ever-thickening snarl of 12 government regulations. 13 While manufacturing-specific regulations are 14 devastating, so, too, are the general business taxes 15 and regulations. 16 Consider the following: 17 On energy: Things like the systems-benefit 18 charge, as well as the Regional Greenhouse Gas 19 Initiative, make our energy the most costly in the 20 country. 21 Health insurance: New York has more than 22 4.2 billion, that's billion with a "B," dollars in 23 taxes on our health insurance. 24 Tort reform: New York is often considered a 25 judicial hellhole due to our court systems and laws 1 that defy logic. 2 The poster child for that is the 3 Scaffold Law, Labor Law 240/241, that, thankfully, 4 you Senator Gallivan sponsored that reform bill. 5 Those are just indications of how New York 6 isn't serious about helping our business community. 7 All of these things hurt manufacturing, 8 especially small manufacturing, the lifeblood of 9 many communities across upstate. 10 These are the companies that can't afford to 11 stay, but they also can't afford to leave. 12 In contrast, many large manufacturers located 13 in upstate have simply shifted work to other 14 facilities or just abandoned New York altogether. 15 Here in Syracuse you can point to the absence 16 of the Carrier Corporation. 17 The only real presence it has in this 18 community today is the dome where the beloved Orange 19 compete. 20 But let me highlight what I consider to be, 21 as we call it, the "grand slam" of unnecessary 22 regulation, the annual notification provision 23 mandated in the 2010 Wage Theft Prevention Act. 24 Senator DeFrancisco, thankfully, you support 25 and endorsed the bill that will repeal that 1 provision. 2 In 2010, the Legislature decided there were a 3 number of problems relating to the nonpayment of 4 workers that needed to be addressed, including 5 nonpayment of overtime, improper deduction from 6 wages, and the payment of below minimum wage. 7 This was an effort motivated by good 8 intentions, certainly, but that well-intentioned 9 effort was missing one component: common sense. 10 Under New York's Wage Theft Protection Act, 11 private-sector employers must provide, each year, a 12 written pay notice to all of their employees. 13 The employer must also obtain a written 14 acknowledgment of the receipt of this notice, that 15 must be obtained in the employees' files for 16 six years. 17 Unshackled Upstate did not oppose efforts to 18 protect employees who were being cheated by bad 19 employers. 20 In fact, we will never defend bad employers. 21 We took no issue with the increased penalties 22 for intentional and repeated violations of the law, 23 or against more diligent enforcement of the law. 24 We felt that this was indeed a problem, and 25 that there were fair and appropriate solutions. 1 But what was not an appropriate response was 2 the imposition of a new employee notification and 3 recordkeeping mandate on every private employer in 4 the state. 5 The aspect of the law was simply an overkill. 6 Besides being a compliance nightmare, the law 7 treats every employer as if they were underpaying 8 their employees. They are guilty before even having 9 the chance to presume their innocence. 10 Since the vast majority of employers follow 11 the law and pay their employees the way they owe, 12 the law needs to go. 13 For the record, I note that the Senate has 14 passed a bill that would eliminate the annual 15 notification requirement. 16 I commend you for that, and urge you to 17 continue to advance the bill. 18 We continue to pressure your Assembly 19 colleagues on the issue, and we hope that they will 20 do it in this next session. 21 In terms of changing the regulatory 22 environment of New York State, most people 23 understand that we did not get here overnight, and 24 we will not be able to solve this problem overnight 25 either. 1 Unshackle Upstate has in the past solicited 2 input from upstate businesses regarding what 3 regulatory reforms should be undertaken. 4 What at first seemed to us to be a simple 5 request turned into something very different. 6 What we heard was, that it was a complex 7 mosaic of rules that the State has in place, 8 combined with little thought to providing assistance 9 to those who have to comply to them. 10 That has created such a challenging 11 regulatory environment. 12 In other words, it's not just the forest, 13 it's the trees. 14 What New York State needs is a serious and 15 sustained effort to change the way the State deals 16 with business. 17 My members recognize the need for the State 18 to have health, environmental, and consumer 19 protection regulations in place, but we also believe 20 that those regulations must be fair and predictable. 21 Critically, regulations must be aligned with 22 understandable and clearly articulated public-policy 23 goals, they must be achieving the goals for which 24 they were adopted, and they should do so in a manner 25 that is not unduly burdensome. 1 To this end, we recommend two overarching 2 strategies as you move forward. 3 First, we urge the Senate to undertake an 4 agency-by agency review of regulations to identify 5 those that are truly unduly burdensome, that have 6 outlived their usefulness, or more importantly, ones 7 that conflict or are duplicative of federal 8 requirements. 9 Continuing to shine a light on the 10 challenging regulatory environment is crucial. 11 Second, and probably most importantly, we 12 urge you to stop enacting laws that result in the 13 imposition of new mandates on new businesses until 14 the State has taken steps to improve the regulatory 15 environment. 16 There's an old saying: When you find yourself 17 in a hole and want to get out, the first thing you 18 need to do is stop digging. 19 So, please, stop digging. 20 I understand that this can be difficult for a 21 legislative body, especially in an election year, 22 but your first priority should be to do no harm. 23 I'm going to conclude my testimony with a 24 plea for SEQR reform. 25 We have no objection to SEQR itself. 1 It makes absolute sense to consider the 2 environmental impacts of a particular project, to 3 see if adverse impacts can be mitigated, or, if 4 there are alternatives to a particular proposal that 5 will impose and improve a project, and make the 6 environment better. 7 That's just common sense. 8 But as presently structured, SEQR is too 9 often a project-killer in New York State. 10 In fact, over the course of the last 11 two years, many of you and the Governor have put 12 hundreds of millions, if not billions of dollars out 13 on the street through the regional councils. 14 Each and every one of those projects that 15 requires building, bricks and mortar, they're all 16 delayed due, in large part, to the SEQR. 17 What troubles many businesses most, and in 18 some cases even troubles them entirely, is 19 uncertainty. 20 I will offer, that the State Department of 21 Environmental Conservation's review of natural-gas 22 development in the Marcellus Shale region is also an 23 example of an environmental review process run 24 amuck. 25 There does not appear to be any timetable for 1 the conclusion of DEC's environmental-review 2 process, the one that began more than five years ago 3 in July 2008. 4 It was just over one year ago today that 5 DEC Commissioner Martens asked State Health 6 Commissioner Nirav Shaw to assess the DEC's 7 health-impact analysis. 8 That has been one year, and the oil and gas 9 industry has heard nothing. 10 More importantly, it is the landowners in the 11 Marcellus area that continue to hear nothing, and 12 continue to have uncertainty. 13 The silence that we hear from the DEC is 14 deafening. 15 Our view is, that natural gas can and should 16 be developed in the Marcellus Shale region, and that 17 the State should finalize its comprehensive review 18 of the potential environmental impact of natural-gas 19 development, and put into place regulations that 20 strike an appropriate balance between economic 21 development and environmental protection as soon as 22 possible. 23 This is exactly the type of "only in 24 New York" situation that we must avoid in the future 25 if we want New York to shed its anti-business 1 reputation. 2 In closing, the focus in Albany needs to 3 shift. 4 We need to hit the restart button on our tax 5 policies, as well as our regulatory structure. 6 We must reduce regulations so that our 7 entrepreneurs may thrive. 8 We must lower taxes that impede our growth, 9 and we must do it today, not at some random point in 10 the future. 11 We don't have time to wait anymore. 12 Again, thank you for the opportunity to speak 13 with you today on this important issue, and I'm 14 happy to answer any questions you may have. 15 SENATOR MARCHIONE: You mentioned the 16 Regional Greenhouse Gas Emission Initiative as being 17 problematic. 18 Can you give me some additional information 19 on that? 20 BRIAN SAMPSON: Sure. 21 So there's a charge on everybody's energy 22 bill called "RGGI," and that's to go to fund some 23 alternative development in the energy industry. 24 While we don't have an issue with developing 25 solar and developing wind, the RGGI, combined with 1 the systems-benefit charge, combined with 18-A, 2 makes energy so expensive here in New York State 3 that, from a manufacturing standpoint, when things 4 can come down to pennies on a dollar, that extra 5 penny or two that somebody may pay through a RGGI or 6 a systems-benefit charge makes their product too 7 expensive and they lose the bid. 8 SENATOR MARCHIONE: Thank you. 9 SENATOR DeFRANCISCO: I'm glad you mentioned 10 the Wage Theft Prevention Act as the poster child of 11 ridiculousness in government. 