New York’s crony capitalism agency – By George J. Marlin

Posted March 2, 2015 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the February 27-March 5, 2015 issue of the Long Island Business News:

In the aftermath of the Martin Luther King Jr. assassination in April 1968, Gov. Nelson Rockefeller forced down the throat of the state Legislature a bill that created the Urban Development Corp. This entity had a wide mandate to provide fast-track housing, industrial development and civic improvements throughout the state.

UDC’s incorporation papers stated there was “legislative intent” to supply money to meet principal and interest on outstanding bonded debt in the event of shortfalls. Since the state had no legal obligation to aid the agency, the concept became known as “moral obligation.” Designed by John Mitchell, who served as Nixon’s attorney general and 1972 campaign manager, “moral obligation” bonds constituted a financial gimmick to get around bonding limitations of the state constitution and to make dubious projects more palatable to the bond underwriters in the investment community.

In early 1975, with cutbacks in federal grants and a recession settling in, UDC had a cash-flow problem when several of its projects went belly-up. On February 25, 1975, UDC defaulted on paying off $104.5 million owed to holders of bond anticipation notes.

Within a month, Gov. Hugh Carey patched together the resources to repay the money, but UDC’s reputation as an economic engine for New York was seriously damaged.

Nevertheless, since that time, the agency has continued to toss bags of money around the state to subsidize various business projects, albeit, since 1995, under the new improved name Empire State Development Corp.

Today ESDC is a huge government leviathan saddled with more than $10.4 billion of debt (20 percent of state public authority debt outstanding), and as a February 2015 report issued by Comptroller Tom DiNapoli points out, it is the primary vehicle for “backdoor borrowing, which is conducted on behalf of the state with no requirement for voter approval.”

The agency has also created more than 200 subsidiary corporations. Audits by the state comptroller’s office have determined the entities do not have adequate oversight by ESDC and that many of them should be dissolved because they no longer serve any purpose.

The comptroller’s office as well as watchdog group Citizens Budget Commission have questioned the effectiveness of ESDC subsidiaries and tax credits. The comptroller concluded that ESDC’s “job creation prowess was relatively meager compared to the amount of state funds spent.”

In fiscal year 2013, ESDC’s total expenditures were $1.3 billion, which included economic development grants of $581 million and reimbursed grant expenses totaling $137 million.

And what was the return in fiscal year 2013 on these so-called investments? ESDC aided 201 companies statewide, which resulted in 12,355 jobs being retained and 2,424 jobs created – 1.8 percent of net private-sector job creation during that year.

Impressive results? I think not. Do the math: $1.3 billion in expenditures divided by 14,779 total jobs saved and created equals $87,962 spent for each job. That’s a lot of money per job.

Even more disturbing: ESDC does not provide the public with any comprehensive data describing how allocations are determined or if the agreed-upon goals of the companies helped are ever met. And approximately 28 percent of the companies assisted in 2013 were not chosen by ESDC but by the state Legislature.

The process, in my judgment, smacks of crony capitalism. The governor or legislative leaders can influence decisions that help their constituents, contributors or pals regardless of the merits – and the meager results prove it.

Job growth will never be sparked by government entities like ESDC. That’s because by its very nature, ESDC is driven by political interests, not economic ones. Until New York’s elected leaders abandon underperforming subsidies in favor of genuine tax cuts and regulatory and unfunded mandate reforms, the Empire State will continue to lag the nation in job growth.

Cuomo’s State of the State: Mostly Empty Rhetoric – By George J. Marlin

Posted February 14, 2015 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the February 13-19, 2015 issue of the Long Island Business News:

This year, Governor Cuomo’s State of the State address got lost amidst all the media attention paid to the fall of Assembly Speaker Sheldon Silver. Frankly, I don’t think that was a bad thing. Let’s face it; the annual Albany speech, like the president’s State of the Union, is mostly theatre—and in my judgment, bad theatre.

After he took office in 2011, Cuomo abandoned the traditional approach of addressing state legislators in the Assembly chamber. Instead, he rents a large hall which is packed with state employees and gubernatorial sycophants who “ooh” and “aah” over his pronouncements.

