State of the State 2010

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State of the State 2010

A Time to Rebuild
An Era of Reform & Recommitment
Governor David A. Paterson This is a winter of reckoning for New York. Cultures of addiction to spending, power or approval have doomed empires, and they now threaten the Empire State. The following plan lays out a blueprint to rebuild New York. Rebuild the State’s economy into a national model of ingenuity and strength. Rebuild the people’s confidence in the stability of our State. Rebuild manufacturing industries to meet the energy standards of this enlightened age. And most importantly, rebuild the trust that the people of New York once had in their government. We must take firm and decisive steps to rebuild New York – with fiscal reform, ethics reform and an economic development plan that helps businesses put our people back to work.

To rebuild New York, we need to enact fundamental fiscal reform that makes government more accountable to taxpayers. For too many years, Albany has spent recklessly and without any long-term strategy – and the cost has been more than monetary. There is a lack of confidence in government that stems in part from the mishandling of public funds. Governor Paterson’s plan for fiscal reform includes real and lasting cuts to the bureaucracy; a merging of agencies to improve efficiency and save money; the public tracking of agency performance; and a long-term strategy for fiscal planning. 1

Making Government Accountable Empire Stat To help make government more accountable and transparent to taxpayers, Governor Paterson will deploy EmpireStat, a new program to track the progress of State agencies.  EmpireStat will be a critical tool for Governor Paterson and the public to assess whether the State, its agencies and authorities are making real progress in areas that matter to New Yorkers.  Governor Paterson will use this tool to conduct agency performance reviews and to hold agencies accountable for their performance, as well as to provide direction for improvement where necessary. Performance results will be published online so that they are accessible to New York State taxpayers.

Implementation will begin by focusing on several categories of significant importance. Through EmpireStat, the Paterson Administration will weigh how the State is performing and design steps for improvement to ensure accountability to New Yorkers in these important areas:  Economic Development/Jobs: The administration of the State’s two new economic development programs (“The Excelsior Jobs Program” & “The Small Business Revolving Loan Fund”), the State’s efforts on weatherization training for potential workers as well as overall success with increasing home weatherization, and the certification of new Minority & Women-Owned Businesses.


 Health Care/Vulnerable Youth: Expediently addressing complaints against physicians, addressing Medicaid fraud and abuse, monitoring the immunization of our youth, and the prevention of lead poisoning in young children.  Public Safety: The policing of violent crimes committed with a firearm and the removal of crime weapons from our streets.  Road Safety: The major causes of accidents on our State roadways and the State’s efforts to make these roads safer for all drivers. Office of Taxpayer Accountability Through the Office of Taxpayer Accountability (OTA), Governor Paterson is completely overhauling State government operations so that government costs less and delivers better and faster service.  Since August, the OTA has generated savings of nearly $27 million and is working on several new initiatives that will result in further savings.  The OTA has issued directives to reduce printing and travel costs that have helped agencies achieve their State Operations savings targets.  Agencies report $1.7 million in savings related directly to the elimination of printing equipment.  Agencies have reduced travel spending by $10.4 million as a result of a new OTA travel directive.  The State will aggressively oversee and monitor agency internal audit plans to ensure that audits are risk-based, protect taxpayer money, hold state officials accountable for 3

funds being spent as effectively and efficiently as possible, and help prevent and eliminate waste, fraud and abuse. Real and Lasting Cuts to the Bureaucracy Additional actions in 2010 will result in even more savings and efficient operations.  Governor Paterson will consolidate and merge state agencies and functions, realizing substantial savings for the State through better integration of staff resources, increased efficiency, elimination of duplicative efforts and staff reductions.  By replacing outside IT contractors with state employees who can be hired at lower cost, the State will save millions of dollars (for every 100 outside IT contractors that are replaced with state employees, it is estimated that the State will save between $2.5 and $3 million).  The State anticipates saving a substantial amount of money by consolidating technology, telecommunications and purchases for a variety of goods and services.  By merging the operation of the State’s nearly 350 call centers and help lines, the State could realize financial savings of approximately $3 million, while delivering more efficient services.  By consolidating all State agencies’ e-mail systems into a single system, the State will gain operating efficiencies that are anticipated to result in at least $4 million in annual savings when fully implemented, and will position the State for unified communications beyond email which will further lower information technology (IT) costs.


 The State will work towards identifying and standardizing human resources (HR) best practices and consolidating HR functions for areas such as learning management, performance evaluations, time and attendance, employee benefits, and recruitment.  By using prepaid debit cards in place of paper checks, the Department of Taxation and Finance will save $2 million when fully implemented, and usage of debit cards by the Office of Children and Family Services will assist counties in realizing an annual cost avoidance of approximately $600,000.  The State will implement a “power down” initiative to reduce energy consumption by workstations, printers and copiers, which is expected to save $25 to $30 per year for each workstation. Fiscal Recovery Plan Governor Paterson has asked Lieutenant Governor Richard Ravitch to take the lead on developing a Four-Year Fiscal Recovery Plan. A multi-year fiscal recovery plan is the most sensible way to bring the State’s financial plan into structural balance. The long-overdue goal of structural balance is the only way to budget responsibly and avoid unexpected cuts in essential services – such as schools, hospitals, and mass transit – in times of economic distress. Spending Cap Governor Paterson has proposed major reform legislation that would cap the growth of State government spending. A spending cap would help control State expenditures, improve New York’s long-term fiscal integrity, and make government more accountable to taxpayers. This fiscal reform bill is tied to a circuit-breaker 5