12 Just to remind you: In 2010, the entire 13 government was controlled by downstate. 14 BRIAN SAMPSON: Yes, it was. 15 SENATOR DeFRANCISCO: And, to require people 16 to give, especially when they give checks with check 17 stubs, talking about exactly what's being taken out, 18 to give another annual notification of what they 19 earn so that they know what they're earning, is the 20 most asinine thing I've seen in government. 21 Now, what I don't understand, for the life of 22 me, there's businesses downstate, I think? 23 BRIAN SAMPSON: Sure, many. 24 SENATOR DeFRANCISCO: And I know 25 Upstate New York, and Unshackle Upstate, and all the 1 manufacturers I hear from on a daily basis, tell me 2 what I just said, and what you said, about this 3 bill. 4 We've passed a repealer two years in a row. 5 Is there any voice downstate of the business 6 community saying: This is ridiculous. It's costing 7 us hundreds of thousands of dollars to do nothing? 8 BRIAN SAMPSON: We actually had an agreement 9 from the Assembly this past session that they were 10 going to advance your bill, and that it would go 11 through the House and be passed. 12 Unfortunately, at the last minute, many of 13 the public-employee unions down in the city wanted 14 to attach a whistleblower provision to the bill. 15 That whistleblower, to us, changed the 16 negotiations of the bill; and, ultimately, it wasn't 17 advanced in the House. 18 So, there is a voice in the city that is 19 speaking on that issue. 20 SENATOR DeFRANCISCO: Well, the next part of 21 that question then is: What about accountability? 22 Do these business people go after some of 23 these people that do not -- are in the government, 24 that do foolish things, and cost them a lot of money 25 for no reason? 1 Are there any organized efforts to run a 2 primary against somebody who's maybe holding up a 3 bill? 4 Or -- I mean, it seems to me, the only 5 solution is political. 6 And if something is so foolish, it has to get 7 done, and it's stopped by one group of people, 8 there's got to be some political consequences. 9 I'm not suggesting -- you, obviously, are 10 very astute at what you're doing. You get your 11 message out very quickly. 12 But, somehow, the same effort's got to be 13 made downstate, because that should not be allowed 14 without accountability. 15 BRIAN SAMPSON: You know, we couldn't agree 16 with you more, Senator. 17 And, thankfully, I only get to deal with the 18 things north and west of the Tappan Zee. And that's 19 difficult enough. 20 I think that there are -- 21 SENATOR DeFRANCISCO: Yeah, but we're up here 22 and we get criticized from down -- 23 BRIAN SAMPSON: Well, you know, this -- I'll 24 tell you what, this is one of those classic 25 examples, though, of upstate bearing the burden of a 1 downstate marketplace. 2 Now, if there are concerns and issues with 3 the bodegas and the construction industry in 4 New York City, then maybe this law should apply just 5 to the five boroughs. 6 I have no problem with that. 7 Here in Upstate New York, we have good 8 employers. 9 We have great manufacturers. We have 10 wonderful farms. 11 They're not skirting the laws. 12 And if they are, we're not going to defend 13 them, and there are laws in place to prosecute them. 14 Couldn't agree with you more. 15 SENATOR VALESKY: Brian, thanks for your 16 testimony. 17 Just a couple of quick points. 18 BRIAN SAMPSON: Sure. 19 SENATOR VALESKY: And I appreciate the 20 specificity, even though you didn't get into in your 21 oral testimony. 22 BRIAN SAMPSON: We would be here all day if 23 you wanted to do that. 24 SENATOR VALESKY: Yes, if we went through it 25 point by point. 1 So, I do appreciate your specificity. 2 One: As I'm sure you remember, the Senate, 3 in the last few days of a recently concluded 4 session, approved a series of, I think it was 5 14 separate pieces of legislation regarding 6 regulatory reform. 7 I think a couple of them you have in your 8 recommendations for next year. 9 One of them that comes to mind, and I think 10 it was sponsored by Senator Griffo, that would 11 establish a Berger-style commission to look at the 12 regulatory climate. 13 I would just certainly suggest, that as you 14 prepare your 2014 legislative agenda for Unshackle, 15 that you review those bills that we've taken up 16 already -- 17 BRIAN SAMPSON: Absolutely. 18 SENATOR VALESKY: -- and, you know, the ones 19 that you feel would be of benefit, from your 20 organization's perspective, certainly would be 21 helpful to us -- 22 BRIAN SAMPSON: Of course. 23 SENATOR VALESKY: -- to continue to advance 24 them in next year's session. 25 The one thing I'm just going to pick out 1 among your recommendations, has to do with 2 worker's compensation. 3 BRIAN SAMPSON: Yes. 4 SENATOR VALESKY: Your headline is: 5 "Adopting the AMA and ACOEM Guidelines." 6 And you talk about the worker's-comp reforms 7 that we passed in 2007 -- 8 BRIAN SAMPSON: Sure. 9 SENATOR VALESKY: -- and you indicated that 10 they haven't particularly worked. 11 We did do some worker's-comp reform in this 12 year's budget. 13 And I don't know whether you've had time to, 14 or whether businesses have had time to, analyze the 15 impact of what we did earlier this year. 16 Do you have any -- 17 BRIAN SAMPSON: Yeah, we actually worked with 18 the Senate and the Governor's Office on those 19 provisions, and they were more long-term changes to 20 the worker's-comp system. 21 In essence what you have, is the reforms that 22 were done in 2007 is a very quick, forced reduction 23 in premiums on worker's comp, and then you 24 established the equivalent of The AMA Guidelines 25 (The American Medical Association Guidelines) for 1 the state of New York. 2 By the times that those rules and regulations 3 were promulgated and put into place, we had already 4 suffered 4 1/2 years of increased growth in 5 worker's-comp premiums, paid on a weekly basis. 6 So in order to revert -- the example is, the 7 minute you drive a car and you drive it off the lot, 8 the rumor is, it's worth about half of what you just 9 paid for it. 10 You passed a law in 2007, changing 11 worker's comp, but by the time you put the rules in 12 place, you were already 4 1/2 years behind the rest 13 of the country that is using AMA Guidelines. 14 Our point is, 30 -- I believe 38 states 15 utilize the AMA Guidelines. 16 They're very -- they're created by doctors. 17 They're designed to ensure that there is, as 18 we like to say, predictability, there's cost 19 ensurement [sic], but there's also good treatment 20 for the injured worker. 21 So what we'd like the State to do is adopt 22 those guidelines, and then to follow them up with 23 ACOEM. 24 ACOEM is a list of treatment protocols. 25 So it's, basically, you know, if you try this 1 treatment and it doesn't work, then you go to B. 2 And if B doesn't work, you go to C. 3 But there's a progression there. 4 A predictable progression. 5 If the State were to adopt those, what you 6 would see is a tremendous decrease in the pressure 7 on the premiums under Worker's Compensation. 8 When we got there, obviously, then, that's a 9 relief to the business community, yet you've still 10 ensured that there is proper treatment for the 11 injured worker. 12 We want to see them get back to work. 13 We don't want to see them sit out on worker's 14 comp, even for the maximum of 500 weeks. 15 We want them back to work. 16 ACOEM and AMA guidelines would make 17 New York State more competitive. Again, would bring 18 us to a national standard that 38 other states are 19 using. 20 SENATOR VALESKY: Would adoption of those 21 guidelines require legislation from us, or could 22 that be done administratively? 23 BRIAN SAMPSON: We're checking on both. 24 My sense is, because the 2007 reforms were 25 done legislatively, this would probably have to be 1 done as well. 2 But, we are talking to the 3 Worker's Comp Board about adopting those 4 regulations. 5 SENATOR VALESKY: Anything? 6 SENATOR GALLIVAN: No, I'm good. 7 SENATOR VALESKY: Brian, thanks very much. 8 BRIAN SAMPSON: Thanks. 9 Appreciate your time. 10 Next we'll hear from Nathan Andrews, who is 11 the president of Morse Manufacturing in 12 East Syracuse. 13 Welcome back. 14 We heard from Nathan at Senator DeFrancisco's 15 hearing here in Syracuse a couple of weeks ago. 16 NATHAN ANDREWS: Yes, indeed. 17 SENATOR VALESKY: Good to see you again. 18 NATHAN ANDREWS: Thank you very much. 19 Thank you. 20 Again, Nate Andrews, Morse Manufacturing 21 President. 22 Thank you for this opportunity, and thank you 23 for addressing the need for regulatory reform in 24 New York State. 25 Morse Manufacturing was founded in 1923, and 1 making it a 90-year-old company. 2 I'm currently third generation. We're a 3 family business. 4 We are a manufacturer of drum- and 5 barrel-handling equipment. 6 Think of a steel drum. 7 We don't make the drums, we make the 8 equipment that properly lifts, moves, and handles 9 it. 10 Two weeks ago, I was here testifying before-- 11 regarding tax reform. 12 At the time, I spoke a little bit about the 13 type of products that we make, in light of the 14 uniqueness and the kind of engineering know-how that 15 is required behind it, in light of the ongoing 16 denial that we have had of the Qualified Emerging 17 Technology Credit that is still ongoing. 18 Nothing's changed in the last two weeks, by 19 the way. 20 But, today, I would like to share a picture 21 of Morse Manufacturing, in light of regulatory 22 reform, and I'd like to focus on the employees that 23 we have. 24 We have, roughly, 40 employees, and our 25 average employee has been with us over 15 years. 