Friday, August 3, 2012

When $50M is No Proof of Fiscal Fitness

In re-building its empire, money apparently is no object.

More's the pity.

My beloved home state of New York, the Empire State, has embarked on what was supposed to be a serious public relations campaign built around the slogan, "Open for Business."  Since corporate relocations out of the state have slowed considerably, as have population losses, New York's popular governor, Andrew Cuomo, decided one of the most famous geopolitical entities on the planet finally has some good news to advertise about itself.

OK, maybe that makes sense.  After all, many newly-minted MBAs these days have only known New York as a calcified tax monster, pretending like its glory days as an industrial and financial powerhouse hadn't all vanished because of its free-spending politicians.  Today's corporate movers and shakers may not be aware that, against all odds, the state hasn't collapsed under the weight of its own bureaucracy.  New York City's welfare roles have decreased, tourism is at all-time highs, and crime is still at remarkable lows.  The number of residents employed by the private sector across the state is at an all-time high, and nanotechnology, one of the most promising fields of cutting-edge science, has managed to take root thanks to billions in investments by IBM.  Cuomo has been able to at least create the appearance of being serious about streamlining state government, the mere mention of which, from the mouth of a Democratic governor, probably sends a chill through Hell.

But unlike the state which 100 years ago couldn't stop growing and innovating, New York State today just can't seem to even run a PR campaign properly.  Or, maybe, things had gotten so bad for so long, the new normalcy of comparatively stagnant job and corporate losses looks better to New Yorkers than it should.  Kind of like a doctor figuring that now their patient has stopped hemorrhaging blood, everything's going to be OK after all.  So far, however, there's little proof of that for the long haul.

Won't Be Open for Business for Long, Spending Money Like That

Our first inkling that New York State - crippled by some of the country's most notoriously burdensome taxes, fees, regulations, and bureaucracies - remains mired in waste, corruption, inefficiencies, and plain old ignorance comes from the very cost of Cuomo's "Open for Business" campaign:  $50 million.

Fifty.  Million.  Dollars.

Raise your hand - anybody - if you've never, ever heard of New York State.  Isn't fifty million the type of PR budget you'd expect for a totally new brand?  And even if you've heard of New York State, and you're thinking of expanding or opening a business there, will you take the word of a state-funded PR campaign, or do your own due-diligence?  Don't companies looking to move or expand hire relocation experts?  Don't they study competitive data for themselves?  After all, New York State isn't Rhode Island, or Mississippi, or Wyoming - states many of us know far, far less about.  The reason companies aren't flocking to the Empire State isn't because nobody really knows much about it.  It's because of what we already know about it:  its government, its unions, and its high costs.

High costs proven in how much Cuomo is willing to pay to market business opportunities in his state.  Couldn't fifty million dollars go a long way for the state's current businesses in terms of cutting fees and taxes?  Already, "Open for Business" has become an open joke across the state, as residents and businesses can only shake their heads at business-as-usual in Albany, their state capital.  "Open for Business" isn't even the main tagline for Cuomo's campaign.  It's only one component of a sprawling, cumbersome initiative called "The New New York Works for Business." 

Maybe the grander it sounds, the more respect it's supposed to be given.  After all, the marketing material is being translated into foreign languages, further solidifying New York's historic multi-culturalism and international fame.  Parts of the new marketing campaign are available in Russian and Japanese, ostensibly for international investors.  Yet also, inexplicably, the translations include Haitian Creole, that bastion of free market enterprise that, somehow, always needs the international community to provide its basic needs.  New York needs its marketing material translated for Haitians?  Really?  Here again, the political - and politically-correct - pandering for which Albany has become infamous just can't stay hidden.

And speaking of pandering, there's not much genuine news to justify a $50 million "open for business" campaign anyway.  A cursory inspection of eight examples of what Cuomo considers innovative business investment into my home state reveals that five of them are simply cleverly-disguised taxpayer funded state projects that likely would have happened regardless if New York was "open for business."  Only two have anything to do with private companies expanding in the state.  Here in Texas, we consider road repaving projects - one of the items on Cuomo's list - as basic maintenance.  Our definition of economic development is providing a low-cost business environment conducive to wooing corporate headquarters for JC Penney, Exxon Mobile, Texaco, American Airlines - all companies that have left the Empire State for the Lone Star State.

