Regulation and Taxes Not Top Challenges for Regional Businesses

Recent news from both Lake Placid and Plattsburgh would have us believe that state and local government regulation and taxes are somehow holding back Northern New York economically. As noted in “Other People’s Money” one of our regional myths is that large amounts of North Country money are going to pay other people’s subway and welfare downstate. The reality is that the region receives far more from the state than it pays out in taxes. While this may not be sustainable in the long run, it is filling a vacuum left by the private sector.

A corollary to this widely held belief is another myth that high taxation and public sector jobs are hurting the private sector, driving business out of the region. The role of government in the region appears as large as it does because there is the lack of a robust private sector in large swaths of Northern New York. Part of what has happened in recent decades is that businesses are abandoning rural areas of the state, while remaining in the state as a whole. For example, two of our regional companies used to maintain customer service offices and staff in NNY in local communities throughout the region. These decent paying private sector jobs are a thing of the past. Closing these offices was a bottom line decision. Now folks in our region end up talking to people who are in Albany or Syracuse. This is part of a larger trend. Nationally, more businesses have become less reliable partners in local economic development in rural areas as they have put their shareholders before their customers. It has been up to the public sector to fill the void and keep rural areas like our own from falling further behind.

Rather than discouraging private sector development in rural areas, local, county and state governments sometimes attempt to jump start or support the creation of a viable private sector. Ideally, this is a short term strategy.

In some cases the role of big business has been that of a bad neighbor. In the past few weeks I was part of an informal economic development discussion at a public facility on the Ogdensburg waterfront. At one point in our meeting, a participant pointed to the bustling shoreline across the way on the Canadian shore then proceeded to say that the reason the Ogdensburg side does not look that way is that there are at least seventy acres of waterfront properties contaminated, and unusable, left behind by previous industrial and business occupants. It will be up to state and local governments to fix this.

There are thousands of local small businesses across Northern New York and they form the backbone of our regional economy. While they may find bureaucracy and regulation frustrating, the vast majority can operate their businesses relatively free and unmolested. As a former business owner of a small online business, I had some real challenges, but regulations and taxes were not near the top of the list.

The North Country is not alone in the challenges it faces. We need to only look at other parts of the Northern Forest Region that stretches across four states from Watertown, NY to Bangor Maine. Despite their lower taxes and less regulation than in New York State, Northern Vermont, New Hampshire, and Maine are no better off than Northern New York, or other rural parts of our state. Clearly, other forces are at work here. Low population, long winters, geographic isolation, the rate at which money leaves the area, and the loss of our young people are the real factors shaping our shared economic life. These other forces, not state regulation and taxes, are likely to determine the ultimate success of a business in our area.

In the end, getting involved in a blame game about regulation and the role of state and local governments is a distraction from tackling the truly thorny issues we face. Identifying opportunities, developing and supporting local businesses that use the region’s strengths is a worthy goal, and should be a priority. Homegrown jobs are the best kind since they are less likely to move away.