1 I have been with the company 10 1/2 years, 2 and so I'm still, relatively, a new face in the 3 organization, even though, you know, a lot of them 4 knew me as a kid, growing up. 5 We offer full benefits: health, dental, life 6 insurance. 7 Last year's profit sharing was over 7 percent 8 contribution to 401(k) plans. 9 And we offer all sorts of incidentals that a 10 lot of bigger companies can't do. We have the 11 flexibility. 12 New York State Fair tickets, or, we get 13 season tickets to the Syracuse Chiefs, and give them 14 away to employees. 15 I got tickets to the SU football game this 16 weekend, that we're giving away. 17 We do a full week's pay at Christmas. 18 SENATOR VALESKY: Do you have trouble giving 19 them away? 20 [Laughter.] 21 NATHAN ANDREWS: The Chiefs tickets we did, 22 but... 23 We do -- in the winter, we have a fruit 24 basket, where the employees can come help 25 themselves, you know, to keep themselves healthy 1 throughout the winter. You know, avoid downtime. 2 We do lunch-and-learns for employees. Bring 3 people in to talk about different nonprofits. 4 It's a family business, in the sense that 5 it's owned by my family, but, it's a family in the 6 sense that our employees are our family. 7 We believe that if we put our employees 8 first, they're, in turn, going to put our customers 9 first. 10 It establishes a sense of trust throughout 11 the entire organization, and that's what keeps us in 12 business for 90-plus years. 13 And, hopefully, for my grandkids to stay 14 within the business. 15 It's within that sense of trust -- and I hate 16 to discuss what's already been mentioned -- but the 17 Wage Theft Prevention Act, twice a year I personally 18 go around and have people sign these papers, 19 declaring all the same information that's on their 20 paycheck. 21 And it's the same conversation every time 22 I walk out back: 23 "Well, what is this?" 24 "Well, it's to show you that I'm not stealing 25 from you." 1 "Well, what's on it?" 2 "Well, it's the same information that's on 3 your paycheck." 4 "Well, why do I have to sign it?" 5 "Well, New York State makes us do that." 6 It's a nonsensical requirement. 7 It invalidates the kind of trust that we're 8 trying to build with our employees. 9 And, it's something -- I won't belabor the 10 point. 11 I'd like to talk about New York State 12 unemployment as well. 13 Morse Manufacturing, as I'm sure you're well 14 aware, is liable for unemployment expenses for 15 employees that we have let go for rightful cause, 16 they've been terminated, who are subsequently hired 17 by another organization, and then let go, in the 18 amounts of thousands of dollars over the course of a 19 year for an employee that was let go for cause. 20 Over the last 10 years that I've been a part 21 of the organization, we have never once let go a 22 single employee that was not for cause, and, 23 therefore, was not eligible for unemployment. 24 Yet, they got hired somewhere else, were laid 25 off, we're liable for unemployment. 1 Back in '08, '09, back when the economy 2 tanked, our sales plummeted. 3 As a family business, we were able to not lay 4 employees off. 5 We kept people busy. 6 We had employees on our roof, painting the 7 roof, just to keep people busy. 8 When the economy turned around, we were able 9 to benefit from it. 10 But, over the course of those 5 years, our 11 unemployment costs have gone up over 83 percent. 12 And that's just not because of the fact that 13 other employees had left and had subsequently been 14 terminated, but I know there's all sorts of other 15 reasons for unemployment expenses going up, but, 16 83 percent over the last 5 years is a big burden for 17 us to bear. 18 We have -- in the past five years, we 19 purchased a paint booth. 20 We have a painting process. 21 We have a water-based paint, very low 22 volatile content. It doesn't smell very toxic, or 23 anything. And, we use a dip tank. It's a 24 500-gallon large dip tank. 25 You don't want to fall in it because you'll 1 turn blue. 2 Everything we do is blue, and it's called the 3 "Morse blue." That's what our products are. 4 We were running into problems because we're 5 limited by the size of the dip tank for painting our 6 products, and so we wanted to acquire a paint booth. 7 We were having to have everything outsourced. 8 We were buying a simple 10-by-10 paint booth, 9 and we started going through the process with the 10 DEC to get the permitting required to purchase this 11 paint booth. 12 We were spending hundreds of 13 thousands of dollars to outside suppliers to have 14 this painting done on some of our larger equipment. 15 A paint booth was twenty, thirty thousand 16 dollars. 17 It paid for itself in a matter of weeks, 18 literally, but the permitting process took us over a 19 year to go through the DEC. 20 Apparently, New York State -- we gave these 21 MSDS sheets that spell out the contents of the 22 chemicals and the paint, and everything else. 23 And the federal government has guidelines on 24 VOC content (volatile organic compounds). 25 And unbeknownst to us, New York State has its 1 own set of calculations and guidelines for 2 VOC content. 3 And so this application process, we -- 4 without the help of the New York State Environmental 5 Facilities Corp., I don't know, we just may have 6 given up. 7 It was -- the application is -- I'm not a 8 stupid person, but it makes you feel really stupid. 9 I can show you a copy of it if you're 10 interested. 11 The last issue I'd like to touch on, and it's 12 been brought up, is the Scaffolding Law. 13 We have absolutely nothing to do with 14 scaffolding in manufacturing drum- and 15 barrel-handling equipment; and, yet, we have to have 16 an entire process set up within our organization to 17 make sure any contractor that comes into our 18 facility is insured and named additional insured 19 through our insurance company. 20 It's a nonsensical rule, whereby, you know, 21 if someone, if they're standing on a footstool, no 22 matter if they were drunk, if they were anything, we 23 are 100 percent liable, according to the best of my 24 understanding. 25 And it's an additional burden that we really 1 don't need to have. 2 Again, I really thank you. 3 To the Senator's point, New York State is 4 regulation "death by a thousand cuts." 5 It's all these little things that burden; 6 take my time, take the time of our employees, and 7 take it away from truly doing what's in the best 8 interest of our employees and our customers. 9 I thank you for the opportunity once again to 10 be here. 11 And, I applaud you all for taking on these 12 tough issues. 13 SENATOR GALLIVAN: I'm just curious, and 14 nothing specific -- 15 I appreciate your testimony, and I guess 16 I would put big exclamation points behind it. 17 -- but I'm curious: How many state agencies 18 regulate you, if you know? 19 NATHAN ANDREWS: Well, Department of Labor, 20 Worker's Compensation, DEC. 21 I would guess at least a dozen. 22 SENATOR GALLIVAN: Of all of them, when there 23 are changes, do you get notice from the various 24 state agencies of the changes in the regulations or 25 the laws that affect you? 1 NATHAN ANDREWS: Generally, no. 2 You know, that -- as a small business, that's 3 a huge fear, that there's regulations out there that 4 we want to be in compliance with. We just don't 5 know about them. 6 SENATOR GALLIVAN: Do you have State 7 auditors? 8 I mean, do state auditors show up from time 9 to time? 10 NATHAN ANDREWS: From time to time. 11 SENATOR GALLIVAN: Do they call? 12 Are they, announced? unannounced? 13 NATHAN ANDREWS: Unannounced. 14 SENATOR GALLIVAN: What are the things that 15 they're auditing? 16 NATHAN ANDREWS: Well, New York State Tax was 17 the most recent one that we've been facing. 18 Fortunately, we've been under the radar in 19 the past 10 years, but, I know people that have been 20 audited by the Labor Departments, and some others, 21 that have not had pleasant experiences. 22 SENATOR GALLIVAN: Yeah, okay. 23 Thank you. 24 SENATOR MARCHIONE: Do you have any 25 duplicative regulations between EPA and DEC with 1 your business? 2 NATHAN ANDREWS: Well, as I mentioned, the 3 VOC-content issue that we had -- 4 SENATOR MARCHIONE: Is that both? 5 NATHAN ANDREWS: -- the New York State 6 guidelines are completely different. 7 Fortunately, we had some help in going 8 through that process to notify us. 9 At this point, we simply pay an ongoing 10 permit fee to have the paint booth established. 11 SENATOR VALESKY: This Panel was in Watertown 12 yesterday, and our topic yesterday was the 13 agriculture industry, and many of the speakers 14 raised the issue of DEC. In many cases, having 15 regulations that go way beyond the federal 16 EPA standards. 17 So just following up on Senator Marchione's 18 questions: So, the permit for your paint booth, 19 there's a separate -- there's obviously a permit 20 from the Department of Environmental Conservation, 21 but the requirements the State DEC requires for you 22 to obtain that permit go above and beyond what the 23 federal EPA requirements specify? 24 Is that correct? 25 NATHAN ANDREWS: As I best understood the 1 process, correct. 2 The calculations for VOC content were 3 separate from what the MSDS sheets, set forth by the 4 federal guidelines, established. 5 SENATOR VALESKY: Thank you, Nate. 6 Thanks very much for your testimony. 7 SENATOR GALLIVAN: I do have one more 8 question. 9 NATHAN ANDREWS: Sure. 10 SENATOR GALLIVAN: I've been told that 11 there's -- now, if I understand correctly -- for 12 energy, you do not have to pay sales tax for energy 13 used in the manufacturing process? 