When the shows are over, however, one quickly realizes Cuomo’s State of the State speeches never amount to much. They are merely a hodgepodge of half-baked proposals designed to appeal to groups on all sides of the ideological fence. And Albany watchers know that most of them will never get anywhere.

Remember in 2012 when Cuomo declared that Manhattan’s Javits Convention Center was obsolete and he proposed building the largest convention center in the nation? Here we are three years later and there is nothing on the drawing board.

Then there was Cuomo’s “New York Works Fund and Task Force” which was to coordinate capital investment in New York’s infrastructure. No one has heard a word about it in years.

In his 2014 address, Cuomo claimed he would “assume management authority from the Port Authority for construction at JFK and LaGuardia airports.” But since he made that declaration, the PA’s Board of Commissioners has not passed a resolution granting him that authority.

This year’s State of the State was not any better. The most absurd announcement was Cuomo’s proposal to build a light rail connecting LaGuardia Airport to the Number 7 subway line and the Long Island Rail Road at the Willets Point terminal in Queens County.

Such initiatives have been talked about for decades and have never commenced because there are numerous engineering problems that could plaque the project and little demand for such a service.

LaGuardia is a relatively tiny airport that services domestic U.S. flights. Passengers are mostly businesspeople, lawyers, etc., who are not inclined to take several subway connections and a trolley to catch a flight. They take, and would continue to take, taxi and limousine services from Manhattan.

Also, the Governor’s claim that this rail connection would cost only $450 million is absurd. The 2-mile monorail service at Newark Airport—which was politically hassle-free because it was built solely on airport property—cost in the vicinity of $2 billion in the 1990s. With both the Metropolitan Transit Authority and the Port Authority in dire financial straits, expect the Governor’s rail link to go the way of his new convention center.

The governor’s other big proposal, a tax credit to provide $1.66 billion in property tax relief, is illusory. If implemented, it will do nothing to fix the never ending property tax increases on New York homeowners. Cuomo’s proposal is classic income redistribution. He takes a couple of billion dollars from one group of taxpayers and gives it away to a different pool of taxpayers. It is just another sop to sidestep addressing the real cause of tax increases: unfunded state mandates and an out of control pension system.

I did find very interesting Cuomo’s declaration of war on the teacher’s union. Calling the teacher evaluation systems “baloney” was terrific. He hit a home run when he queried, “How can 38% of students be ready, but 98% of the teachers be effective?”

Such rhetoric appeals to conservatives like me but in the end it won’t matter much because the teacher’s union controls the legislature and will block any real reforms.

Despite all the histrionics surrounding Cuomo’s 2015 State of the State address, like previous years, it consisted of mostly empty rhetoric and proposals that will never see the light of day.

Mario Cuomo and the Liberals – By George J. Marlin

Posted January 22, 2015 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the January 16-22, 2015 issue of the Long Island Business News:

I first met Mario Cuomo in 1970 when I was a college freshman. He was introduced to me by his good friend and former law school classmate Republican Assemblyman Jack Gallagher. Moments after meeting him, I realized Cuomo was a sharp, fast-talking guy.

My first impressions were confirmed a year later when I sneaked into a law class he taught at St. John’s University. Using the Socratic method, Prof. Cuomo went for his students’ jugulars. He made John Houseman’s character in the movie “The Paper Chase” look like a pushover.

During his unsuccessful run for mayor in 1977, I couldn’t help but admire the tenacious Cuomo, even as I campaigned for his Conservative Party opponent. Not since conservative William F. Buckley Jr. ran for mayor in 1965 had voters been exposed to such an articulate debater.

Five years later, Cuomo proved his mettle when he went on to beat Mayor Edward Koch in the Democratic gubernatorial primary and then defeat my candidate, Lew Lehrman.

As New York’s chief executive, his son rightly described him as a “pragmatic progressive.” In the 1980s, New York was not dark blue. A U.S. senator and the state comptroller were Republicans and the state Senate was solidly in GOP hands. Cuomo promoted as best he could his leftist ideology and stuck to his guns on the issue that cost him the gubernatorial election in 1994: his opposition to the death penalty.