property tax relief program that would provide direct relief to taxpayers once the State’s fiscal house is in order. Fiscal Discipline The spending cap will end the era of excess that has contributed to New York’s current fiscal crisis by forcing state government to spend within its means. This law will improve the long-term financial health of our government and help avoid future fiscal crises by ending the boom and bust cycle budgeting of the past.  Under the proposal, the Governor would be required to propose, and the Legislature would have to enact, a budget that limits State Operating Funds growth to the average rate of inflation from the three prior calendar years. The State Operating Funds budget includes all State spending except long-term capital expenses and federal aid, and is the best measure of what it costs State taxpayers to operate State government in a given year.  From 2002-03 to 2007-08, State Operating Funds spending grew from $52.8 billion to $77 billion – an average annual rate of 7.9 percent. In great part due to this dramatic expansion in spending during a boom era on Wall Street, the State needed to address a nearly $20.1 billion deficit during last year’s budget process.  If the cap had been in place from 2002-03 to 2007-08, State Operating Funds spending for the 2007-08 budget would have totaled $60 billion – $17 billion lower than actual results – and annual spending growth during that period would have averaged 2.6 percent.  Based on projections in the Division of the Budget’s most recent financial plan, State Operating Funds spending is currently estimated to total $82.6 billion in 2010-11, an increase of $3.9 billion or 5 percent. If the cap were in 6

effect for next year’s budget, it is expected State Operating Funds spending would be limited to no greater than $80.4 billion in 2010-11, which reflects an increase of approximately $1.7 billion or 2.1 percent from the prior year – $2.2 billion below current services estimates.  This legislation also more than triples the maximum capacity of the State’s rainy day reserve from 3 percent of General Fund spending to 10 percent of General Fund spending. Consequently, surpluses that accrue as a result of this cap can be used to help address revenue declines during times of economic difficulty. A Path to Property Tax Relief and Fiscal Stability Once the spending cap puts New York’s fiscal house in order, the circuit-breaker program will kick in and provide direct relief to New York’s overburdened property taxpayers. Unlike the current STAR exemption program, this circuit-breaker will encourage fiscal responsibility at the local level by providing incentives for localities to limit property tax increases. This program will deliver a double benefit to New York’s taxpayers – spending restraint at both the State and local levels.  After the State has eliminated its structural imbalance, surpluses that result from this spending cap will be returned to school taxpayers in the form of a circuit-breaker property tax relief program.  The circuit-breaker program delivers property tax relief progressively to those who need it most through a fully refundable personal income tax credit. The number of recipients and the average value of the benefit would increase based on the size of the State's budget surplus. For example, if the State has a surplus of $3 billion in a given year, the average homeowner in the program would receive a benefit of $1,418. 7

Encouraging Fiscal Responsibility at the Local Level In order to provide real property tax relief to everyday New Yorkers, local school districts will also have to do their part to control spending. As such, Governor Paterson’s circuit-breaker proposal includes a provision to encourage fiscal responsibility at the local level. This provision presses localities to keep spending and property tax bills under control.

Governor Paterson’s Reform Albany Act is driven not by the illegal actions of any one person, but instead by what is still legal and rampant throughout the entire system of government. The corrosive effects of outside influence and inside decay have bred cynicism and scorn from the people of New York. Special interests expect others to shoulder the burdens that they are unwilling to bear, and expect special treatment with no regard for the welfare of others. This Act will restore the trust and faith that people expect and deserve. The ultimate goal of this reform is to bring fairness and openness to a government that has little of either. Reform Albany Act The Reform Albany Act puts the interests of the people of New York ahead of the lobbyists and special interests. As long as Albany’s political establishment self-regulates without independent scrutiny, any effort to reform the laws is window dressing. In spite of efforts to prevent public officers from using their positions for personal gain and despite enacting tougher ethics laws to govern those who work for the state to conduct themselves in an honest and open manner, more complete guidance is necessary. Governor Paterson proposes sweeping reform – the Reform Albany Act – to fundamentally change the culture of Albany. 8

Independent Ethics Commission The centerpiece of the Reform Albany Act would be a new independent Ethics Commission to oversee our entire state government.  The Reform Albany Act would establish an independent State government ethics commission composed of individuals who have no relationship with the State officers they oversee, to examine conduct and advise the executive and legislative branches of State government and ensure uniform enforcement so that one ethical standard, one set of practices, and one interpretation of the application of the ethics law would apply to everyone in State government.  Real reform requires full transparency and accountability to the ethics laws, not to the appointing authority. That is why the members of the new Government Ethics Commission will be selected by a 10-member Designating Panel modeled on the Commission on Judicial Nomination. The Designating Panel members would be selected by State leaders in such a way that no clear majority controls the designating board. The Governor would select four members of the Designating Panel (with no more than two coming from the same political party and including one former judge); the Attorney General, Comptroller, Assembly Speaker, Senate President Pro Tempore, Senate Minority Leader, and Assembly Minority Leader would each select one member. This successful merit selection model will be used to attract highly qualified candidates, eliminating direct appointments by elected officials. Ultimately, this legislation should take the politics out of the oversight and enforcement of ethics laws.


 The Designating Panel would:  consider and evaluate the qualifications of candidates for appointment to the Office of Commissioner of Government Ethics;  make appointments by at least an affirmative, super-majority vote (7 out of 10);  establish outreach procedures to encourage the most qualified candidates to apply for Commissioner positions;  provide that all selection proceedings and records are confidential; and  provide for the filling of vacancies in the Designating Panel.  The single State Government Ethics Commission would include five members, replacing the 13-member Public Integrity Commission. It would oversee all branches of government, rather than only the executive branch, and would have both advisory and enforcement powers. A five member commission would be more efficient and less prone to leaks. The Commissioners as well as all Commission staff would be required to sign non-disclosure agreements to help ensure the prevention of leaks.  This single Ethics Commission would oversee, review, investigate and enforce:  all financial disclosure statements for those subject to its jurisdiction;  all complaints associated with violations of lobbying the legislative and executive branches;  all matters involving ethics;  all financial disclosure of public officers;  state open meetings; and  campaign finance laws.


