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.

FISCAL REFORM
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.

2
  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.

4
  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.

ETHICS REFORM
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.

9
 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.

10
  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
 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
  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
  Limiting State Assembly and State Senate to six,
two-year terms;
 Limiting Statewide office-holders to two, four-
year terms.

 Replace the Comptroller as the “sole trustee” of the

Common Retirement Fund (“Fund”) with a newly-
established 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.

ECONOMIC DEVELOPMENT &

JOB CREATION
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 start-
up 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 in-
State 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.

24
  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.

25
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 to leverage federal funding

opportunities.

 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 become Climate Smart
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.

28
  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.

30
 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 multi-
state 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
(www.otda.state.ny.us/main/workingfamilies), 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 www.myBenefits.ny.gov, 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.

A PATH TO RECOVERY
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.

35
 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.

43