Cuomo’s death on January 1 brought out many of the old-time New York lefties, who praised him as a liberal icon. What hypocrisy. Back in 1994, they were knocking Cuomo for not measuring up to the words of “The Speech” he delivered at the 1984 Democratic National Convention defending liberal ideals.

Dr. Donna Shalala, former president of City University’s Hunter College, was quoted by The New York Times describing Cuomo “as a powerful and articulate spokesman for social and political issues,” yet when it came to implementing those views, she concluded, “I’m confused by Cuomo.” (This is the same Shalala, who as Clinton’s Secretary of Human Services sat by silently when he declared the “era of big government was over.”)

The Black and Puerto Rican Legislative Caucus groused about Cuomo’s “lack of urgency” when it came to minority and poverty issues.

Feminists were also unhappy. Irene Natividad, chairperson of the National Women’s Political Caucus, complained: “There’s no getting around the fact that he could do more [for women].”

As Cuomo prepared to run for a fourth term, his standing with the left was described by Jacob Weisberg in New York magazine: “There is a deep sense of weariness with Cuomo, a feeling of anger, even betrayal.”

Interesting, isn’t it? Particularly considering that during Cuomo’s tenure, state spending ballooned 123 percent, while the compounded inflation rate was 65 percent. Medicaid spending was costing taxpayers $16.2 billion annually by 1994 and represented 18.4 percent of the total national Medicaid spending, even though New York included only 10 percent of the nation’s Medicaid recipients. In addition, outstanding state and authority debt during the Cuomo years went up 107 percent from $30 billion to $62 billion.

That record is not a conservative one. And criticism Cuomo received proves liberals are never happy. One can never spend enough on his agenda to please them.

Although Cuomo and I were on opposite sides of the political divide, I like to think we were friends. After he left office we would chat from time to time over breakfast or over the phone. When I was executive director of the Port Authority, I sought his advice on a number of occasions. I always respected that he was a fighting liberal unafraid of verbal clashes with people, like me, who disagreed.

Mario Matthew Cuomo – Requiescat In Pace.

New York, the public authorities leviathan – By George J. Marlin

Posted January 8, 2015 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the January 2-8 2015 issue of the Long Island Business News:

During his 14 years as governor of New York (1959-1973), Nelson Rockefeller created 230 agencies and authorities and incurred $12 billion in debt to fund his grandiose plans for the Empire State. Since the end of his reign, governors and local magistrates have continued to increase the number of these entities and to pile up debt.

Today there are 325 state authorities and 847 local ones. Collectively they have incurred more than $250 billion in debt, spend $60 billion annually and employ 150,000 people with a payroll that totals $10 billion.

In a report released Dec. 23, 2014, state Comptroller Tom DiNapoli cast a light on these shadow governments: “Public authorities borrow and spend billions of dollars outside the state budget,” he said. “And from Buffalo to Brookhaven, New Yorkers foot the bill.”

DiNapoli pointed out that most of the state authorities serve as vehicles to circumvent voter approval of general obligation bonds. This financial gimmick is commonly known as “backdoor borrowing.” In other words, a given agency issues debt to finance a gubernatorial-approved capital project for which the state is bound to appropriate funds annually in its budget to cover principal and interest payments on the agency-bonded debt.

Backdoor borrowing, the report pointed out, “eliminates the opportunity for voters to have input on major borrowing decisions that affect them financially; transferring control to public authority boards [appointed by the governor] and thus further limiting accountability and transparency.”

And, as a result of this financial chicanery, as of March 31, 2014, just about 95 percent of all state-funded debt was issued by public authorities.

The governor also uses the authorities to procure one-shot revenues to balance the executive budget. The 2014-2015 enacted budget projects $265 million in transfers from public authorities. This tactic, DiNapoli observed, “obscures the state’s overall spending levels and spending growth, and diminishes oversight.”

The New York Power Authority is an example of an agency that has been a willing participant in this executive budget balancing act. Instead of using surplus dollars to lower customer electrical rates or to pay down debt, the power authority has gifted hundreds of millions to Albany’s coffers over the years.