 The Ethics Commission would promulgate, adopt, amend and rescind rules and regulations to:  define State officers for the purposes of clarifying who is covered under the law to make clear that legislators are included within its scope;  provide for the availability and filing of financial disclosure statements;  establish a protocol for the performance of regular reviews of annual statements of financial disclosure filed by persons under the Commission's jurisdiction;  provide assistance to the Legislature, State agencies, public authorities, public benefit corporations or the public regarding possible conflicts of interest;  provide ethics training for those subject to its jurisdiction; and  provide for enforcement of the laws under its jurisdiction. End Pay-to-Play The Reform Albany Act also makes fundamental changes to the way Albany operates in secret. These enhancements will help to eliminate the pay-to-play atmosphere that surrounds Albany by improving the reporting of outside businesses including increased oversight and enhanced reporting for both lobbyists and State officers and improving guidance to identify and prevent conflicts of interest.  The Reform Albany Act seeks to end pay-to-play by:  requiring State officers, including State legislators, to disclose all outside business activities, including consulting services;  requiring State officers including State legislators, to report all business dealings with 11

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lobbyists, vendors, contractors and contractees including listing referrals of business by such individuals and entities to all State officers and State legislators in their private business capacities; requiring lobbyists to disclose all private business relationships with State public officials, including State legislators; prohibiting State officers, including State legislators, from benefiting from State contracts during their period in office; requiring any State officers, including State legislators, with outside legal or other professional practices to identify their income and clients on the annual financial disclosure statement, with exceptions made after review and approval by the Ethics Commission; requiring enhanced reporting of lobbyists to report to the Commission all solicitations of public officers and all lobbying for grants, loans and other disbursements of public funds, as well as other inducements of agency or public authority actions beneficial to their clients or themselves; increasing lobbyists disclosure regarding their business and appearances before State agencies, public authorities and other quasi-governmental entities; expanding the prohibition on contingent retainer agreements to apply to other inducements or payments to an agent on behalf of a client, including, but not limited to, bonus payments or success fees; establishing a Pay-to-Play ban on the Comptroller including placement agents, consultants, financial advisors and lawyers who 12

solicit the State or New York City Comptrollers for investment of pension funds with those who are required to register as lobbyists.  To enhance enforcement, the bill would provide the Commission with the right to make referrals of violations to the Attorney General for either civil or criminal prosecution as the Attorney General is better equipped to investigate and prosecute referrals than local district attorneys due to the scope and often multi-county breadth of these types of violations.  Increased penalties to improve deterrence include:  the first criminal offense would be a class A misdemeanor;  each subsequent offense within 5 years would be a class E felony;  civil penalties would be increased from $10,000 to up to $25,000. Campaign Finance Reform The Reform Albany Act would implement a bold, new public campaign finance system that would drastically reduce the maximum campaign contributions allowable, ban corporate contributions and provide for a 4:1 public matching system with enhancements to encourage participation.  Enhancements to campaign finance laws include:  drastically reducing campaign contribution limits to $1,000;  limiting lobbyist contributions to a maximum of $250;  phasing-in a public campaign finance system that matches a donor’s contribution up to the maximum, $250, on a four-for-one (4:1) basis to boost the importance of small donors; 13

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 For those candidates who opt-out of the public financing scheme, all individual contributions to their campaign would be limited to $1000; phasing-in public campaign finance beginning with the State legislative races in 2012, followed by all Statewide and State legislative races by 2014; banning corporate contributions, including contributions by limited liability companies and limited liability partnerships; banning the bundling of contributions; limiting lobbyist contributions by providing no public match of campaign funds; banning transfers among campaign committees; imposing limits on the unlimited contributions to campaign “housekeeping accounts”; limiting the personal use of campaign funds; requiring the return of unused campaign funds upon leaving public service; facilitating compliance with reporting requirements, including random as well as routine, real time audits of campaign committees; increasing penalties for violations.

 The new Ethics Commission would enforce the State’s campaign finance laws. Changing the Culture of Albany Beyond ethics, pay-to-play and campaign finance enforcement, the Reform Albany agenda will:  Establish term limits for Members of the Legislature as well as the Statewide elected officials by: 14

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Limiting State Assembly and State Senate to six, two-year terms; Limiting Statewide office-holders to two, fouryear terms.

 Replace the Comptroller as the “sole trustee” of the Common Retirement Fund (“Fund”) with a newlyestablished five member Employee Retirement System Board of Trustees (“Board”):  utilizing a designating commission to select qualified and independent members of the Board based on merit, with no direct appointments by any elected official;  establishing that the Board owes a fiduciary duty to the Fund.  Enhance the scrutiny of not-for-profit corporations engaged in issue advocacy to prevent violations of the campaign finance and tax rules.  Close the 1995 loophole that permits Members of the Legislature to double-dip and collect a state pension simultaneously with their legislative salary.  Require the forfeiture of a public pension upon conviction of a felony crime involved with public service.  Expand nepotism prohibition to include any knowledge of such hires.  Require the Committee on Open Government, as an independent entity, to prepare an annual report summarizing the public actions of the Commission. In light of issues surrounding the Commission on Public Integrity and the Legislative Ethics Commission and the perception that the 15

laws are not being enforced, it is clear that the status quo does not work. This bill would reform Albany by establishing an independent arm that will promote both the reality and the perception of integrity in government by helping to prevent conflicts before they occur and addressing enforcement in a thoughtful and consistent manner.

The third vital reform in rebuilding New York is to restore our economy to greatness, with a focus on New Economy jobs, a rebuilt manufacturing base, a modern energy infrastructure and a commitment to helping New Yorkers lift themselves up. The fiscal and ethics reforms in this plan will help form the foundation of New York’s economic comeback, but to pull all of this together our State needs an economic development program that is suited to the times we live in and the jobs that the people of New York aspire to. Excelsior Jobs Program The Empire Zone program has outlived its usefulness. New York will not invest money in businesses that promise to create jobs, but then fail to deliver them. Empire Zones will be replaced by the Excelsior Jobs Program – a New Economy jobs program focused on the high tech and clean energy growth jobs of tomorrow. The Excelsior Jobs Program is the centerpiece of the most innovative job-creation agenda in the history of New York. This new effort will be strategic, cost-effective, transparent, and accountable. To develop the Excelsior Jobs Program, the Paterson Administration spent the last year reaching out to hundreds of businesses and communities across the State – to find out how to 16

