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Wrong way on IDAs

When he is talking about New York’s fiscal crisis, Gov. David Paterson never misses an opportunity to mention the historic nature of the current recession and the unprecedented challenge it poses for the state.

But when it comes to solidifying his support among a key constituency, labor unions, the governor acts like it’s business as usual.

What else explains his draft "reform" legislation for industrial development agencies? This is a bad idea whose timing could not be worse.

The governor’s proposal would require developers receiving financial incentives from an IDA to pay prevailing wages during a project’s construction. In addition, any businesses or non-profit organizations with at least 100 employees occupying the space after construction is completed would have to adhere to livable wage standards.

Those requirements also would extend to outside contractors such as custodians, grounds keepers and garbage collectors, as well as retail workers.

Some projects would be exempt-for example, those by non-profits with fewer than 500 employees or a project value of less than $10 million-but clearly most IDA-financed deals would be subject to the proposed legislation.

Organized labor and its allies have been trying for several years to enact a prevailing-wage requirement for IDA-backed projects. They say it is needed to guarantee that fair wages are paid on projects financed with public funds.

The notion that fairness should be determined by the prevailing wage standard is debatable, but not so the cost of implementing these rules. A study conducted by the Center for Governmental Research Inc. concluded that this standard would boost wage costs of an IDA-backed project in Rochester by more than 40 percent.

This would be a dubious proposal at any time, but it is particularly ill-timed as New York struggles to regain its economic footing.

"Our economy is in the worst shape it has been in since the Great Depression-how can the governor propose a measure that will destroy hope for economic recovery in New York?" said Brian Sampson, executive director of the Unshackle Upstate coalition.

It’s not too late for Mr. Paterson to rethink this proposal-and he must do so.

11/27/09 (c) 2009 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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