14 NATHAN ANDREWS: Correct. 15 SENATOR GALLIVAN: Is that accurate? 16 NATHAN ANDREWS: Yes. 17 SENATOR GALLIVAN: However, you do have to 18 pay sales tax for any energy that's not used for 19 manufacturing; for your administrative office -- 20 NATHAN ANDREWS: Correct. 21 SENATOR GALLIVAN: -- or things of that 22 nature? 23 NATHAN ANDREWS: Uh-huh. 24 SENATOR GALLIVAN: How do you calculate that? 25 NATHAN ANDREWS: We do it based on 1 square footage of our manufacturing facility 2 compared to our office environment. 3 We have not been questioned on that in the 4 fact of -- 5 SENATOR GALLIVAN: That was my next question: 6 You have not been questioned? 7 NATHAN ANDREWS: We have not. 8 SENATOR DeFRANCISCO: Yet. 9 NATHAN ANDREWS: It's not -- yet. 10 For the most part, our sales, as a 11 manufacturer, we sell through a distributor network. 12 Our sales-and-usage tax is extremely low 13 because we don't sell anything direct, so we're not 14 really paying taxes. 15 So, that tax on our energy usage is the only 16 sales-and-use tax that we really have an obligation 17 to pay, so it's not a large amount, comparatively. 18 SENATOR GALLIVAN: All right. 19 Thank you. 20 SENATOR VALESKY: Thanks very much, Nate. 21 NATHAN ANDREWS: Thank you again. 22 SENATOR VALESKY: Next is Karyn Burns, 23 vice president, communications and government 24 relations for The Manufacturers Association & 25 The Manufacturers Alliance of New York State. 1 Good morning, Karyn. 2 KARYN BURNS: Hello, how are you? 3 First of all, obviously, thank you very much 4 for coming together and holding this forum. 5 I think it's terrific it's in Syracuse. 6 Obviously, we have a great manufacturing 7 sector here, robust, growing, but certainly not 8 without their share of challenges. 9 I will spare you the details. I believe most 10 of you are aware of MACNY. 11 Just a brief overview: 12 We've been around for over 100 years. We're 13 celebrating our 100th birthday this year. 14 And, we represent about 55,000 manufacturers. 15 We have 330 manufacturing companies within 16 26 counties. 17 Very proud of what we do. 18 We serve our members, whether it's HR 19 services, or training, advocacy. 20 Essentially, we try to make it easier for 21 them to do what they do best, which is manufacturing 22 products. 23 I've been doing it a long time, hoping to do 24 it for a longer time. 25 But I'm also here wearing a separate hat, and 1 that actually has to do with The Manufacturers 2 Alliance of New York State. 3 This came together in 2006. 4 And, essentially, we came together with some 5 other regional organizations also representing the 6 manufacturing sector throughout the state. 7 That's to include the Buffalo Niagara 8 Manufacturing Alliance; the Rochester Tooling-- I'm 9 sorry, they just changed their name-- Technology and 10 Manufacturing Association; the Council of Industry 11 of Southeastern New York; the Long Island Forum for 12 Technology; Manufacturers Association of the 13 Southern Tier; Finger Lakes Advanced Manufacturing 14 Group. 15 I apologize-- oh, and the Chief Executive 16 Network in the Albany region. 17 It's a great representation, primarily of 18 upstate manufacturers, but we all came together, 19 because we realized that together, collectively, we 20 were going to get a lot more done on the statewide 21 level. 22 We tend to advocate on sector-specific issues 23 rather than regional. 24 So that's also what I'm here representing 25 today. 1 What I want to talk to you about-- and feel 2 free to read through my testimony -- but what we 3 ended up doing, we've actually, this summer, we've 4 been receiving a lot of inquiries, not only from the 5 Senate, but from the Assembly as well, and from the 6 Administration. 7 And it sounds like everyone is looking for 8 some regulatory reform to make changes on. 9 And that, to us, is very positive. 10 Obviously, we want everyone to work together. 11 Businesses are happy to work with you. 12 So I'm here speaking on behalf of those 13 businesses. 14 And we took the initiative, and we actually 15 ended up surveying our membership a couple weeks 16 ago. 17 And I apologize, we're still in the process 18 of finalizing that information and quantifying those 19 results. 20 But some of those results that came through 21 allowed me to write my testimony, and a couple 22 things I want to talk about specifically today. 23 And some of the -- 24 SENATOR VALESKY: Karyn, just before do you 25 that -- 1 KARYN BURNS: Yes? 2 SENATOR VALESKY: -- when you do finish that 3 process, if you could share that with us? 4 KARYN BURNS: Absolutely. 5 Absolutely, yes. 6 We were planning on doing that under our 7 research institute, so we'll be happy to send you 8 those results once they come in. 9 But what we've found, so far, is that there's 10 a pattern; that there's three areas of regulation 11 that we'd like to discuss today, and they're in the 12 areas of: 13 Economic regulation, which has to do with 14 prices and wages. 15 And I'd like to discuss some specific 16 examples that were given to us. 17 One had to do with the unemployment-insurance 18 issue that happened a few years ago within the 19 Department of Labor. 20 I've never seen my members so angry. 21 I'll talk about that in a minute. 22 The second component that we found was more 23 social issues; had to do with DEC, for example, 24 environmental regulations. 25 I'll be talking a little bit about SECRA. 1 That was something that we've gotten back a 2 couple specific responses. 3 And then the third one had to do with 4 compliance. 5 So you have economic, social, and compliance. 6 And within the compliance issue, I want to 7 talk about the Wage Theft Prevention Act; however, 8 what I would like to talk about, is some specific 9 complaints that we've gotten about the oversight 10 from -- in terms of the Wage Theft Prevention. 11 Obviously, I believe we're all on the same 12 page that the legislation needs to be repealed, but 13 the fact is, is that it's an active law right now, 14 and there are some issues that we're getting -- we 15 tend to be getting some complaints about the 16 oversight of it. 17 So, I'd like to talk about that. 18 If it's okay, I'd like to just read through 19 them, because they are specific quotes from some of 20 these. 21 So the first thing I'm going to talk about is 22 economic regulation. 23 Economic regulation on businesses includes 24 areas such as prices or wages and allocations of 25 public resources, such as usage of the tax dollars. 1 And one significant area, as I mentioned, 2 that is in need of reform here is through the 3 Department of Labor, and their unemployment 4 insurance regulations. 5 Historically, manufacturers have taken a 6 significant hit from the UI fiscal irresponsibility 7 and the lack of oversight. 8 Most recently, resulting from overborrowing 9 in 2011, New York owed the federal government 10 3.3 billion for borrowed funds so it could afford to 11 pay for unemployment benefits. 12 In 2011 alone, 115 million was owed by 13 New York in interest costs. 14 And, over 500,000 New York State employers 15 were blindsided by the aforementioned fees, with no 16 reason, other than the State could not afford to pay 17 it back. 18 These added fees, whether permanent or not, 19 significantly impact a manufacturer's ability to 20 operate a business here in New York. 21 And that's, obviously, because they weren't 22 expecting to pay those fees, so, that goes towards 23 paying those fees that are now required of them. 24 And they're told, it's just because we need 25 you to help us out. 1 We need to -- basically what my manufacturers 2 are saying is, they paid it, but, this is the second 3 time this has happened. 4 So, essentially, something needs to be done 5 about the regulation of this. 6 So they're asking that you help us out, and, 7 basically, not putting a Band-Aid on it, but making 8 sure that it doesn't happen again. 9 The second component I'd like to discuss is 10 the social regulation, as I mentioned. 11 And this also comes at a fiscal cost for 12 manufacturers, including areas in environmental 13 protection, consumer safety, employment 14 discrimination, and public health. 15 And a significant example is already 16 discussed, which is a DEC regulatory reform that 17 comes with improving SECRA, and permitting programs 18 to give business a more certain workable timetable 19 for the environmental review of major investment 20 projects, including, a more appropriate standard for 21 issues and DEC permit hearings, assuring the 22 regulatory timetables for project reviews are 23 adhered to, and creating an expeditated process for 24 applications that meet certain criteria. 25 So, basically, with that one, too, 1 self-explanatory. 2 Brian spoke to it quite well. 3 But, that's one of the responses that we've 4 gotten back, is that there are specific issues in 5 the DEC and overregulatory, specific in the SEQRA 6 area. 7 So, we ask that you visit that as well. 8 And then the third part I want to talk about, 9 and I'm pleased with this, because, again, it has to 10 do with the Wage Theft Prevention. 11 But, we are pleased to actually be getting 12 back some real feedback about how the oversight is 13 going right now. 14 So, I'm hoping hope you can visit this when 15 you head back to Albany. 16 But, compliance regulation significantly 17 hinders the manufacture's ability to function 18 effectively. 19 And this would include paperwork, for 20 example. 21 The Wage Theft Prevention Act that was passed 22 in 2009 is a prime example. 