best build a program that delivers what it promises. The results are three aggressive incentives for targeted growth industries:  Research and Development Tax Credit: Governor Paterson’s plan expands the Research and Development Tax Credit to support innovation and enhance New York State’s role in the New Economy. Currently, the Research and Development Tax Credit is available only to businesses investing in capital equipment. The definition of the credit will be broadened to allow the use of credit to encourage additional categories of investment.  Investment Tax Credit: This plan calls for the creation of an Enhanced Investment Tax Credit to support capital investment. Currently, firms investing in manufacturing, production or research and development property may claim an Investment Tax Credit (ITC) for that investment against their corporate income tax. ITC would be expanded to encourage capital expansion in New York.  New Jobs Incentive: The New Jobs Incentive will target firms in the high technology, biotechnology, clean technology, finance and manufacturing industries. Firms that create and maintain a set number of new jobs in New York for five years will receive tax credits for a portion of the payroll costs associated with those new jobs. Strategic These tax incentives, combined with Governor Paterson’s “45 by 15” clean energy plan and a $25 million new technology seed fund for entrepreneurs, will encourage capital investment, spur innovation, and create tens of thousands of jobs.  This set of new programs will keep New York State competitive in attracting jobs and capital investment. 17

 Future investments will be strategically targeted, their costs will be controlled and they will be transparent and easily understandable to both users and oversight agencies. Transparent and Accountable The Excelsior Jobs Program will require a new level of transparency and accountability.  All job creation numbers will be net-statewide. Shifting employment among state locations will not count as new employment.  Firms must be in good standing and in compliance with all environmental and worker protection laws, and must be current with all state and local taxes, fees and fines.  Empire State Development (ESD) will monitor compliance. Firms must agree to share information with ESD.  Firms must provide clear and detailed information regarding affiliated businesses.  Annual performance reports will be required to verify compliance and to qualify for benefits. New Technology Seed Fund New Economy Job Creation Colleges and universities are catalysts for new technology. Governor Paterson proposes a $25 million New Technology Seed Fund to create the next Silicon Valley right here in New York State.  University-based entrepreneurs in New York and around the country face a so-called “valley of death” between proving their research works and developing a product that 18

can generate revenues. The research and development work being done on the campuses of New York’s colleges and universities commands the attention of scientists around the world.  This Fund will help institutions of higher learning grow their research and strengthen their partnerships with the business community to advance their work to commercialization and put New York on par with states like Pennsylvania, California, Maryland and Texas in terms of directly supporting entrepreneurial activity and creating jobs for the State.  New York is a national leader in research areas including energy, nanotechnology, life sciences and agriculture. These areas generate significant economic impact for the State, yet New York’s universities incubated only 35 startup companies in 2007 while Massachusetts generated 58 and California 60. The presence of a Seed Fund will attract aspiring entrepreneurs to our institutions of higher education and will encourage more new businesses to be created and grow right here in New York.  Investment decisions will be made by independent, professional investors who will be insulated from political pressures and who will invest in promising technologies only. State funds will require matches of at least 1:1 from federal or private sources in order to leverage and maximize the impact of State investments. New York Insurance Exchange Governor Paterson is committed to maintaining New York’s status as the financial capital of the world. The global financial crisis and turmoil in the financial markets have highlighted the need for mechanisms that reduce risk, increase transparency and provide for 19

investment diversification. Sophisticated insurance transactions, and the financial and economic benefits resulting from them, are increasingly moving outside of New York to places such as Bermuda, Ireland, and Switzerland. In the process, New York loses jobs and tax revenue. New York can and must attract international investors by providing tax benefits and an efficient and secure regulatory environment. Governor Paterson proposes a bold initiative to establish the infrastructure for a revived New York Insurance Exchange (NYIE).  The NYIE would bring buyers and sellers of complex commercial insurance closer together, providing increased transparency and security for everyone in the process. The NYIE would operate in a manner similar to Lloyd’s of London. Groups of investors, such as hedge funds, private equity funds, investment banks and traditional insurance companies, would come together to form syndicates and become members of the exchange. Brokers would then bring large property or reinsurance risks to the “floor” of the exchange to seek bids from investors to take on the risk.  The NYIE would enhance New York’s status as the world’s financial center. It would stimulate the New York economy by increasing the flow of capital and insurance premiums to New York. An additional $7 billion to $10 billion in premium dollars can be generated by an efficient, revitalized exchange. This additional revenue will create high-quality jobs and provide a much needed stimulus to New York’s financial services sector. Leading the Rebuilding and Reform of Vital Global Markets While New York’s earlier attempt to create an Insurance Exchange in the 1980’s was not successful, insurance markets today are far more sophisticated, global and integrated with the rest of the capital markets. By bringing together buyers and sellers of 20

complex commercial insurance, the exchange will reaffirm New York’s status as the hub of international trade and finance and curtail the unregulated transactions that devastated the global economy.  While recent events have caused a contraction in capital, these same events have created demand for facilities that provide greater transparency, better regulation, and better risk management. In this time of global financial insecurity, the NYIE could provide much needed transparency and security for insurance and reinsurance markets.  In light of issues surrounding mortgage securitization and the distancing between the underwriting of risk and those who ultimately assume it, there is an increasing emphasis on getting closer to customers and eliminating unnecessary links in financial services supply chains. The NYIE could bring buyers and sellers of complex commercial insurance closer together, providing increased transparency and security for everyone in the process. Manufacturing Legacy Program Over the last hundred years, New York’s economy was built by two primary industries – manufacturing and financial services. We must leverage the strengths of these twin titans to guarantee the economic security of the people who are carrying their legacy into the twenty-first century. Revitalize Manufacturing Infrastructure Governor Paterson proposes the creation of a new Manufacturing Legacy Program to re-purpose underutilized industrial facilities.  Abandoned and underutilized manufacturing sites are scattered across the State – a visceral reminder of New York’s historic manufacturing legacy and our recent decline 21

