Upstate gets lost in Albany shuffle; Key legislation unlikely this session

Since the beginning of the year, Democratic and Republican state legislators have used the upstate economy as a rallying cry.

Gov. Eliot L. Spitzer frequently mentioned "upstate" and "economy" in January.

But now, with six weeks to go in the legislative session, upstate advocates say they remain waiting to see whether action will follow the rhetoric.

"It's not been enough," said Andrew Rudnick, president of the Buffalo Niagara Partnership.

"An objective observer would say there was very little in the budget that helped or hurt upstate," Rudnick said. "By and large, upstate issues weren't dealt with in the budget."

Spitzer and legislative leaders say they are continuing to work on measures that will help the region -- even if the effects may not be seen for years.

But in keeping with the practice of this secretive session, lawmakers declined to discuss details.

As the end of session gets closer, other priorities are competing for attention.

Lobbyists and state officials say they are virtually certain that several major upstate items will not be passed this session.

That includes simplifying the way cities like Buffalo can turn often polluted former industrial sites into new uses.

Even though the Spitzer administration says small businesses are key to the rebirth of the upstate economy, a plan to provide subsidies to help the owner of certain businesses lower rising health insurance costs remains on life support.

Officials also say action is unlikely on changing a law that holds owners and builders liable if workers fall from ladders and other devices, even when workers are at fault. Advocates say current law drives up construction costs.

On some major matters, talk already has turned to next year.

"There are a series of issues that we have to advance now and build momentum for next year," said Kenneth Adams, president of the Business Council of New York State.

What is likely before lawmakers break?

Since upstate energy costs are soaring and making employers even less competitive with other states, several energy proposals top the list for Spitzer, Senate Republicans and Assembly Democrats.

Power for Jobs, a state program that provides low-cost energy for companies, will expire June 30. The Spitzer administration is quietly advancing an effort to renew the law, but with modifications.

Western New York companies want the state to direct the flow of cheap hydropower produced on the Niagara River to businesses in the region.

"It's a tool, if cast right, that can be very important to the regional and upstate economy," Rudnick said.

The Spitzer administration, though, talks of sending the power around the state.

But shouldn't the Buffalo Niagara region be first in line for the cheap hydropower? area businesses ask.

"We're one state, and we should be using the program for job creation," Spitzer spokesman Darren Dopp said.

Another proposal would relax requirements for locating new power plants. New plants are likely upstate because of growing energy needs downstate.

Renewing Power for Jobs is "more significant" a priority for upstate than a new power plant location law, said Assembly Speaker Sheldon Silver, D-Manhattan.

"It is assuring the flow of low-cost power to businesses so they can make their plans for the future and know that they are going to stay in New York," he said.

The Spitzer administration and the Legislature say upstate already benefited this year from economic legislation.

The governor and lawmakers approved a measure to cut workers' compensation costs for businesses by as much as 15 percent in the coming years. And Spitzer's effort to provide health insurance for an additional 400,000 children will trickle down to help reduce private health insurance costs, the administration says.

Albany officials also note that the state budget steered record new money to upstate schools and cities. The budget also provides $1.3 billion in property tax relief, manufacturing tax breaks and a $600 million stem cell research fund that will benefit upstate.

But one big item not covered by the budget involves relaxing the state's Wicks Law, which drives up the cost of public construction projects, such as school expansions, by requiring multiple contracts.

The governor's proposal calls for excluding projects of up to $1 million upstate and $2 million downstate from the law.

But saving municipalities any meaningful amount of money, critics say, would require higher limits -- or none at all.

Both the GOP-led State Senate and the Spitzer administration say they are focusing on expanding incentives for high-tech companies upstate.

The implications for legislation in the final seven weeks are uncertain, since such measures are budget-related, and the budget passed April 1.

Senate Majority Leader Joseph L. Bruno, R-Brunswick, said the Senate's agenda includes more high-speed rail opportunities upstate, additional business tax cuts, especially for smaller companies, and incentives for producers of alternative fuel, such as ethanol.

His to-do list still includes a small-business package containing job-training funds and a measure to spur development of the abandoned industrial areas known as brownfields.

Bruno rejected the governor's claims that upstate is high on the priority list. He also has criticized Spitzer for not linking his plans to deeper tax cuts for upstate businesses and for doing too little to control spending increases by public schools in return for more state aid.

"He has done practically nothing that relates to specifically stimulating upstate," Bruno said.

Bruno said Senate Republicans wanted a $1.3 billion tax cut for businesses.

"We had to fight like heck to get $300 million," he said of the governor. "I think he owes people living in upstate, based on his campaign promises, a lot more in every direction."

Silver said his house is focused on improving the state's Empire Zone program, which provides tax incentives for companies in certain parts of the state.

Silver, who proposed the idea in Buffalo more than five years ago, said the administration of previous Gov. George E. Pataki, a Republican, had operated the program poorly, resulting in tax breaks for companies that added no jobs.

"We're going to change and reform it so that it happens in the right way," Silver said.

Spitzer administration officials say many pieces to the puzzle for improving the upstate economy will take years to implement. Besides the bigger ticket items like workers' compensation already accomplished, the administration listed expansion of high-speed Internet service upstate and infrastructure improvements, like a new Peace Bridge.

As the session winds down, the administration says it is starting to restructure the state's economic development agency -- for which it does not need Legislature cooperation. It envisions moving away from major, headline-grabbing deals with big employers to concentrate on small-business development upstate.

"The focus has not been on small businesses, and that's what upstate needs," Daniel Gundersen, Spitzer's upstate development chief, said of past upstate efforts.

He talked of better leveraging the power of local colleges to help small firms with research, development and taking products to the market.

"If you think traditional economic development is bricks and mortar, you're sadly mistaken about helping the upstate economy," he said.

But upstate interests that have heard past promises from Albany worry that the final weeks of the session will yield little major change.

"Legislatively, outside of workers' compensation," Rudnick said, "very little has been done that affects the economy one way or the other."

e-mail: tprecious@buffnews.com