23 And then a specific area specified by our 24 members in need of reform, is by way of regulating 25 the Wage Theft Act. 1 The New York State Legislature recently 2 passed amendments to Section 193 of the Labor Law, 3 which governs deductions from wages, which then 4 signed into law. 5 Specifically, employers were given the right, 6 in writing, to deduct for the correct repayment of 7 an overpayment of wages. 8 Also, they are now able to deduct for a loan 9 repayment when they allow their employees to borrow 10 against future wages. 11 The issue is, that these new rules require: 12 "That the employer shall comply with 13 regulations by the commissioner for this purpose, 14 which regulations shall include, but not be limited 15 to, provisions governing the size of overpayments 16 that may be covered by this section, including the 17 timing, frequency, duration, and method of such 18 recovery; limitations on the periodic amount of such 19 recovery; a requirement that notice be provided to 20 the employee prior to the commencement of such 21 recovery; a requirement that the employer implement 22 a procedure for disputing the amount of such 23 overpayment or seeking to delay commencement of such 24 recovery"...and on and on, end quote. 25 This is specific from the language. 1 And to date, we have spoken with our members, 2 and the commissioner has not issued any regulations 3 for employers to follow and ensure compliance. 4 As a result, employers are going to be held 5 to a standard, retroactively, once it is written. 6 And it is our belief that by addressing some 7 of these regulatory burdens, that you'd be enabling 8 manufacturers to operate more efficiently and more 9 effectively. 10 In closing: 11 I actually spoke with Nate Andrews before. 12 We were talking about our testimony, and 13 I thought he made a great point. 14 You know, he spoke to it, but I'd like to 15 speak to it again today, that, you know, in terms of 16 even bringing business into our state, you know, 17 he's -- I hope it's okay, I'm speaking on your 18 behalf -- he was telling me that he's, you know, 19 talked to state -- you know, he's talked to 20 economic-development groups from out of the state, 21 and they're not talking about rolling out a red 22 carpet and saying, Here are all these 23 economic-development programs. 24 They're simply pointing out all the 25 regulatory burdens and taxes that Nate has to deal 1 with in New York State. 2 And that's not really the best strategy for 3 economic development. 4 MACNY has always remained a firm believer 5 that there's two components to getting us back on 6 track, and that's, matching economic-development 7 incentives, which we've taken a large 8 [unintelligible] approach in, and doing quite well 9 in the state, but, we need to couple it with 10 lowering taxes, easing the regulatory burden. 11 Because, other than that, it's not going to 12 happen. 13 Economic dollars can come in and in, but if 14 you have high taxes, you're not going to recruit 15 those people taxes, or incentivize those who are 16 here to keep building their businesses here. 17 I hope I answered some of your questions. 18 I'm happy to answer some. 19 If I don't know the answers, I can certainly 20 find them and get them back to you. 21 So, thank you very much. 22 Thank you. 23 24 25 1 SENATOR DeFRANCISCO: What regulations are 2 you waiting for from the commissioner, pertaining to 3 compliance with the Wage Theft Act? 4 KARYN BURNS: This actually had to go through 5 our HR department. 6 I'd like -- if it's okay with you, I just 7 don't want to speak out of line. 8 You know, basically what they were saying 9 was, the regulations that were put in place, there's 10 been no real instruction. 11 This is my understanding. 12 And so what they're looking for is, instead 13 of a retroactive, having to do it, it should be -- 14 the regulation should be put in place. 15 If they're gonna say they have to do 16 something, then they should have to do it now. 17 SENATOR DeFRANCISCO: But you're complying 18 with something now, the law; right? 19 KARYN BURNS: Uh-huh. 20 SENATOR DeFRANCISCO: Why would you want to 21 encourage more regulation? 22 Because the regulation may be more onerous 23 than the bill. 24 KARYN BURNS: That's not -- actually, what 25 they're saying is -- what the members were saying 1 is: The law's in place. 2 They should be following, by right -- you 3 know, it just appeared to them that it wasn't being 4 regulated at all. 5 So, they're being told they have to do 6 something. 7 It's somewhat similar to what the 8 unemployment insurance was, where, they just didn't 9 know, and the next thing you know, they had to 10 comply by it. 11 So, they want to follow the rules, but 12 they're concerned that if they don't follow the 13 rules now, but they're not being told to do so, 14 they're gonna have to do it. 15 SENATOR DeFRANCISCO: Okay, can you just get 16 back to us and let me know what the bill -- what's 17 confusing about the bill that requires further 18 regulation, because you may get what you ask for. 19 KARYN BURNS: Absolutely. 20 SENATOR DeFRANCISCO: And that may not be -- 21 then there might be another set of regulations you 22 want to remove next year. 23 KARYN BURNS: Absolutely. 24 And I just -- actually, so you know, we did 25 an HR meeting about this, a conference call, 1 discussed it with our members. 2 This is all HR directors from manufacturing, 3 so, they'd be happy to do that as well. 4 SENATOR DeFRANCISCO: Okay. 5 Thank you. 6 KARYN BURNS: Thank you. 7 SENATOR VALESKY: Otherwise, I assume if we 8 get final legislative approval on repealing in law, 9 the Wage Notification Act -- 10 KARYN BURNS: Well, that's it. 11 SENATOR VALESKY: -- well, that's kind of 12 irrelevant. 13 KARYN BURNS: Yes, it's the lesser of 14 two evils. 15 But, they're complaining about the regulation 16 of it, because, they're not finding it there, and 17 they're concerned. 18 SENATOR GALLIVAN: Is it a concern that it 19 would then be applied retroactively -- 20 KARYN BURNS: Correct. 21 SENATOR GALLIVAN: -- and then they'd have to 22 be reaching into their pockets? 23 KARYN BURNS: Correct. 24 So -- 25 SENATOR GALLIVAN: And the larger concern -- 1 I mean, that's a good specific example -- but, a 2 similar process -- 3 KARYN BURNS: Absolutely. 4 SENATOR GALLIVAN: -- the State implements 5 something, you don't hear anything, you don't hear 6 anything, you don't hear anything. 7 And now, in this case, we're, what, 8 four years later, and you still haven't heard of 9 anything -- 10 KARYN BURNS: And then they get a notice -- 11 SENATOR GALLIVAN: -- and, yet, you're held 12 accountable for everything immediately? 13 KARYN BURNS: Absolutely. 14 The conversation that I had with the 15 HR members within our council were specifying just 16 that: that they're more concerned -- they don't want 17 the regulation at all, but they're concerned, 18 because the regulation is in law, but then they're 19 not being asked to execute it, or being held 20 accountable. 21 So they're kind of concerned, because they 22 don't know whether they're adhering to it or not. 23 And, the ramifications afterwards could be 24 far worse, because there is a history of that in 25 New York State. 1 SENATOR GALLIVAN: Your survey? 2 KARYN BURNS: Yes. 3 SENATOR GALLIVAN: We're anxious to see the 4 results. 5 KARYN BURNS: Absolutely. 6 SENATOR GALLIVAN: I mean, the timing of it 7 might coincide with what we're trying to accomplish. 8 KARYN BURNS: Wonderful. 9 SENATOR GALLIVAN: That, if we're able to get 10 this over the course of the next several weeks? 11 Is that reasonable? 12 KARYN BURNS: The final date due back is the 13 24th, which is next Wednesday. 14 SENATOR GALLIVAN: Excellent. 15 KARYN BURNS: So we'll compile those results. 16 I think you'll be pleased. 17 It's asking, specifically, we actually list 18 out every department -- 19 SENATOR GALLIVAN: Excellent. 20 KARYN BURNS: -- and ask them to rank it, in 21 order, which one they have most issues with. 22 The information I collected from here came 23 from a, "Do you have any other comments with, 24 specifically." 25 And then, of course, there's the statistics 1 of, "Do you think you're overregulated?" 2 Which I can probably tell you is a yes. 3 A concise yes. 4 So, I will be happy to share that survey with 5 you, all of you. 6 SENATOR VALESKY: Thank you very much. 7 KARYN BURNS: Thank you very much. 8 SENATOR VALESKY: Next, Deb Warner, 9 vice president of public policy and government 10 relations for Center State CEO. 11 DEB WARNER: Good morning, Senators. 12 SENATOR GALLIVAN: Good morning. 13 DEB WARNER: Thank you again for this 14 opportunity. 15 It's been very interesting and encouraging to 16 see how much attention is going on recently with 17 regards to looking for reform, whether it's tax 18 reform or regulatory reform, to get ready for 2014. 19 So, that's making us very hopeful that we're 20 going to see some great things happen. 21 For some of the Senators who might not be 22 familiar with Center State, we're the regional 23 business and economic-development organization, 24 representing 2,000 companies in a 12-county region 25 in northern and central New York. 1 So, I also want to thank you for your efforts 2 on repeal for WTPA, and some other efforts that 3 you've already done earlier in the legislative 4 session. 5 There's three or four specifics I'd like to 6 talk to you about today that particularly relate to 7 manufacturing. 8 One of them has to do with sales tax, in 9 compliance of purchasing for equipment that 10 manufacturers buy, and whether or not it's exempt or 11 nonexempt, it's causing a problem. 12 As we've done outreach to our members in the 13 last month, with regards to the hearings that have 14 come up, this one came up a couple of times. 