It's my pleasure to be here today to talk with you about the successes we've had in creating record private sector jobs, moving hundreds of thousands of New Yorkers off the welfare rolls and toward lives of self sufficiency, and the plan ahead to maintain these gains and build upon them.
City government believes in the Forum Club's basic philosophy - that the business community has a stake in the future of the City. We've believed in this philosophy since I came into office in 1994. But New York City wasn't always this way. City government used to think that businesses and people somehow had to be opposed to one another that businesses were a cash cow for the government to tax and regulate, and not vital, vibrant, creative, and essential members of New York City's community.
We now understand - and I believe the City as a whole has undergone a fundamental philosophical shift to understand this as well - that when businesses thrive, people thrive. Businesses invest in communities. They build structures that anchor neighborhoods. They serve as ambassadors of our City to other cites around the country and other nations around the world. Businesses represent us - and promote progress, through competition, at every level and in every field, whether it's medical research, publishing, entertainment, new media, retail - you name it. Without businesses, New York City would not be the Capital of the World - a place that is always moving forward and leading the way for the rest of the world.
But beneath all this, underlying it all, is one fundamental role that businesses play: they employ the people of the City. The energy, ambition, and drive of the people - which is, after all, our greatest resource - is what enables businesses to accomplish all that they accomplish.
Because of the way they make the most of this resource, businesses are the backbone of the City's economy. But as the work of the Forum Club and others constantly reminds us, businesses are not only at the economic core of our society - they're at the social core. Corporate philanthropy touches every corner of the City, aiding among other things the state of education, health care, and law enforcement. In fact, just two weeks ago, I announced a plan to provide new bulletproof vests for thousands of New York City Police Officers - a plan that would have been impossible if not for the generosity and commitment of New York City's corporate community.
I was reading up on the Forum Club and I saw other great examples of the indispensable contributions businesses make every day to New York City and the world. You do it every day, both by giving money and giving of yourselves. I was deeply impressed by something I read about how, on a business trip to the Dominican Republic to investigate prospective investment opportunities, Forum Club members saw a number of hospitals in dire need of medical supplies. They didn't just come home and lament the terrible condition of the hospitals. They did something about it. The same instinct that drives you to push forward in business drove you to act. You shipped $14 million in medical supplies to hospitals in the Dominican Republic.
And in one other example that's particularly close to my heart, to promote goodwill, the Forum Club hosted a group of young Russian baseball players at a Yankee game.
I want to thank you all for these contributions and others. We couldn't have transformed the City without you. After all, the heart of the City's transformation has been the creation of over 213,900 private sector jobs. Last week, I announced that job creation has reached this high, which means we are well on our way to recovering the 320,000 private sector jobs lost in the early 1990s.
A NEW CULTURE OF WORK
How did we create these jobs? The short answer is we did it together. It all goes back to the fact that this administration set out to treat businesses differently. We set out, from the start, to make New York City into a pro-business, pro-opportunity City - one that truly values the investment of the private sector rather than simply collecting a percentage of its revenue it at tax time. As I said, as New York City's businesses go, so goes the City as a whole.
We believe - and have believed since the start - that government can and should only do so much in creating private sector jobs. One of the biggest mistakes of the past was that City government tried to regulate growth. It tried to micromanage the City's economy.
The results were disastrous. That's because inevitably, the City knows less about exactly how to spend the private sector's money than the private sector itself knows about how to best invest its own resources. The reason we've promoted record growth is that we understand that the best management of an economy is to allow businesses to manage themselves for the government itself to take broader strokes that promote growth in businesses large and small, across all sectors of the economy ultimately returning money and control to the private sector and allowing the private sector to grow and thrive. In New York City, with the most dynamic business community on the planet, that's s a very exciting thing to do.
Our philosophy respects the private sector, and returns economic power to it, with the understanding that a pro-business, pro-opportunity government lets the private sector create jobs and ultimately returns work to the core of New York City life.
1. Lower Taxes Create Jobs
Of course, this isn't the way it's always been. When I came into office, the City was faced with a massive budget gap - much larger than had been previously represented to me - and City spending was out of control. If spending had continued at that rate, in the next five fiscal years from FY 95 and FY 99, the City would have spent $10.5 billion more than it has spent under our administration's fiscal management. Not coincidentally - and, in fact, enabling this spending, was the City's tax policies at the time. In the midst of what could only be called a budgetary crisis, the previous administration actually proposed raising taxes by $926 million for FY 1992, including an increase in the personal income tax, a sales tax base expansion, a gasoline tax, and more. I don't think I need to tell you that these tax increases would have had a disastrous effect on the City's economy, which was already too burdened by taxes.