in local jobs and regional pride. These facilities are well prepared to manufacture the products of a New Economy. Solar photovoltaic cells, wind turbines, fuel cells and batteries are just a few products that require the space and fixed assets these off-line plants have to offer.  Partnering with regional non-profit business organizations to help build on New York’s exceptional manufacturing legacy, the Paterson Administration will establish an inventory of available locations, assess the opportunities, identify regional core competencies, partner with key stakeholders, and invest and aggressively market these locations nationally and internationally. Through partnership with local organizations, the State will identify prospects which could capitalize and build on a region’s competitive advantages.  In addition, the Paterson Administration will create industrial assistance centers to educate businesses on alternative manufacturing approaches, support marketing efforts for underutilized facilities and provide capital enhancements to renovate and reuse facilities. Clean Energy Manufacturing Transitioning to a clean energy economy has significant implications for the State’s manufacturing base. To breathe new life into New York’s industrial base, Governor Paterson will take several actions:  NYSERDA will assist companies within New York State wishing to retool their existing facilities, or expand into idle manufacturing facilities, to produce clean energy technologies and components that will be needed by the State, the nation, and the world as it transitions to a clean energy economy. 22

 NYSERDA will launch programs to improve energy efficiency and emissions profiles of existing manufacturing processes to reduce the State’s carbon footprint and work towards achieving the State’s “80 by 50” greenhouse gas reduction goal.  NYPA will offer low-cost financing for clean energy retrofits for its economic development customers, helping to lower their costs of doing business.  LIPA will seek to redevelop the Shoreham nuclear facility site for clean energy manufacturing. Leading the Nation to a Clean Energy Economy New York State Energy Plan In December, the Governor accepted the New York State Energy Plan, which provides a comprehensive 10-year blueprint for further actions necessary to transition to a clean energy economy.  New York’s future depends on producing clean, renewable energy and creating clean energy jobs while also retooling the State’s manufacturing base for work in the clean energy economy. Energy Efficiency The cleanest, cheapest energy resource is energy efficiency. That is why Governor Paterson is committed to continuing to expand opportunities to improve energy efficiency. In 2010, the Paterson Administration will take a series of steps towards that goal including:  Ensuring ease of access to the State’s multiple energy efficiency programs through coordination and consistent messaging. 23

 Submitting legislation to “green” the State’s energy code and remove loopholes that have limited the code’s effectiveness.  Submitting legislation to authorize the State to adopt minimum energy efficiency standards for additional products not covered by federal law.  Submitting legislation to require residential property owners to disclose energy efficiency information about the property to prospective purchasers.  Developing a “stretch code” that is more stringent than the State Energy Code that municipalities can voluntarily adopt. Energy Independence In 2010, Governor Paterson will support the development of inState energy supplies by:  Submitting legislation to improve the net metering law to make it more attractive for commercial customers to install renewable energy systems.  Working with NYSERDA to issue at least two solicitations for large-scale renewable energy projects under the recently expanded Renewable Portfolio Standard.  Working with NYPA to issue RFP for 100 megawatts of solar energy Statewide.  Working with LIPA and the Long Island-NYC Offshore Wind Collaborative to issue an RFP for an offshore wind project off the coast of the Rockaways.


 Inventory State-owned properties that are suitable for renewable energy installations.  Providing financial incentives through NYSERDA to encourage the use of bioheating systems, solar thermal and geothermal systems.  Ensuring that stringent environmental safeguards are in place to control natural gas drilling in the Marcellus Shale gas reserves. Energy Infrastructure Governor Paterson understands the need to identify future needs for, and invest in, energy infrastructure. The Paterson Administration will take numerous steps to develop that infrastructure in 2010 including:  Preparation of a Climate Action Plan that will identify how to achieve an 80 percent reduction in greenhouse gas emissions by 2050.  Submit legislation that will establish a power plant siting process that will provide both greater certainty to developers and greater opportunities for public involvement.  Establish incentives to repower existing power plants to reduce emissions and increase power output.  Inventory existing transportation corridor rights-of-way that could be used for new energy infrastructure.  Commence Smart Grid demonstrations in New York City and Long Island.


Energy Innovation Governor Paterson will take the following actions in 2010 in an effort to stimulate innovation in the clean energy economy and help the existing manufacturing base transition to a low-carbon future.  Foster the development of clean energy incubators and regional clean energy clusters of related industries and research entities to accelerate technology commercialization.  Increase focus on State economic development incentives for clean energy companies and component manufacturers.  Use State programs opportunities. to leverage federal funding

 Begin making clean energy job training curriculum standard in all SUNY and CUNY schools.  Dedicate funding from the energy efficiency portfolio standard for pathways out of poverty programs to train unskilled workers for clean energy jobs. Coordinated Energy Strategy Taken together, these actions will only have the desired impact if State government works to improve coordination between the State, other governments, and communities. In 2010, Governor Paterson will:  Promote land use and zoning tools that support Smart Growth.  Develop procedures to assess and consider disproportionate environmental burdens from energy facilities in potential environmental justice areas. 26

 Help local governments Communities.




Power for Jobs Governor Paterson will submit legislation to reform the Power for Jobs program.  A long-term Power for Jobs program will provide businesses the certainty they need to make long-term investments in our State.  The development of new selection criteria will encourage energy efficiency and improve coordination between NYPA and ESD. Sustainable Neighborhoods Project Rebuilding a Sustainable Upstate New York Resulting from decades of economic decline, the vacant housing crisis across Upstate New York inhibits future economic development, discourages homeownership and in-migration and perpetuates the perception that the region’s urban areas are in a downward spiral. Without intervention, the surplus of infrastructure and properties will likely persist for years to come and vacancies will continue to spread outwards beyond city limits. This will challenge other efforts to attract private investment to rebuild Upstate cities and the Upstate economy.  As tax revenues decrease, Upstate cities are unable to properly staff and manage an adequate response to the crisis.  Each known abandoned residential property may involve 20 or more city actions and cost taxpayers nearly $12,000 over a five-year period. 27