One particularly egregious state policy imposed on public authorities since 1989 is the bond issuance charge. Almost every state agency where at least three board members are appointed by the governor must pay, for lack of a better term, a tax every time it issues bonded debt.

Here’s how it works: When the Metropolitan Transportation Authority goes to the bond market to raise, say, $500 million to pay for Long Island Rail Road infrastructure improvements, a portion of the borrowed proceeds are handed over to the state. And who gets stuck paying back this borrowed money? Commuters. In state fiscal year 2013-2014, Albany received $106.9 million in such gifts from 20 different agencies. The MTA’s share was $21.3 million.

Then there is the waste, fraud and abuse in varying degrees. Audits by the comptroller of the MTA, which employs more workers than any private-sector company in the state, uncovered a “culture of entitlement.” Inaction by the authority and lax payroll controls resulted in six employees being paid $991,000 for excessive overtime and $216,000 for hours not actually worked.

Also, an auditor reviewing the MTA’s management of cash and investments discovered that record-keepers failed to recognize that the Empire State Development Corp. owed $68.2 million.

New York’s public authorities represent a huge part of our government. And with the state’s growing reliance on them for fiscal and programmatic assistance, DiNapoli rightly concluded there is a “need for greater transparency, increased board accountability and a keener understanding of authority operations by policymakers and the public.”

LI politics’ winners and losers in 2014 – By George J. Marlin

Posted December 9, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the December 5-11, 2014 issue of the Long Island Business News:

Here’s my take on those who gained and those who lost ground in this year’s game of Long Island politics.

WINNERS

Tom DiNapoli: The state comptroller from Great Neck is this year’s biggest winner. Re-elected with 60 percent of the vote, he topped Gov. Andrew Cuomo’s vote total by 180,000. In the unlikely event Cuomo seeks a third term, he may have to rely on DiNapoli’s coattails to get over the electoral finish line.

Lee Zeldin: He had the guts to give up a safe state Senate seat to take on Tim Bishop, who easily beat him in their first faceoff in 2008. Zeldin proved his mettle in the Republican primary, handily fending off challenger George Demos, a political ne’er-do-well whose family spent a fortune on his campaign. In the fall, Zeldin ran an impressive campaign against the ethically challenged incumbent and shocked political wags when he won by 16 percentage points. Expect Zeldin to be a rising star in the GOP.

Kathleen Rice: Despite a lackluster campaign, the Nassau DA managed to squeak by on Election Day, winning her race in the 4th Congressional District with 52 percent of the vote. She’s fortunate her Republican opponent was a political knucklehead.

Dean Skelos: Thanks to Cuomo sitting on the sideline, the GOP picked up just enough seats to make Skelos majority leader of the state Senate. But will he blow it again and condemn the GOP to permanent minority status? He will, if he supports a Democratic-lite agenda and continues to be Cuomo’s political knave.

John M. Kennedy Jr.: Shunned by most of Suffolk’s political establishment, Kennedy was elected county comptroller solely on the Republican line with 53 percent of the vote. As fiscal watchdog, he’ll give the county executive plenty of heartburn – and might be the guy to take down Bellone in the next election.

LOSERS

Bruce Blakeman: His loss in the 4th Congressional District qualifies him as the Harold Stassen of the New York Republican Party. The voters have rejected him for state comptroller in 1998, for county legislator in 1999, for the U.S. Senate in 2010 and in November for the U.S. House of Representatives. Hopefully, Nassau’s top political narcissist has finally realized the voters are not enamored of him.

Jon Kaiman: The NIFA chairman’s boast that the deal he negotiated to lift the Nassau public employee wage freeze was cost-neutral was, as predicted, wrong. It will cost taxpayers an extra $70 million a year. Kaiman, the governor’s top political lackey on Long Island, has turned NIFA from a fiscal watchdog to a lapdog.

Ed Mangano: The Nassau County executive’s lies about the county’s fiscal condition have caught up with him. His 2015 budget, which he promised would be GAAP-balanced, is out of whack to the tune of $210 million. In the out years, projected deficits are $259 million in 2016, $295 million in 2017 and $325 million in 2018. Re-elected a year ago on the platform that he didn’t raise taxes, Mangano was exposed this year as the fiscal emperor with no clothes when he raised taxes for next year by 3.2 percent. Mangano should spend less time playing poker at Oheka Castle and more time reading Municipal Finance 101 textbooks.