A Bridge Runs Through It

And it's not like Albany is making life easier for the people who still live and work in my ol' home state.  For example, the state is finalizing its plans for replacing one of its biggest bridges, the Tappan Zee Bridge, located in New York City's far northern suburbs.  The current Tappan Zee is 56 years old and handles 40% more traffic that it was designed to carry across its three-mile Hudson River span.  It needs either major renovations or a completely new structure, with costs for either option costing two to four billion dollars.  So in all likelihood, the Hudson River is getting an all-new bridge.

However, to help pay for it, the economically-overextended state can do little else than charge new tolls that will be triple what drivers currently pay to cross the span.  And while making the people who actually use public infrastructure responsible for paying the bulk of its costs is a popular notion these days, a $14 toll to cross a suburban bridge is shocking a lot of New York commuters.  Imagine how it sounds to company executives who aren't used to the costs of living and working in New York!

Granted, New Yorkers are already a captive audience, resigned to such ridiculous bridge and tunnel tolls, but most of those are in New York City itself, where if they could charge you for breathing its air, they would.  For trying to attract new businesses to the state, paying $14 to cross a bridge not only sounds like a lot of money, it makes one wonder that if something as simple as crossing a bridge costs that much, how much does it cost to do far more substantial things in the Empire State?

Highway Robbery

Which is where Cuomo's other plan to raise tolls on the state's popular Thruway further antagonizes his fellow New Yorkers.  Although regular passenger vehicles won't be affected, commercial truckers would see their tolls increase 45%.  An increase that will, of course, be passed on to consumers.  That is, if truckers continue to use the Thruway.  Some small communities fear that truckers will abandon the interstate-grade Thruway for their smaller, narrower roads, increasing wear and tear on them and making them less safe and more noisy.

I remember practically growing up on the Thruway, which my family took whenever we went to Maine to see Mom's relatives, or to Brooklyn and Dad's side of the family.  Stretching from Yonkers, just north of "the City," all the way up to Albany and then west to Buffalo and along Lake Erie, the Governor Thomas E. Dewey Thruway features rest stops complete with their own gas stations, car repair garages, and restaurants.  I thought those were the coolest things - little tiny villages along the way, with greasy, fried foods my parents wouldn't ordinarily let us eat much of.

Speaking of captive audiences, drivers along the Thruway have no options for food and fuel unless they want to exit, schlep around some town they don't know to find a restaurant or gas station, and then pay more to re-enter the Thruway.

Not that being a captive audience is as bad as it sounds.  Over the years, the Thruway authority has modernized their rest stops to include a variety of popular restaurants, snack shops, coffee shops, and tourist shops.  But the gas is still priced by the Thruway, and not exactly cheap.  For years, even after the Thruway was supposed to be free after being paid off in 1996, New Yorkers assumed that the Thruway's highway robbery at its gas pumps was simply revenue generation for the roadway's upkeep.  Now, however, to hear that shippers will need to cough up 45% more in tolls, which everybody knows they'll end up paying in the long run, the thin patience of tax-weary New Yorkers simply gets thinner.

Truly a "New York State of Mind"

Still, Cuomo says his state is "open for business."  Apparently, he and Albany have been deluded by tax-and-spend policies for so long, they can't recognize that it's not the state's winter weather keeping businesses away.  It's not the fact that beyond the Big Apple, every other city in the state is merely pleasant and common.  It's not that all of the vast, empty manufacturing plants waiting to be re-used are stuffed with asbestos.  It's not even that all of the laid-off union workers waiting for new jobs aren't still qualified and industrious, and maybe even desperate enough to work for market wages.

Fifty million here, fifty million there, and pretty soon, you're talking about real money.  At least, that's apparently how Cuomo and his fellow legislators in Albany see things.  But for the vast majority of American companies, one million is real money.  $14 bridge crossings are real money.  45% toll increases cost real money.

New York's hardy taxpayers have been nickled and dimed and taxed to death for so long, they don't make a sound when Albany's waste machine sloshes around with ideas like its new marketing campaign.

But I suspect businesses across America are far less jaded by tax-and-spend policies.  Maybe things are getting better in the Empire State, but how much of Cuomo's good news today only shows how bad things were yesterday?

New York can't market itself based on comparisons to its own recent history.  It needs to market itself based on whatever advantages it has over America's new economic powerhouse states.

And something tells me that if New York really has real advantages, corporate America will be able to find those advantages without a $50 million boondoggle from Albany.

Maybe the $50 million itself shows that no, the state really isn't "open for business."  At least, not yet.

What a shame.

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