 Nuisance response, inspections, maintenance and mowing, foregone taxes, and eventual demolition costs represent public funds that could be spent on more productive city priorities, from education to health care to housing innovations.  The challenge is how to readjust or “right-size” cities’ physical and built environments so that they mirror the city’s and the region’s existing and projected population and economic base. National Model for Affordable Housing and Urban Revitalization The Paterson Administration’s landmark legislative efforts for keeping neighborhoods together in the face of the foreclosure and sub-prime crises have been emulated across the United States. Building on these efforts, Governor Paterson proposes the Sustainable Neighborhoods Project as a national model for affordable housing and urban revitalization.  This historic initiative will fight urban decay and revitalize prime housing stock – using existing resources to create long-term affordable housing across the State.  Local officials will designate blighted homes for rehabilitation and sale to first time homeowners; houses will be marketed as long-term affordable housing and homeowners will be selected through a lottery process. Strategic Focus The Sustainable Neighborhoods Project will allow State and local officials to focus limited resources strategically on environmentally-responsible initiatives. With more than 23,000 vacant housing units, Buffalo will serve as the starting point for the project which will expand to cities across New York State.


 Within newly designated Sustainable Neighborhoods, State and local officials will partner to focus resources for urban revitalization and to create new, high quality homeownership opportunities.  Sustainable Neighborhoods will coordinate State and local resources for strategic investments in urban agriculture projects, open space management and economic development.  Leveraging State expertise to support efforts based on local needs, a key State agency lead will be assigned to work with a community development official in each Upstate city to establish clear goals for each new Sustainable Neighborhood, and will be accountable for results.  Governor Paterson’s results-oriented approach will include the strategic targeting of State resources into the new Sustainable Neighborhoods – including ESD, DHCR’s Weatherization program, HFA’s Neighborhood Stabilization program, DEC’s Brownfields Tax Credits, the State’s energy efficiency programs and the Historic Rehabilitation Tax Credits administered by State Parks. Upstate New York – Back Office of Corporate America Quality Jobs for Real New Yorkers New York State is home to an estimated 60,000 back office jobs. The Paterson Administration will focus on expanding the State’s back office opportunities by making Upstate New York the preferred back office for corporate America.  Some of the largest corporations in America have realized it makes economic sense to locate their back office operations in Buffalo rather than Bangalore. Given the number of major companies downstate, New York has the potential to 29

create thousands more of these high-quality jobs across the State. The Paterson Administration will work with private sector partners that will act as advocates, matchmakers and rain-makers. There is no denying that Upstate New York has the workforce, space and livable communities to support these office operations.  There is no other region of the country with the affordable housing stock, the close-by schools, the natural beauty and the untouched small towns that families would cherish. Upstate New York should be promoted that way. Small Business Revolving Loan Fund Access to Capital To support New York’s small businesses, the State must help provide them with access to much needed capital. That is why Governor Paterson proposes the creation of a $25 million Small Business Revolving Loan Fund that will provide capital to worthy entrepreneurs.  As a result of the financial crisis, small businesses that occupy a critical space in our economy are having a difficult time accessing the capital they need to keep their doors open.  The Governor’s Small Business Task Force initially proposed the creation of a small businesses revolving loan fund.  The fund will particularly target minorities, women and other disadvantaged New Yorkers who have difficulty accessing regular credit markets.


Expanding Economic Opportunity to All New Yorkers Rebuilding New York’s economy means creating new opportunities for all New Yorkers. A more diverse and competitive business climate will mean more jobs and more money in the pockets of hardworking New Yorkers, which is why Governor Paterson has made investment in MWBE’s a key piece of his overall economic development strategy. Minority and Women-Owned Business Enterprises New York State Department of Labor statistics show that during the past year, unemployment among African-Americans was more than twice as high as unemployment among whites, and unemployment among Hispanics was approximately 50 percent higher than whites. In the past, minority and women-owned enterprises were not a significant part of the State’s economic development priorities. By synchronizing the MWBE program with the State's overall economic development agenda, Governor Paterson is ensuring that companies are growing in the areas that will create jobs, wealth, and tax revenue. Under Governor Paterson’s leadership:  The State is continuing to open the door to success for any New Yorker who has the talent, drive and passion for their business to succeed by creating a permanent council to encourage the use of MWBE firms in public contracting.  The Task Force on Minority and Women-Owned Business Enterprises was created to increase the participation of MWBE firms in State debt issuances, legal procurement, and financial services procurement. Traditionally, MWBE firms in these fields have been underutilized. Governor Paterson is changing this precedent. In its preliminary report to the Governor, the Task Force reported that fees to MWBE underwriting firms had increased from 4 percent of total fees ($517,000) in 2007 to over 23 percent of total fees 31

($5.1 million) in 2008. This ongoing increase in MWBE utilization is an historic accomplishment that has already resulted in new firms establishing a presence in New York and existing firms growing their employee base.  Revenues to MWBEs in New York State have increased by $100 million.  The Division of Minority and Women-Owned Business Development (DMWBD) is creating industry-specific initiatives to increase MWBE participation in growth sectors such as information technology, energy efficiency and clean energy technology. All three of these sectors correspond to the Governor's economic development and policy priorities.  The DMWBD has reduced processing time for State MWBE certification from two years to 90 days, and created a "fast track" expedited certification process for companies that are already federally certified as a Disadvantaged Business Enterprise.  In order to lift a major barrier in the development of MWBE firms from subcontractors to prime contractors, the DMWBD created a bond access pilot program for the construction industry. This program created $30 million worth of additional bonding capacity for MWBEs. Contractors receive training and mentoring from the program that will help them develop the ability to secure bonding in the traditional bonding markets, and position themselves to compete for other public and private prime contractor contracts in the future.  The State, via the Dormitory Authority, has for the first time in its history allocated significant funds – $3 million – 32