15 And one of our members said that they have to 16 have two or three employees spending about 20 hours 17 a month trying to keep track of complying with this 18 particular regulation, that's mentioned in the 19 testimony, and this relates to equipment that has 20 both manufacturing production-related and safety 21 applications. 22 So, one example told us that a rebar lanyard, 23 which is something that you use on a work-site, 24 manufacturing, and if it is positioned on the shop 25 floor so the employee can lean against it, and use 1 it for -- to, you know, make them more stable while 2 they're welding, then that application is tax 3 exempt. 4 But if they turn around and use the same 5 lanyard in a similar circumstance, and it's just 6 there for safety purposes, well, then it's taxable. 7 And another example is, with some analyzers 8 the a company has bought, and they use it in 9 multiple applications throughout their manufacturing 10 process. 11 So, if it's used in the 12 research-and-development function, it's exempt. 13 If they use it on the shop floor, that's 14 exempt. 15 But if a service technician takes that same 16 analyzer and uses it in the field, then it's 17 taxable. 18 So what I would ask you to do, is to work 19 with the Department of Taxation and Finance, and get 20 them to declare that any equipment purchased by a 21 manufacturer for safety purposes is tax exempt. 22 Let's just sort of clear that and get rid of 23 any nuances. 24 Another thing, which actually was surprising 25 to me when I started talking to some folks, and 1 found that, in New York State, the burden of proof 2 for some insurance claims, especially if it relates 3 to something that's happened in the past, is really 4 on the insured. 5 The insurance companies keep their policies 6 for a certain period of time, and then, you know, 7 they destroy them or have them shredded. 8 So, if something happens, and there's a 9 timeframe -- and this happens particularly with 10 manufacturers, because their products are out, being 11 used for a period of years -- now it's up to them to 12 produce an insurance policy to prove that they 13 actually had coverage, and bring the insurance 14 company in when they do have some problem with 15 liability. 16 So, apparently, we need to use some 17 technology and come up with a new document-retention 18 policy and system so that manufacturers don't have 19 to spend time doing forensic research for their 20 lawyers, and other people involved, when there is a 21 lawsuit and they need to -- or have a claim, and 22 they have to come up with proof that they had 23 coverage at whatever point in time in the past. 24 I know you were speaking to the folks about 25 agriculture recently. 1 That's great. 2 That's a growing industry for us. 3 That's really important. 4 One of the things I'd like bring up is 5 something that relates to manufacturing of 6 agriculture, food products, and sort of the 7 ecosystem, as New York State is -- our dairy 8 industry is growing, and with the yogurt plants and 9 cheese industry growing in our state, we really need 10 to increase dairy production. 11 So, we need to have systems and regulations 12 that further enhance that. 13 And there are regulations, mostly within the 14 DEC, about how agricultured byproducts are used and 15 regulated, permits, all the paperwork and all of the 16 various permitting and regulations that have to be 17 complied with when you're using an agricultural 18 byproduct. 19 And that's becoming very burdensome. 20 Also, the amount that we're increasing, as 21 these large yogurt plants come on, they have -- are 22 putting forth larger and larger amounts of 23 agricultural byproduct when they're done with their 24 food processing. 25 We need to find positive ways and incentives 1 to use those. 2 An example is, something that comes out of 3 both the cheese and yogurt industry, is one of the 4 byproducts is whey; that thin liquid that comes 5 after the manufacturing process. 6 That can be used by agriculture. 7 It can be spread on farm fields as 8 fertilizer, and it can also be used as feed for 9 animals. 10 It's got a lot of protein in it, and it's a 11 pretty good -- it's a strong -- I understand from 12 farmers, some farmers I've talked to, that's a great 13 product to be able to feed your animals. 14 But, there's a lot of regulations and 15 paperwork and permitting, and we need to take a 16 fresh look at that, so that the regulations and 17 policies that are in place really help enhance the 18 ability of the agriculture industry to be able to 19 put those things into good use, and not end up with 20 prohibition, where -- and regulations that prevent 21 the use of those products safely within the state. 22 SENATOR GALLIVAN: Are curds, as well, a 23 waste product? 24 DEB WARNER: I think curds are what becomes 25 the cheese. 1 SENATOR GALLIVAN: Oh, okay. 2 DEB WARNER: Yeah, curds is the -- my 3 understanding, is that's the solid -- 4 SENATOR GALLIVAN: [Unintelligible] curd with 5 whey, so I wasn't sure. 6 DEB WARNER: Curds and whey. 7 Yeah, curds are the coagulant that happens 8 when you make cheese and yogurt. 9 SENATOR GALLIVAN: Yeah, I know. 10 I'm just kidding. 11 DEB WARNER: I think. 12 Okay, so their Part 360 permit process is one 13 of the places to start when trying to address that 14 challenge. 15 A couple of more broadly -- more broadly 16 mentioned things with members, not so much specific, 17 with regards to agencies and regulations, and trying 18 to comply, and accessibility is an issue. 19 When -- whether it's a company individually, 20 or one of their accountants or lawyers, are trying 21 to deal with state agencies, they often have 22 trouble, and spend a lot of unnecessary time, just 23 trying to stay in touch with whoever they need to 24 talk to in the agency. 25 In particular, two accountants that I talked 1 to, talked about Taxation and Finance, when they're 2 working with clients. 3 One, in particular, had to do with tax 4 credits. 5 Working -- there had been a challenge within 6 the Taxation and Finance Department about whether a 7 company was eligible for tax credits or not, so the 8 accountant was going to bat for their client. 9 And they have -- every time they call, they 10 have to go through this lengthy auto-attendant 11 process, and they frequently don't get back to the 12 exact same person, so they may hear a different 13 story. There isn't always consistency. 14 And, they don't get a call-back number. 15 You know, the agency employee could say, 16 "Okay, if we're going to follow up, here's is my 17 number, call me back directly," so they don't have 18 to spend all that time on the auto-attendant. 19 In one instance, too, they said, Well, we 20 need to do a conference call. We need to talk to 21 your client and you at the same time. That would 22 expedite things. 23 And, the State employee told them, they said, 24 Well, we can't do conference calls. 25 I will tell you, I tried this -- I tried this 1 for -- to help a member who has an established 2 business, which, technically, is a manufacturer, and 3 he now wants to sell over the Internet within 4 New York State, and has some challenges with trying 5 to be in compliance with sales tax for local -- 6 collecting local sales tax around New York State. 7 So I called this -- that Division of Taxation 8 and Finance, and went through the auto-attendant, 9 which was lengthy. Many, many questions. And then, 10 supposedly, I was being transferred then to a 11 person, an individual, who could actually answer the 12 question. 13 And, I ended up with a fast-busy, and I got 14 cut off. And I probably spent 5 to 10 minutes, just 15 trying to do that. 16 So, technically, a state regulation? No, but 17 it's within the regulatory realm of how businesses 18 and taxpayers interact with the agencies that 19 regulate them. 20 So, if you can do something to help encourage 21 better technology and policies so that agency 22 employees can give direct phone numbers, and when 23 you've already got a relationship or a situation 24 established, they should be able to just call up the 25 person, follow up with the same person; not have to 1 go through all that waste of time every time. 2 I don't know if the conference-call thing was 3 true or not, but, it's just kind of crazy that they 4 can't do that. 5 And this was pretty consistent. I talked to 6 several clients who had manufacturers -- or, several 7 accountants who had manufacturing clients, and they 8 all cited that it's just very, very difficult 9 dealing with Taxation and Finance. 10 The other thing I'd like to suggest is, 11 something based on the other experience that we had 12 in outreach to our members, is, they're very 13 reticent to come forward, because they're afraid of 14 retaliation from the agencies. 15 They don't want to cause trouble. 16 They're afraid that, you know, somebody is 17 going to come down on them, just because they've, 18 you know, pushed back a little bit. 19 So, I wonder if you couldn't look at perhaps 20 establishing some sort of whistleblower procedure 21 that would have anonymity or some whistleblower 22 protections, so if a business, or even an employee 23 within the state agency, if they see something that 24 they see -- that could be remediated, improved, or 25 eliminate a regulation, that there's a safe 1 environment to do that. 2 Because, right now, I mean, if somebody's 3 being audited and there's problem with their audit, 4 with Taxation and Finance, or with the DEC, they 5 don't dare push back. 6 So, thank you very much for your time this 7 morning. 