David Denenberg: That Denenberg thought he could be elected to the state Senate when his former law partners were about to file a lawsuit accusing him of defrauding a client of more than $2 million (and of forging the signatures of two judges on court orders) is beyond my comprehension. He’s either incredibly delusional or dumb or both.

Ed Walsh: The Suffolk Conservative Party chairman is being investigated by the FBI over allegations he collected his salary as a county Corrections Department lieutenant for hours he didn’t work. His boss, the county sheriff, is attempting to fire him. For the sake of the Conservative Party, which was founded on the notion that principles matter more than financial gain, Walsh should resign.

Cuomo: The winner who actually lost – By George J. Marlin

Posted December 1, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the November 21-27, 2014 issue of the Long Island Business News:

Despite a national Republican tsunami in 2010, Democrat Andrew Cuomo was elected governor with a whopping 63 percent of the vote.

Armed with that mandate and with the White House in his sights, Cuomo initially governed from the center and began to fix the fiscal mess created by his three immediate predecessors, Govs. George Pataki, Eliot Spitzer and David Paterson.

But this approach to governing did not last. By the end of his first term, he managed to infuriate plenty of voters.

On the one hand, his anti-fracking, anti-gun, anti-traditional-marriage stands – not to mention his tax increases – energized opposition among suburban blue-collar conservatives and upstate rural Republicans. On the other, the angst he caused in New York’s bluest quarters forced the extremist Working Families Party to publicly condemn him, to make him beg for their nomination and to agree to expend his treasure and time on electing a Democratic state Senate.

Also, Cuomo’s overall attitude didn’t help. His contempt for retail politics and his micromanaging and bullying alienated most of New York’s political establishment.

Despite these woes, to keep his White House hopes alive (just in case Hillary doesn’t run, or she somehow falters), Cuomo’s main goal this fall was to best the 65 percent his father earned in his 1986 second-term victory.

To achieve that end, Cuomo’s campaign spent millions on negative advertising falsely portraying his Republican opponent, West-chester County Executive Rob Astorino, as a felon. The campaign also limited Cuomo appearances to small, totally controlled, invitation-only events, and discarded those promises made to the Working Families Party.

This approach backfired. Cuomo was re-elected with only 53 percent of the vote, receiving 1 million fewer votes than he did in 2010. It was the lowest count for a Democratic victor since Franklin Roosevelt in 1930, when the state had 12 million people (it has 19 million today).

Upstate, Cuomo carried 13 counties, down from 37 in 2010. On Long Island, his margin in Nassau County was down 8 percentage points, for a total of 52.5 percent. As for Suffolk County, four years ago he garnered 58 percent, this time 47.5 percent.

Most interestingly, Democratic state Comptroller Tom DiNapoli – whom Cuomo tried to knock off the party ticket in 2010 – humiliated the governor by leading the statewide ticket with 2.104 million votes. DiNapoli was re-elected with 60 percent of the vote and topped Cuomo’s total by 180,000.

Cuomo’s strategy depressed the Democratic turnout and helped Republicans pick up three Congressional seats (25 percent of their national gains) and secure outright control of the state Senate. And Astorino, who ran a respectable campaign on a shoestring budget of $4.8 million, received 41 percent, the highest GOP total for governor in 12 years.

After analyzing the results, The New York Times rightly proclaimed on Nov. 5: “Cuomo wins a second term, but his aura of invincibility is gone.”

The next four years will not be happy ones for our governor. Vengeful Democrats, led by New York City Mayor Bill de Blasio and labor union bosses, will be plotting comebacks and counting the days until the Cuomo era ends. Republicans will strive to build on their gains and will block Cuomo’s leftist agenda at every turn.

There are two things you can bank on. First, there will be no third term for Cuomo, who is smart enough to know that in his weakened position, he’ll face a serious primary challenger in 2018. He also knows, from his father’s experiences, that third terms are not fun.