to establish a pipeline of firms in the MWBE sector capable of becoming prime contractors. Economic Development that Reaches all New Yorkers Governor Paterson’s vision of economic development will attract stable employers that contribute to the community and that benefit workers and investors alike. This approach includes a vigorous role for State government in protecting employee rights and in ensuring a stake in economic expansion for our most vulnerable citizens.  In the coming year, New York State will expand its innovative approach to labor law enforcement to new venues. State agencies have begun to create new multistate teams to coordinate enforcement and share information, so they can jointly pursue fly-by-night lawbreakers, who undercut law-abiding businesses by failing to abide by wage, benefit and safety rules, and then evade consequence by setting up shop in a new jurisdiction.  Broad-based economic development requires vigorous enforcement of the Human Rights Law, and an atmosphere of tolerance and mutual respect. Under Governor Paterson’s leadership, New York has expanded protections against discrimination for victims of domestic violence, gays and lesbians, and people with disabilities. The Paterson Administration will continue on this path by implementing the recommendations of the Governor’s Hate Crimes Task Force, to ensure that new immigrants can play the central part they have always played in our economic expansion.  The State can and will serve as a model for other employers, by creating a more diverse public workforce, recruiting in non-traditional venues and among populations 33

previously left out, and expanding opportunities for training and promotion. Families First Initiative The historic economic crisis has had a devastating impact on working families throughout the nation, and New York is no exception. People who as recently as a year ago would not have considered themselves to be vulnerable to swings in the economy are seeking government assistance for the first time in their lives. Homeowners who started last year with a good job now face foreclosure and find themselves in need of food stamps and unemployment insurance. Governor Paterson will lead a Families First Initiative to help connect newly vulnerable citizens with available services they may not be aware of.  The Families First Initiative will maximize existing government services for the most vulnerable New Yorkers. The initiative will not call for additional programs, but instead focus on more effectively connecting those in need with programs the State already offers.  Administration officials will travel the State to hold job training seminars and highlight programs available to assist New Yorkers struggling to make ends meet.  Existing tools that will be utilized include the Governor’s Resources Page for Working Families (, a one-stop shop for working families to find the services they need, such as nutrition programs, tax filing assistance, job placement services, child care subsidies, assistance for refugees and immigrants, and banking resources.  Families can also access, a quick and easy way to find answers to questions about New York 34

State’s programs and services related to economic security. The website allows low-income New Yorkers and the community-based organizations serving them to perform an online assessment of potential program eligibility for a broad array of public benefit programs, including food stamps, health insurance, public assistance, and tax credits.

Time and time again, New Yorkers have demonstrated the ability to rebuild and renew – that is the promise of the Empire State. New Yorkers have recovered from economic crises and rebuilt after disasters both natural and manmade. Every time our capacity for hope has been questioned, every time our faith has been tested, every time we have approached a wall that seemed too high to scale, we have proven that our determination knows no bounds. Governor Paterson’s plan to rebuild New York will strengthen our State, grow our economy, and get New Yorkers back to work.


An Era of Reform & Recommitment
The plan outlined above builds on the work Governor Paterson has accomplished over the past year on behalf of the people of New York. Throughout his time in office, Governor Paterson has fought to provide economic security for all New Yorkers; protect the most vulnerable in a time of historic economic crisis; expand opportunities and civil rights to all; and enact real reform that changes the culture of Albany and makes government more accountable to taxpayers. Fighting for Economic Security for All New Yorkers  Governor Paterson enacted the first increase in the basic public assistance grant in two decades to help assist those in our communities who are struggling in poverty during a time of unprecedented economic turmoil. The Paterson Administration remains committed to seeing that the State’s most vulnerable residents aren’t left behind.  Under Governor Paterson’s leadership, family members up to the age of 29 can now be covered by their family health coverage plans at their own cost, and Governor Paterson has laid out an aggressive five-point plan to address the growing obesity epidemic which serves as the greatest threat to children’s long term health.  Governor Paterson signed into law additional critical protections for New York State homeowners, tenants and neighborhoods in the wake of the ongoing foreclosure crisis. The legislation builds upon Governor Paterson’s landmark subprime lending reform law enacted in 2008, by assisting homeowners currently at risk of foreclosure and minimizing the negative impacts that foreclosures have on homeowners, tenants and communities. 36

 New York’s extensive response to the mortgage crisis includes the funding and administration of grant programs for counseling and legal services; outreach and loan modification events that bring homeowners face-to-face with lenders and servicers; refinancing and mortgage programs such as the introduction of the forty-year fixed rate mortgage through the State of New York Mortgage Agency; neighborhood stabilization initiatives to return foreclosed properties to productive use; and enforcement actions through the creation of a Mortgage Fraud Unit within the Banking Department.  Governor Paterson and the Department of Labor worked with their federal partners to extend Unemployment Insurance to help New Yorkers weather the economic storm by allowing New York State to participate in the fully federally funded extension of unemployment insurance benefits. Civil Rights  Governor Paterson has advanced the cause of civil rights for gay, lesbian and transgendered individuals by directing all State agencies to recognize same-sex marriages legally performed in other jurisdictions to the full extent permitted by law, and by issuing an Executive Order banning discrimination in State employment on the basis of gender identity. Governor Paterson also placed landmark marriage equality legislation on the agenda for the Legislature’s extraordinary session. Though it did not pass, it was an historic vote that has emboldened Governor Paterson and advocates for same-sex marriage to fight harder to ensure that this civil right is recognized in New York State. In addition, the Paterson Administration will seek to pass the Dignity for All Students Act, to make sure our students 37

learn from an early age the need for tolerance and respect of differences. Reform  Under Governor Paterson’s leadership, the Legislature overhauled New York State’s Rockefeller Drug Laws. The sweeping reforms eliminate the harsh sentences that the Rockefeller Drug Laws mandated by giving judges total authority to divert non-violent offenders to treatment and greatly expanding drug treatment programs. The law strikes a careful and appropriate balance to ensure that non-violent addicted offenders get the treatment they need while predatory kingpins get the punishment they deserve. New York State has made a significant investment to ensure that drug law reform is successful.  Governor Paterson fought for and signed into law historic reforms to New York’s public authorities. The measures include the creation of an independent Authorities Budget Office with expanded regulatory responsibilities and subpoena power to improve the oversight of authority operations. The New York State Comptroller will also be empowered to review certain noncompetitively procured contracts for more than $1 million. The reforms, while raising transparency standards, will maintain the authorities’ ability to promote economic development.  Under Governor Paterson’s leadership the first substantive pension reform in a quarter of a century was achieved. The Governor signed into law pension reform legislation that will provide more than $35 billion in long-term savings to New York taxpayers over the next 30 years. Governor Paterson first proposed a new pension tier in his 2009-10 Executive Budget. 38