8 I'd be glad to answer any questions. 9 SENATOR VALESKY: Kathy? 10 SENATOR MARCHIONE: No, no questions. 11 SENATOR VALESKY: Thank you, Deb, very much. 12 DEB WARNER: Thank you. 13 SENATOR VALESKY: Next we'll hear from 14 Kip Hicks. 15 Is Kip Hicks here? 16 Kip here? 17 No? 18 I didn't see him come in earlier. 19 No? 20 Okay. 21 Then we'll move to Laura Miller. 22 Laura Miller, general manager of 23 Darco Manufacturing. 24 Good morning. 25 LAURA MILLER: Good morning. 1 And I'd like to thank you for holding this 2 hearing, and for listening, and for the opportunity 3 to submit a brief statement, I hope. 4 I don't do this regularly, so I'm kind of 5 nervous. 6 But, I am the general manager of 7 Darco Manufacturing, and we-- actually, the 8 description on this piece of paper from you guys is 9 a little bit off, so I'll correct that. 10 Maybe that's an example of government, 11 something. 12 I'm not sure. 13 [Laughter.] 14 LAURA MILLER: Anyway, but we do production 15 CNC machining, primarily. 16 We've got 26 people. 17 And I'll read the statement, it will just 18 take a minute. 19 SENATOR GALLIVAN: Production of, what? 20 LAURA MILLER: I'm sorry. 21 "CNC." Computer numerical-controlled 22 machining. 23 SENATOR GALLIVAN: What does that mean? 24 LAURA MILLER: Well, if you remember from 25 shop class, the -- you know, your bridge ports? The 1 milling machines and your lays? 2 You take that, enclose it, and apply computer 3 programming to do pretty efficient manufacturing. 4 So, it's all metal cutting. 5 It's not stamping. It's not hammering. It's 6 not bending. 7 It's -- we machine, with those basic 8 concepts. 9 So, anyway, our story is very similar to what 10 we heard from Nate Andrews. 11 It's not quite as old, but our values and our 12 philosophies are the same. 13 We understand that people are really what 14 make your company, not your machines, and not any of 15 the other things we hear about. 16 Really, your human resources is your most 17 valuable resource. 18 So, I have a slightly different take, though, 19 on the impact of government in our daily lives on 20 the production floor, than we heard from Nate 21 Andrews. 22 Do you mind if I just read the statement? 23 SENATOR VALESKY: Go right ahead. 24 LAURA MILLER: Okay. 25 I'm Laura Miller. I'm general manager of 1 Darco Manufacturing. 2 We've been in business since 1978, and I've 3 been with the company since 1988. 4 We have 26 employees. Our employees have 5 been with us, on average, for 16 years. 6 We, like dozens of privately held companies 7 in Central New York, do contract machining, 8 generally, CNC, for durable goods OEMs. 9 You know what "OEMs" are; right? 10 "Original equipment manufacturers"? 11 So, our stuff goes into, you know, planes, 12 automobiles, trains, hydraulics, whatever. 13 We make about 5,000 different things, by the 14 way. 15 Anyway, at this moment in time, we are 16 busy -- busy, busy, busy -- with work from a wide 17 array of industries. We're starting to book 18 overtime, and we're starting to hire. 19 It's a very exciting time. 20 I'd like to submit a few numbers for the 21 record, as part of the discussion here today. 22 As a manager, I try to focus my time on the 23 workplace issues that improve or impede our 24 competitiveness. 25 So here are some numbers: 1 The New York State franchise tax costs our 2 company $1500 per year. 3 We sell $3 million worth of widgets every 4 year. 5 So, if I've done my math correctly, that's 6 one-half of 1 percent of our revenue. 7 You guys can check that math if you want. 8 Our company produces -- we use electricity to 9 do what we do. That's our main input. 10 Our total electricity bill is 1.27 percent of 11 revenue. That's the total number. 12 And those machines hog a lot -- our machines 13 hog a lot of energy. 14 I don't -- I really would like some help 15 here. 16 I don't know what the 18-A energy tax is. 17 Is it on my bill here? 18 I don't know. 19 Some of the taxes we've discussed earlier, 20 I don't know what they are, but, I think they're 21 probably small numbers. 22 I don't know. 23 So, anyway, we can write that in this blank. 24 I've brought with me a blank wage-reporting 25 form from the New York State Department of Labor. 1 Do you guys have it? 2 SENATOR GALLIVAN: Yes. 3 LAURA MILLER: I'm really not good at forms. 4 I don't like forms. They're slightly 5 irritating. 6 But this particular form, as you can see, is 7 pretty intuitive and pretty easy. 8 So, the mandate, you know, administering the 9 mandate, takes about 5 or 10 minutes per employee 10 per year. 11 So, anyway, I'd like to put these numbers 12 into perspective. 13 We spend at Darco more on perishable tooling. 14 Now, "perishable tooling" are cutting tools, 15 drills, inserts. You know, reamers. Whatever. 16 These are things, they're "wear" items. 17 We spend more on perishable tooling than we 18 do on energy. 19 We spend more on coffee for our troops, which 20 we provide free, than we do on the New York State 21 franchise tax. 22 We, quote/unquote, lose anywhere from 10 to 23 30 minutes per employee, every day, to the 24 complexities of human beings working together to 25 move good quality product out the door. 1 That's reality. That's what it's like on the 2 floor. 3 I don't consider any of the aforementioned 4 items to be significant drags on our organization as 5 we compete in the marketplace. 6 If you'd like to come out, I'd like to invite 7 any of you to come out and visit us, so you can see 8 what we really do spend our time focusing on. 9 That's my statement. 10 SENATOR DeFRANCISCO: I have a question. 11 Okay, the form that you got attached, that 12 you have to do for the Wage Reporting Act -- 13 LAURA MILLER: Uh-huh. 14 SENATOR DeFRANCISCO: -- you said it's not 15 overly burdensome. 16 LAURA MILLER: Uh-uh. 17 SENATOR DeFRANCISCO: Is there anything on 18 this form that isn't on your pay stub already? 19 LAURA MILLER: Probably not. 20 SENATOR DeFRANCISCO: Okay, so it's a waste 21 of time then, isn't it? 22 LAURA MILLER: It's a waste of a small amount 23 of time, yes. 24 SENATOR DeFRANCISCO: Yeah, so would you like 25 us to waste small amount of times in other areas, or 1 would you like us not to do these things to waste 2 any time? 3 LAURA MILLER: Well, this particular example, 4 I don't know the intent of the law. I don't know 5 who it's trying to protect. 6 What I'm trying to share with you, is it 7 doesn't really hurt us all that much. 8 That's my reality. 9 That's all can I tell you. 10 SENATOR DeFRANCISCO: Okay. 11 Go ahead. 12 SENATOR GALLIVAN: Not who; where do your 13 competitors come from: locally or across the 14 country? 15 LAURA MILLER: We have local competitors, and 16 from across the country. 17 SENATOR GALLIVAN: Now -- so your competitors 18 that you're dealing with from across the country, 19 are there things that New York State imposes upon 20 you that put you at a competitive disadvantage? 21 LAURA MILLER: I'm not aware of what they 22 would be. 23 What I know right now, is that work is moving 24 into this area so fast that we don't have enough 25 capacity. 1 And, when someone calls up and asks for some 2 emergency help to get going, they oftentimes have to 3 leave the area because other areas have capacity. 4 That's what I know. 5 SENATOR GALLIVAN: Well, if you -- and when 6 you go back, if you think of some -- if some things 7 that come up, that we might be helpful in trying to 8 take on, if you could just get back to us. 9 LAURA MILLER: Sure. I can try that. 10 I'll think. 11 SENATOR GALLIVAN: I mean, if -- you know, as 12 you're driving home, you're thinking, Gosh, I should 13 have thought about this, or you're talking to 14 somebody. 15 LAURA MILLER: Yeah. 16 SENATOR GALLIVAN: When you go back, if 17 things come up, please let us know. 18 LAURA MILLER: Sure. 19 SENATOR VALESKY: Thank you very much, Laura. 20 We appreciate your input today. 21 LAURA MILLER: You're welcome. 22 SENATOR VALESKY: That completes the list of 23 speakers. 24 We did have a few others who were scheduled 25 to testify -- 1 Oh, I'm sorry, we do have Kip. 2 Oh, there he is. 3 SENATOR GALLIVAN: Now he lost his chance. 4 SENATOR VALESKY: Oh, that's it, I was about 5 to close. 6 KIPP KICKS: Sorry to be late, guys. 7 SENATOR VALESKY: Kipp Hicks, executive 8 director of Madison County IDA. 9 SENATOR GALLIVAN: Perfect timing. 10 SENATOR VALESKY: While Kipp is preparing, 11 Karyn, we have -- we're going to revisit the topic 12 of general manufacturing in Corning on -- 13 October 9th? 14 SENATOR GALLIVAN: October 9th, yes. 15 SENATOR VALESKY: -- on October 9th. 16 So the surveys that you were talking about, 17 if they're finished in time for that, we would like 18 to include that. 19 KARYN BURNS: Absolutely. 20 SENATOR VALESKY: Kipp, go ahead. 21 KIPP KICKS: Thank you. 22 Again, I'm Kipp Hicks with the Madison County 23 Industrial Development Agency. 24 We actually represent the Madison County 25 Center for Economic Development. We are the voice 1 of economic development in the county. 2 SENATOR VALESKY: Kipp, just hold on just one 3 second. 4 KIPP KICKS: Yeah, yeah, please. 5 SENATOR VALESKY: Just want to make sure we 6 all have the same paperwork here. 7 What are you reading from? 8 Or, what are -- you're using-- 9 KIPP HICKS: I put together a letter. I've 10 got a -- 11 SENATOR VALESKY: Okay, so these handouts -- 12 KIPP KICKS: The handouts are backing up some 13 of the -- 14 SENATOR VALESKY: Okay. We just don't have 15 enough for all of us. 16 KIPP HICKS: I'm sorry. I didn't know how 17 many people I'd be presenting to. 18 SENATOR VALESKY: That's okay. We'll get 19 copies. That's fine. 20 KIPP KICKS: And, again, I submit that for 21 the record, and, hopefully, speak a bit off-the-cuff 22 on specific issues. 