Second, Cuomo will devote most of his time to settling scores. He’s a man who never forgets or forgives a slight. He mastered the role of hatchet man during daddy Mario’s 12 years in office, and doesn’t fear utilizing those skills.

Expect plenty of gubernatorial theater in the next four years, but few accomplishments. Cuomo’s second term will resemble many gubernatorial third terms – marking time and lackluster at best.

Paying a high price for the woeful MTA – By George J. Marlin

Posted November 16, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the November 7-13, 2014 issue of the Long Island Business News:

For most New Yorkers, the Metropolitan Transit Authority is an enigma. At best, they see the MTA as a maze of poorly managed transportation agencies that stick them with the tab for fiscal and operational incompetence.

Created by Gov. Nelson Rockefeller in 1968, the MTA consolidated, under one state-controlled oversight board, three ailing commuter systems: Long Island Rail Road, the New York City Transit Authority and Metro-North Railroad, plus the prosperous Triborough Bridge and Tunnel Authority.

The key component of the Rockefeller initiative was the TBTA, because its toll-collecting facilities were generating significant annual surpluses. Instead of lowering tolls to reduce the burden on commuters, the surplus money was allocated to cover the operating deficits of the other MTA transit operations. This arrangement, the political class proclaimed at the time, would be the panacea for all mass-transit ills.

Alas, it was not to be. Misuse of capital-project funds, public-employee union pandering and fiscal slight-of-hand not only sucked up the TBTA surplus, but forced toll and fare increases time and again.

Gov. George Pataki, for instance, inflicted great harm on the MTA when he recklessly refinanced MTA debt in 2002. He approved $12 billion of restructuring that produced limited short-term savings and extended debt due to be paid off between 2015 and 2032. E.J. McMahon of the Empire Center for New York State Policy wrote at the time that Pataki’s actions “weakened the agency’s infrastructure budget for a generation.”

In 2009-2010, the MTA had to borrow to meet its payroll and deferred pension payments to the tune of $125 million. To stem the hemorrhaging, Gov. David Paterson and the state Legislature further picked the pockets of taxpayers by imposing a “regional payroll tax.”

Pandering to unions has resulted in a majority of the MTA’s 68,000 employees making more than $100,000 a year. In 2013, the average pay of MTA police was $125,000. The Empire Center reports that among non-police operating subsidiaries, LIRR employees were the MTA’s highest-paid workers, earning an average of $84,000, with 28 percent of railroad employees receiving more than $100,000 – including 166 who more than doubled their base pay with overtime and other extras. And these figures don’t include the 7.5-percent retro pay included in the giveaway election-year contract deal Gov. Andrew Cuomo cut with LIRR unions.

To add to the MTA’s woes, State Comptroller Tom DiNapoli reported in October that “significant challenges remain, in particular, closing the unprecedented funding gap in its proposed five-year capital program.”

The DiNapoli Report revealed:

  • Cuomo’s labor agreements will cost $1.5 billion more than originally budgeted.
  • Non-pension, unfunded retirement and post-employment benefits (i.e., healthcare insurance) at the end of 2012 totaled $19.9 billion.
  • Capital-program bonded debt is expected to reach $39 billion by 2018, more than double the 2003 level.
  • Overtime is projected to hit $801 million in 2014, 30 percent higher than four years ago.
  • The 2015-2019 capital projects plan, which totals $32.1 billion, has a funding gap of $15.2 billion.

These dismal findings explain why the MTA raised tolls and fares between 2007 and 2013 by 29 percent, more than twice the inflation rate.

While it’s projected that tolls and fares will go up another 4 percent in 2015 and 2017, that may not be enough if the MTA proceeds with its $32 billion building plan. Closing the capital program’s funding gap through borrowing “would put added pressure on fares and tolls,” DiNapoli concluded, noting every $1 billion borrowed increases debt service by an amount comparable to a 1-percent increase in fares and tolls.

Not a pretty picture. And commuters and taxpayers will, as always, be shelling out more of their hard-earned dollars to pay for the fiscal follies of inept and shortsighted pols.


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