Property Tax Relief  Governor Paterson has made reducing the burden on local property taxpayers a guiding principle for his Administration’s policy and legislative agenda. Governor Paterson issued Executive Order No. 17 on mandate reform, which establishes measures to evaluate costs of mandates on local governments, ensuring an increased flow of information in an effort to make better decisions about the impacts of proposed legislation and regulations on property taxes for New Yorkers. Following the issuance of this Executive Order, Governor Paterson vetoed numerous pieces of legislation that delivered unfunded mandates to local governments, one of the most significant contributors to rising property taxes. Governor Paterson also signed the New York Government Reorganization and Citizen Empowerment Act, which established a single, comprehensive procedure to consolidate or dissolve several kinds of local government entities, which will help reduce duplicative layers of non-essential government and reduce cost to property taxpayers. In addition, Governor Paterson’s landmark reform to the pension system will generate long-term savings for property taxpayers. Health Care  Governor Paterson has achieved more than $3.8 billion in health care savings by eliminating fraud and inefficiency in the Medicaid program, reforming reimbursement to incentivize high quality, effective care and establishing controls to promote cost efficiency. These changes have reduced spending growth and allowed the State to invest in primary and preventive care programs and other public health priorities that will improve health care outcomes and save lives. 39

 Since taking office, Governor Paterson has enacted sweeping reforms to the Medicaid reimbursement system, ensuring that the right price is paid for the right care in the right setting. This includes reforming the systems used to pay hospitals and nursing homes and beginning to reform the home care system. For example, as a result of reforms to inpatient hospital rates, there will be a significant investment in primary care and outpatient hospital rates. Comparing January 2009 to January 2010, reimbursement for outpatient hospital clinic services will increase 55 percent; reimbursement for ambulatory surgery will increase by 72 percent; and reimbursement for emergency department services will increase by 48 percent.  Governor Paterson created a statewide public awareness campaign for educators, health care providers, parents, and members of the general public to learn about the H1N1 virus and take precautions to protect themselves and their families this flu season. Education  Governor Paterson is committed to providing access to quality, affordable higher education to all New Yorkers. That is why he established a new student loan program to provide 45,000 New Yorkers with at least $350 million in student loans annually. The New York Higher Education Loan Program (NYHELPs) was enacted as part of the 2009-10 Executive Budget. NYHELPs, which represents New York’s first major financial aid initiative in over 30 years, will continue to offer students a competitive financing option in the future.  In a five-year capital plan that runs from 2008-2013, Governor Paterson committed over $9 billion in funding for new infrastructure such as classrooms and laboratories as 40

well as investments in crucial investments in critical and deferred maintenance such as fixing roofs, playing fields and walkways. These record investments in public higher education infrastructure draw upon the legacies of President Franklin Delano Roosevelt and New York Governor Herbert Lehman by seeking to build our way out of the current fiscal crisis. Energy & Environment  In his 2009 State of the State Address, Governor Paterson announced one of the most ambitious clean energy goals in the country: the “45 by 15” initiative. By 2015, New York State will meet 45 percent of its electricity needs through improved energy efficiency and clean and renewable energy. Not only will this initiative help New York meet its clean energy needs and help to protect the environment, it also means good jobs and the stabilization of energy costs.  The “45 by 15” initiative will create an estimated 50,000 new jobs, and through job training programs for displaced, unemployed, and underemployed workers, New York is creating the clean-energy workforce of the future. The initiative is an outgrowth of the Renewable Energy Taskforce, created by then Lieutenant Governor Paterson to find clean, renewable, sustainable solutions to New York’s energy needs.  Governor Paterson led the effort to expand the State’s bottle bill. The legislation broke a nine year struggle to update the 1982 law governing bottle deposits by expanding it to include bottled water. By retaining 80 percent of unclaimed bottle deposits, the State is expected to receive an additional $115 million in annual revenue, which will help address New York’s fiscal crisis. 41

Public Safety  Governor Paterson proposed and secured enactment of the Child Passenger Protection Act (also known as Leandra’s Law), one of the toughest DWI laws in the country. The law makes it a felony to drive drunk or under the influence of drugs with a child in the car. It also requires mandatory interlock devices to be installed on the car of any individual who is convicted of a misdemeanor or felony drunk driving offense. Job Creation  The Governor tasked the Empire State Development Corporation and the New York Power Authority with identifying transformational projects in Upstate communities and retaining and bringing new companies to every region of New York State including Canon, USA; IBM; Yahoo!; Globalfoundries and many more. These companies are investing billions of dollars in the New York State economy and creating well-paying jobs for New Yorkers. In addition, working with ESDC, the Paterson Administration has overseen approximately 135 business offers accepted since March 2008, committing $232 million in public investments to leverage over $4 billion in private project investment. These projects include pledges to create over 10,000 new jobs and retain over 19,000 jobs in New York State.  Governor Paterson unveiled Bold Steps to the New Economy: A Jobs Plan for the People of New York, highlighting the emergence of a New Economy based on knowledge, technology and innovation. The Governor’s plan capitalizes on federal stimulus dollars to drive economic recovery in the fields of energy, environmental protection, technology and health care by establishing the 42

Innovation Economy Matching Grants program. The program provides a 10 percent match for federal government awards to facilities in Innovation Economy sectors up to $100 million.


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