23 And, I walked in during the Darco discussion, 24 but, 18-A is a regressive tax. 25 I'll give you one example. 1 I'm working with a major agriculture producer 2 that's looking at Upstate New York for a site. 3 The monthly tax, the 18-A benefit, based on 4 the calculations worked up by National Grid, is 5 going to exceed $15,000 per month to this company. 6 It's substantial. 7 It's something that should have expired at 8 the end of last year. 9 As you guys are aware, it was extended for an 10 additional year. 11 It's grown from .3 percent, to 2 percent, of 12 the total electricity bills. 13 The system-benefit charge for this potential 14 prospect exceeds $40,000. 15 These are expensive bills that makes 16 New York State less competitive. 17 And it's very tough for us to make a hard 18 argument that they ought to be looking at 19 Madison County, the city of Oneida specifically, 20 versus other sites in Pennsylvania and New Jersey. 21 Another item that I mentioned was, the IDA 22 pilots lacks the step-up on the tax-levy growth 23 factor. 24 I'm sure you've heard this from your other 25 constituents, but, when a company approaches us, a 1 new company, adding to the tax base, constructing 2 new facilities, and they enter into a pilot 3 agreement through their local development 4 corporation, the taxing entities are not seeing that 5 increase. 6 It does not count above and beyond the 7 2 percent property-tax cap. 8 It's not affecting those taxing entities on 9 their revenues on the front end, nor are they 10 getting it on the back end once the pilot expires. 11 So, there's no step-up. There's no real 12 impact to those taxing entities. 13 And I hear that from school districts time 14 and time again. 15 It's a real issue. 16 And I'm under the impression there's at least 17 been some proposals. 18 Camoin & Associates I think was working along 19 with Brian McMahon from the NYCDC. 20 Third item I brought up was SEQR. 21 It's really an open-ended component that can 22 delay development projects. 23 We're trying to develop a business park at 24 the Ag and Renewable Energy Business Park at the 25 Madison County landfill. 1 We've been dealing with the DEC and SHPO. 2 We have finally published our draft generic 3 environmental impact statement and our finding 4 statement, but it was in excess of 18 months, and a 5 lot of that was waiting to see if there was going to 6 be a holdup by any of these regulatory agencies. 7 In speaking with Brian McMahon, he said he's 8 got a cement company that was held up for four years 9 before they finally got an answer. 10 And, again, I think what people, what 11 companies want, they're not afraid of hearing no, 12 but they need to have an answer. 13 And right now, there's not a very -- there's 14 not a clear timeline in which these state agencies 15 need to get back to private companies, to IDAs, to 16 help us with guidance on specific projects. 17 This next one might be a little bit touchy, 18 but, if you could help us work with regulators, in 19 helping them to understand, or what their 20 interpretation, of IDA statute. 21 Both the ABO and the Office of State 22 Comptroller view the IDA statute very, very 23 narrowly; whereas, in my opinion, our interpretation 24 is, that it's supposed to be an open-ended; it's 25 supposed to allow us flexibility. 1 The attachments, the addendums, that 2 I included with my testimony, there's three 3 different pieces there. 4 One is that -- is a lack of -- the State 5 seems to be pushing for consolidation. 6 And the Office of -- the Authority Budget 7 Office seems to want to, again, look at IDAs through 8 a very specific glass, through a very narrow focus, 9 and say, Now, it's not appropriate for industrial 10 development agencies to create a local development 11 corporation. 12 I've got a project, in particular, in which 13 we've got a C&D waste-recycling facility looking at 14 the -- our park as a regional repository to bring in 15 material. 16 We applied for State assistance through the 17 Environmental Facilities Corporation. 18 EFC said, Well, we can't grant to private 19 companies, but we can grant to IDAs. 20 So, they wrote the grant agreement to the 21 IDA. 22 Our legal counsel said, Wait a minute. Where 23 is the protection of liability? All of a sudden, 24 we're tied up with this private activity, someone 25 slips and falls, gets hurt on the job, the IDA needs 1 some insulation. 2 And they said, Well, we understand. Create 3 an LLC., a local development corporation. Hold the 4 grant or facilitate the grant through that 5 sub corporation, and you're insulated. 6 Well, we've gone and done that, and the 7 Authority Budget Office, I think the third and 8 fourth paragraphs of the correspondence from 9 David Kidera specifically says, Well, we don't know 10 where you get off thinking that you can create a 11 local development corporation. 12 And our legal counsel simply said, Hey, the 13 state statute says you can do anything necessary to 14 facilitate economic development. The State has, 15 actually, a state agency has, instructed us to take 16 this path. 17 And we're currently in a little bit of a 18 battle with the ABO, and asking them for the 19 Attorney General and the Office of State 20 Comptroller's opinion on interpreting what the IDAs 21 do and don't have the power to do. 22 Again, it's frustrating. 23 There's even a third example there, with 24 granting financial assistance. It's a special 25 report by the Office of the State Comptroller there, 1 that IDAs aren't allowed to provide grant fundings 2 except for very specific, narrow project-related 3 projects. Initiatives. 4 There are a handful of examples. 5 There may be, half of the examples submitted 6 within that special report that you can see, they're 7 economic development-related. 8 They're helping the community colleges to put 9 together business-plan competitions, or supporting 10 trade shows sponsored by the Economic Development 11 Corporation. 12 And those are being pointed at as, Hey, this 13 is irresponsible. These are -- money is being given 14 away for improper uses. 15 It's my opinion, that we need to help rein 16 in, or provide a little more guidance, on how these 17 state agencies, or these oversight agencies, 18 interpret our role as economic-development 19 councils -- as economic-development agencies. 20 And that's my final bullet, also. 21 When people talk about IDAs 22 (industrial-development agencies), it's perceived as 23 very narrow and specific industrial development. 24 I'm here testifying in front of you, trying 25 to promote business for all types of businesses. 1 We try to push for export initiatives. 2 We try to build collaboration between 3 colleges and universities. 4 All of this is part of economic development. 5 But through the definition of industrial -- 6 or, through the title "industrial-development 7 agency," I think it's time for a change to 8 "economic-development agencies," just to help 9 broaden, to help other state agencies, or even our 10 prospects, to understand what our role is. 11 I'm happy to answer any questions. 12 And, again, I hope the written testimony is 13 helpful and more concise, I guess. 14 SENATOR MARCHIONE: From your perspective, 15 and you've done a great job in outlining some of the 16 issues you have, what's the single -- if you had a 17 issue single issue that was most onerous, if you 18 could tell us -- if you can't, I understand -- but 19 what would it be from your perspective? 20 KIPP HICKS: Again, taxes and regulations, 21 I think, are the biggest inhibitor. 22 SENATOR MARCHIONE: But not any specific -- 23 KIPP HICKS: Well, again, I think we can add 24 them up. We've got the -- 25 SENATOR MARCHIONE: I understand. 1 KIPP HICKS: -- corporate income tax, the 2 18-A assessments, the system-benefit charges; 3 I mean, all of those. 4 It -- I spent the start of my career, 5 seven years in eastern Idaho, doing economic 6 development for a private nonprofit. 7 Taxes at 2 1/2 percent. Electricity at 8 4 percent. A very stable, conservative State 9 Legislature. 10 I mean, just things -- I didn't realize how 11 difficult it was, moving home to my hometown and 12 doing the job of economic development, that other 13 states are exceptionally competitive. 14 And New York State does a good job through 15 NYSERDA, through our -- through Empire State 16 Development, there are ways to help lower the cost 17 of doing business, but usually that's very narrow 18 for specific industries or specific types of 19 companies. 20 We really need to take a big-picture approach 21 and try to lower the cost of operating businesses in 22 New York State. 23 SENATOR MARCHIONE: Thank you. 24 KIPP KICKS: I mean, it -- it -- 25 SENATOR MARCHIONE: We agree with you. 1 KIPP HICKS: Thank you. 2 SENATOR VALESKY: Kipp, thank you very much. 3 We appreciate your input today. It will be 4 very helpful as we move forward. 5 KIPP HICKS: Thank you for your time. 6 SENATOR VALESKY: Again, another reminder: 7 We'll touch general manufacturing issues in 8 the Southern Tier on October 9th in Corning. 9 Our next scheduled hearing topic is the 10 construction industry. We'll be in Long Island on 11 Wednesday. 12 I want to thank my colleagues 13 Senator Gallivan, Senator Marchione, and 14 Senator DeFrancisco. 15 That concludes today's hearing. 16 Thank you. 17 (Whereupon, at approximately 11:21 a.m., 18 the public forum on manufacturing regulatory 19 reform held before the New York State Senate 20 Majority Coalition concluded, and adjourned.) 21 ---oOo--- 22 23 24 25