Testimony delivered by the National Federation of Independent Business
August 10, 2021
Testimony delivered by the National Federation of Independent Business (NFIB)
Thank you very much to Leader Ortt, Leader Barclay, and the Senators and Assembly Members here today for allowing us to testify on A.6967/S.4264-A, the Climate and Community Investment Act (CCIA).
NFIB is a member driven organization representing close to 300,000 small businesses across this country and more than 10,000 in New York State.
NFIB members are the businesses that define our neighborhoods and strengthen our communities with character and value: local hardware stores, independent restaurants, florists and barbers, roofers, landscapers and mechanics; fitness and retail boutiques. These are NFIB members.
There are close to 500,000 small businesses with employees in New York. These businesses employ half the state’s private-sector workforce, nearly 4 million New Yorkers, and their production accounts for nearly half of the state’s GDP. A strong, vibrant small business eco-system supports local tax bases, governments, and schools. Sixty-seven cents of every dollar spent at a local small business is reinvested into the community.
According to a recent survey by NFIB, 73% of small businesses have not seen their sales volume return to pre-COVID levels and 52% anticipate that their local community will not return to precrisis level of economic activity until sometime in 2022 or later.[1] The Partnership for New York City estimates one-third of New York City’s small businesses will close before the pandemic passes[2] and a survey by Yelp indicates that 60% of businesses that have already closed are permanently closed.[3] Additionally, the New York State Comptroller released a report finding that four out of five small businesses continue to suffer from a negative overall impact from COVID-19.[4] These are sobering numbers for the state’s economy, local communities, and our Main Streets which bring life and vibrancy to our neighborhoods.
The COVID-19 pandemic brought unprecedented economic damage to our state’s small businesses. Tens of thousands of small businesses were deemed non-essential and forced to close for months to protect public health. While COVID restrictions have been lifted and businesses have reopened, the economic recovery is still a long way away with small businesses desperately trying to survive. Many small employers are struggling with decreased sales, labor shortages, higher UI tax bills, and increased debt.
New York State should recognize, value, and fight to protect small businesses and it’s important to keep small businesses, and their employees in mind when considering legislation with as far-reaching impacts as the Climate and Community Investment Act.
The intent of this legislation is laudable and NFIB supports efforts to reduce greenhouse gas emissions, protect our environment, preserve New York’s natural assets, and responsibly transition to sustainable energy sources. New York State enacted the Climate Leadership and Community Protection Act, which sets a mandate of net zero emissions by 2050, with emissions reduced by 85 percent from 1990 levels and requires 70 percent renewable energy by 2030 for the electric sector and carbon neutrality by 2040. The CLCPA working groups are just beginning to consider how New York State is going to achieve these targets while gathering stakeholder input. While some insist a pollution fee or carbon tax is needed to help pay for renewable energy projects to achieve CLCPA’s goals, a 2018 survey asked NFIB members in New York what they thought – as small business owners –about taxing carbon-based energy production, transmission, distribution and/or use in New York as a means of addressing environmental concerns: 87 percent opposed. This is not a reflection of small business’ indifference to climate change or its commitment to addressing it, but rather that the economic impacts to those actually investing and hiring in New York’s economy must be understood and valued in coordination with environmental goals.
Small businesses depend on energy supplies at globally competitive prices to operate and run their businesses. New York ratepayers already pay the 8th highest electricity costs in the nation according to the US Energy Information Administration. In NFIB’s 2020 Problems and Priorities report, New York small business owners ranked the cost of natural gas, propane, gasoline, diesel and fuel oil as the 14th most burdensome problem and electricity costs as the 16th most burdensome problem, out of a list of 75 potential issues or concerns.[5]
Small businesses rely on affordable energy options for all aspects of their business operations, including transportation, shipping, heating and cooling, energy-intensive equipment, and electricity. When these costs increase, the cost of doing business increases and puts small businesses at a greater disadvantage at a time when they are severely hurting.
NFIB recognizes that this legislation provides “rebates” and/or credits to small businesses to help offset higher costs related to the climate pollution fee; however, it is limited to small businesses with less than 50 employees, and it is unlikely that this rebate or credit will be able to offset all of the increased costs. Trucking companies, manufacturers, paper mills, and other energy-intensive small businesses would be further squeezed by these new taxes – putting them at an extraordinary disadvantage to businesses in other states. A pollution fee or carbon tax will force these businesses out of business or to states that welcome their investment. A new $15 billion per year tax creates a permanent economic disadvantage with neighboring states that are domestic and global competitors.
Furthermore, there are significant issues and concerns with the legislation’s requirements to use project labor agreements and extend prevailing wage to virtually all energy and climate-related projects. New York’s prevailing wage has long been established to increase the cost of construction and development, limit small business contractors’ ability to participate in public procurement and ignores rational regional wage scales. Transitioning New York State to renewable-based energy suppliers should be as affordable as possible to mitigate any excess expense. Mandating prevailing wage on such projects will only increase the transition’s cost, making energy more expensive for future consumers, including small businesses.
Increased costs caused by new taxes can be least afforded by individuals at the lower end of the economic scale or by businesses at the lower end of the industrial scale. And increases in the costs to do business anywhere in the economy, will ultimately be felt across the economy by every employer, and felt most by the members of NFIB. Big-box stores, online retail giants, and large corporations can adapt to higher taxes and increased regulations, small businesses cannot. New York State needs to take a step back and seriously consider the effects this proposal will have on small businesses and consumers.
At this time, NFIB strongly opposes the Climate and Community Investment Act (CCIA). Thank you for considering our testimony and we welcome discussion on this legislation and its far-reaching impact on New York State.
[1] “Covid-19 Small Business Survey (18).” NFIB Research Center, 26-30 June 2021. https://assets.nfib.com/nfibcom/Covid-19-18-Questionnaire.pdf.
[2] “A Call for Action and Collaboration.” Partnership for New York City, Jul. 2020.
[3] Sundaram, Anjali. Yelp Data Shows 60% of Business Closures Due to the Coronavirus Pandemic Are Now Permanent. 16 Sept. 2020, www.cnbc.com/2020/09/16/yelp-data-shows-60percent-of-business-closures-due-to-the-coronavirus-pandemic-are-now-permanent.html.
[4] Office of the New York State Comptroller, New York’s Economy and Finances in the COVID-19 Era
March 18, 2021, Edition, https://www.osc.state.ny.us/reports/impact-covid-19-march-18-2021.
[5] NFIB Research Center, 2020 Small Business Problems & Priorities, https://assets.nfib.com/nfibcom/NFIB-Problems-and-Priorities-2020.pdf