But at the time, that policy was nothing out of the ordinary, because it was consistent with the old governing philosophy. That philosophy said that when government needs money, it raises taxes - and the revenue from those taxes, in theory, fills the government's coffers and provides some temporary answer to the problem. But as we understand now, this philosophy is seriously flawed. In fact, it's outright dangerous, because it leads to short-sighted, irresponsible budgets. Instead, it's the government's obligation, before raising taxes and hiking spending indiscriminately, to seriously consider the realistic, long-term impact of those taxes on the people and the businesses they burden.
We knew that to promote growth we first had to lift some of the many unreasonable burdens that government - and others - had placed on our businesses for far too long. We began to do this by putting money back into the hands of the private sector through responsible, targeted tax cuts for businesses and families.
We understand that business productivity is not something to be harnessed, and siphoned, for the government's benefit - as previous administrations consistently did. It's something to be promoted and to be encouraged, because it ultimately benefits the City as a whole.
Over the last five years, we have cut more taxes than any other administration in the history of the City. Actually, here in New York, that's not necessarily an accomplishment in and of itself - because City government hardly ever cut taxes at all in the past. But we not only cut taxes, and cut them more than any other administration, but we returned over $2 billion to the private sector - a significant achievement by any standard.
We eliminated the Commercial Rent Tax throughout most of the City and significantly reduced it in Manhattan between Chambers and 96th Street. And there, we're planning to phase the tax out completely over a three-year period beginning in FY 2000. We reformed the Unincorporated Business Tax, and lifted many other burdens on the businesses of the City.
And we have not only reduced the amount of money that government takes from the private sector we've also reduced the sheer number of taxes that government imposes on the average business.
Consider these two examples. In FY 1993, there were 81,400 commercial rent taxpayers. In FY 1998, there are 11,849 such taxpayers - almost 70,000 fewer. In FY 1993, there were 41,700 unincorporated business taxpayers. By FY 1998, that number has shrunk to 20,590 - cut by more than half.
Now, to further this record of accomplishment, we will push to eliminate double taxation on resident owners of "S" Corporations. And we will continue aggressively to make our case for the complete elimination of the sales tax on clothing by 1999, because that's the tax cut that will result in the most significant - and most economically progressive - savings for families and businesses. That's that tax that will spur the most substantial job growth all across the City.
The sales tax is the perfect example of how, by and large, what benefits businesses benefits the people of the City. When businesses flourish, consumers benefit and more and more jobs are created.
I think that most of the political establishment of New York City understands this principle now, and also has a broader, more realistic understanding of the importance of tax cuts. I'm proud of this change in philosophy. I'm proud of the fact that tax cuts are now part of the discourse of the City. I've had something of a competition with the City Council of late about which taxes to cut, and how much to cut them. We might disagree on the specifics but without question, the fact that this debate is happening at all is an excellent sign. This is the kind of competition we should be having - especially for a City that has been historically as overburdened by taxes as New York City.
But of all of the reductions, the one I'm proudest of reduced a "tax" that was taking money from the private sector, but not to fund any government programs it was funding criminal enterprises. For years and years in New York City, the Mafia exerted substantial influence over entire industries, such as the commercial garbage hauling industry. They drove up prices at will and the money went not to government, where some of it would be spent wisely and some of it wasted. The money went to organized crime syndicates, where all of it went directly toward funding murder, drugs, and corruption.
Instead of throwing up our hands, as people had done for thirty, forty, or fifty years, we decided to do something about it. We aggressively enforced the law, wrested control from the organized crime cartel, and put it back in the hands of legitimate businesses, who now have to compete by lowering prices and improving service in order to win the business of New Yorkers.
The savings have been remarkable, for businesses of all sizes all across the City. A hotel in Manhattan that used to pay $156,000 a year now pays $96,000 annually - savings of $60,000. A dry cleaner in the Bronx that used to pay over $1,000 every year now pays $528 a year. A pharmacy in Queens that used to pay $1,432 now pays $300. A restaurant in Brooklyn that used to pay $60,396 now pays $36,000.
Again, not only is the actual savings in dollars and cents important, but think about the transformation in the mindset of the City. Now, because of our tax reductions and the reduction in the so-called "mob tax," we are a pro-business, pro-opportunity City, and businesses across the City and the nation have gotten the message that we're not interested in simply burdening businesses in order to raise money for the government. We want money to stay with the private sector, because that means more investment in our communities, more economic development, and more jobs.
