What makes New York stand out? Taxes and other costs of doing business and living here, economists and business leaders say.

"We're a high-cost state,'' said Rae Rosen, an economist with the Federal Reserve Bank of New York. "Right across-the-board, we tend to be the highest or among the highest for wages, utilities and taxes. So it's difficult to either get companies to relocate here or grow new companies.''

An Economy.com survey, however, showed the state had been making progress in getting costs of doing business more in line with the rest of the country. A decade ago, the overall costs were the third-highest among states, but that had dropped to seventh-highest by last year. That was helped by labor costs that were only the 11th-highest in the country. Now, some fear that the actions taken this year to raise taxes will reverse that progress.

Bruno pointed out that the increase in the sales and income taxes that lawmakers approved over Pataki's vetoes helped to hold down property-tax increases, which he said would have hurt even more.

Pataki said he's worked hard to get the state's spending and taxes more in line with the rest of the country since assuming office in 1995. He said only six states had raised their spending less in that period. That's partly because state government has shed 25,000 jobs in the past eight years, aides said.

"That's an extraordinary record," he said.

But there are different ways to look at the figures. When adjusted for inflation, state spending in Pataki's first seven years went up twice as fast as in the last eight years of former Gov. Mario Cuomo's reign, according to an analysis by the Manhattan Institute, a business think tank.

The overall high costs make the state vulnerable to other states picking off New York companies.

"It's common knowledge in economic-development circles that New York is at or near the top of the list for other states to cherry-pick,'' said Roche, of the Mohawk Valley chamber, whose job in Minnestoa was to search for companies to relocate there.

Roger Hannay, whose family has run a company just south of Albany that has made reels for hoses for almost 70 years, isn't ready to pull out. But sometimes he is tempted.

"If we were doing a 50-state search for a place to locate a business, New York wouldn't be near the top,'' he said. "But we're staying here because we like it here and because of tradition. But you could build a strong economic case that we should leave.''

He said he was angry that the Legislature this year did little to accomplish what business leaders said all year was a top priority: changing lawsuit rules to give them protection against having to pay what they consider unfair awards.

Hannay and other business leaders wanted the state to limit the time a suit can be brought for damages caused by their products. They also don't want a company to have to pay the full cost of a settlement even when it is only partly responsible.

"All of our pleas fell on deaf ears,'' he said.

© 2003, Gannett News Service