All of these savings have returned hundreds of millions of dollars to the private sector - and, as a result, they've created thousands of new jobs for New Yorkers. Think about the meaning of 213,000 new jobs- it means that 213,000 more people are feeling the benefits of self-sufficiency, independence, and economic freedom. It doesn't simply mean that we have 213,000 more income tax payers. It means we have 213,000 more people able to contribute in a meaningful way to the economy and society of the City. And this job growth has been broad-based. The myth is that Wall Street is carrying the City's growth. But let's talk about the facts. Between 1994 and 1997, jobs in the motion picture services industry grew by 47.5 percent in the educational services industry, they grew 25.5 percent in business and related services, 17.6 percent in the restaurant business, 16.9 percent and in tourism, 15 percent.
2. Turning Welfare into a Job Placement Program
Our tax policies have been designed to return work to center of New York City life. But there is also another way in which we must do this, and that's by reforming the system of government dependency that has entrapped too many New Yorkers, often for generations on end.
When I came into office there were more than 1.1 million people on the welfare rolls, with that number projected to go even higher. But the leaders of the City did not see this as a problem. In fact, they called it "progressive."
Over the three years, as we've moved hundreds and thousands of people to lives of self-sufficiency, we've shown what it really means to be progressive. A progressive city enables 340,000 people to move off government dependency and take control over their own lives. That's a sign of a City that is becoming more independent and more confident - a City that's making progress. When a thousand people who were dependent on government are suddenly in a position to take care of themselves - and, therefore, their children - we're on the right track. We're honoring the meaning of the social , which is one of the foundations of democracy: for every benefit there is an obligation, for every right there is a duty.
The fact is when the City's welfare rolls are rising, and the social contract is being neglected, that's not something to celebrate. That's the sign of a City moving in the wrong direction. That's retrogressive.
Last month, for the first time since John Lindsay's first administration, we went below 800,000 people on the welfare rolls - a landmark that should fill the City with a sense of hope and optimism. It doesn't mean our work is done, but it means that we're moving in the right direction.
The City's workfare program, which is a fundamental component of our welfare reform efforts, asserts that basic social contract. It says that in order to receive benefits or a paycheck you must work. Since it began in March of 1995, New York City's welfare to work program has grown into one of the largest and most successful of its kind in the nation. Private sector partners like Macy's, the GAP and Local 372 have been invaluable contributors the success of the workfare program, and I encourage more companies to participate.
To shift from dependence to independence - to return work to the center of New York City life - we have to do this, and more. In my state of the City address I announced that all welfare offices will become job centers. If you go to receive benefits everything that the government does will point you in the direction of employment. This is at the heart of the way Commissioner of HRA Jason Turner is turning around the City's welfare system. It's a basic re-conceptualization. The question won't be, "What can I get?" The question will be, "What can I do to receive benefits or even better, to receive an income?"
As part of this movement, today I'm announcing that New York City has submitted eight welfare-to-work competitive grant applications to the U.S. Department of Labor seeking more than $33 million in federal funding for a broad array of welfare-to-work initiatives.
These federal funds provide a real opportunity for us to build on our welfare reform achievements and move even more people off of welfare dependency.
Today I want to talk specifically about one of these proposals, called "Ladders to Success" - which will be part of turning welfare offices into job centers. It will start as a pilot program in two "Job Centers": the Greenwood Center in Brooklyn and the Melrose Center in the Bronx.
At the job centers, case workers will help applicants look for job opportunities even before the applicants complete their assistance application. Applicants will be referred to comprehensive welfare-to-work agencies that will try to find them jobs - agencies that will be paid based on their success in moving people into the workforce.
Everyone, with very few exceptions, is subject to the universal work requirement. That's not a penalty. That's a truly compassionate answer, because it begins to give people the gift of their own independence.
In addition to the "Ladders to Success" program, we're submitting proposals for a number of other initiatives that will advance our welfare to work strategies and will move more people toward independence, including one which will establish a Retail and Customer Service Institute. This program, modeled after our successful Macy's program, will move people toward short-term targeted training programs that will help them bolster the skills they need to succeed in the retail or service industry and other sectors of the economy.
New York City is increasingly becoming a place defined by the promise of jobs, not by the promise of dependency. It's become a place where people are free to shape their own lives. That's so important, because when people take control over their own lives, they are able to explore their true potential.
Just think - if you were never given a chance to explore your true potential, you would never have had the opportunity to become the business leaders you are today. But because you have - because you have made the most of your independence - the City benefits from your leadership. For that, we are grateful.
Now we want to give more people the gift of independence that you treasure today. Actually, we want to allow more people to have the chance to create that gift of independence with their own energy, creativity and hard work. Ultimately that will be the greatest step we can take toward forging a permanent, progressive culture based on the centrality of work.
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