Casinos, VLTs can’t fix unfunded mandates – By George J. Marlin

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

The following appears in the July 4-10, 2014 issue of the Long Island Business News:

In 2010, Gov. Andrew Cuomo promised taxpayers he would help municipalities and school districts lighten tax burdens by “undertaking a comprehensive review of [unfunded] state mandates and state laws that otherwise limit the ability of school districts and localities to contain costs.”

Mandates imposed by Albany have been driving many local governments to the brink of insolvency. For instance, Erie County officials told The New York Times their entire property tax levy goes to pay the most costly state mandate: Medicaid. All the revenue is gone, they complained, before the county pays for libraries or snow plows or roads.

Failing to fulfill his promise, Cuomo tried to change the subject by supporting a ballot measure approved by voters last November to permit casino gambling and legislation that expands video lottery terminals in Nassau and Suffolk counties. Approval of these measures, Cuomo insisted, would lower property taxes, create jobs and increase aid to public schools.

Despite the governor’s claims, there’s a consensus among economists that gambling emporiums will not be the panacea for all municipal ills.

Gambling competition in the region – New York, Pennsylvania, New Jersey, Connecticut and Massachusetts – has become so intense that casinos are failing. In New Jersey, the Atlantic Club closed its doors in January, the Revel has filed for bankruptcy and the Showboat, which employs 2,100 people, announced last week that it’s closing its doors Aug. 31.

New York faces serious problems before casino building plans get off the drawing boards. Recently, two developers canceled plans to bid for casino rights in economically depressed Sullivan County because the more affluent Orange County – which is closer to NYC – is also eligible to compete for a gambling license.

The New York Post reported that “the mere prospect of a casino in Orange County makes it impossible to get financing for a gambling resort in Sullivan County, which has been waiting 40 years for one.”

There’s more bad news. In May 2014, Comptroller Thomas DiNapoli released a 34-page report, “Trends in N.Y.S. Lottery Revenues and Gaming Expansions,” which concluded, “The projected new revenues from casinos, VLT expansions and payments by Native American [casinos] would add slightly less than half a percentage point to the state’s existing non-federal receipts. The permanent jobs projected to be created by new casinos constitute a small addition to the more encompassing broader strategy needed to [strengthen] the Empire State economy especially in struggling upstate communities.”

DiNapoli’s excellent analysis gives a slew of reasons why taxpayers should not have high hopes – the key one being that most gambling revenue will not come from out-of-state tourists but in-state residents.

Let’s face it; most rich people who fly to New York from London or Paris to shop on Fifth Avenue are not going to jump into a limo to travel to a Sullivan County Casino or a Suffolk County VLT.

If most gaming customers are local folks, then, “such activity primarily represents substitution of gambling losses for other consumer purchases rather than net new business,” according to DiNapoli’s report. In other words, instead of disposable income being spent in neighborhood restaurants or cinemas, it will be squandered at a betting parlor.

And then there are the social costs. Studies show that a significant number of locals who gamble at gaming parlors close to home can least afford it. They are seniors on fixed income and low-income workers risking their rent and food money.

Also, state and local governments will have to allocate more tax dollars to publicly funded problem gambling programs. Presently, about 5 percent of New Yorkers suffer from problem gambling and about 28 percent of them have experienced a substance abuse disorder. As casinos and VLTs become more accessible, expect these numbers to rise.

Don’t believe politicians who insist gambling – in whatever form – will be a fiscal game-changer for our local governments. Only genuine unfunded mandate relief will begin to help lessen the burden on New York’s taxpayers.

 

With some groveling, flip-flopping gov wins – By George J. Marlin

Posted June 23, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the June 20-26, 2014 issue of the Long Island Business News:

Four years ago, gubernatorial candidate Andrew Cuomo told the radical leftist Working Families Party that if he were to accept its nomination, the party would have to support his “New New York” agenda, which stated that, as governor, Cuomo would “veto any increase in personal or corporate income taxes or sales tax.”

Cuomo made it perfectly clear to the WFP that he was opposed to extending the state’s so-called Millionaire’s Surcharge Tax, which was set to expire at the end of 2011. “I was against it at the time, and I still am,” the candidate told the party. “It’s a new tax. It was supposed to sunset. If it doesn’t sunset, it’s a tax.”

Comparing his refusal to extend the surcharge to his father’s principled opposition to the death penalty in the 1980s, Cuomo stood up to WFP and its “soak the rich” ideology. He let them know it had to be his way or the highway.

Fearful it might fail to get the 50,000 votes required to maintain its legal party status if it ran its own candidate in 2010, WFP capitulated. It chucked its principles and agreed to Cuomo’s conditions.

Fast forward four years and the proverbial political shoe is on the other foot. This year, the WFP would be the one to put conditions on its nomination.

Knowing that Cuomo is desperate to rack up a huge victory – one that not only surpasses Mario Cuomo’s second term total of 64.6 percent but one that could jumpstart a 2016 presidential run, if Hillary Clinton doesn’t enter the race – WFP figured it had the upper hand. Party leaders felt even more empowered when opinion polls indicated that a WFP candidate running against Cuomo and Republican-Conservative Rob Astorino could garner as much as 15 percent of the vote. That high a total could cost Cuomo the election or reduce him to a plurality victory.

Despite the fact that Cuomo had broken his word and raised taxes, this was not good enough for WFP’s members. At their May 31 convention, delegates were out for blood – and many were prepared to support announced challenger Zephyr Teachout, a Fordham University law professor.

What did the governor do to fend off a November challenge? He groveled.

The man who ran in 2010 as a centrist did a 180-degree flip-flop and signed onto the WFP’s hard-left platform, which the National Federation of Independent Business has denounced as “completely incompatible with the pro-growth policies New York needs.”

Cuomo pledged to support a $10.10 minimum wage plan that would also permit individual municipalities to increase it an additional 30 percent – a formula guaranteed to kill jobs. He agreed to push through the legislature public campaign financing which the Wall Street Journal pointed out “will further limit political competition and enhance the power of public unions backed by coerced dues.” And he agreed to abandon the coalition of Republicans and independent Democrats that has controlled the Senate – a coalition he boasted time and again was essential in implementing his first-term agenda.

Even though he ate plenty of crow, Cuomo still managed to receive only 58 percent of the delegates’ vote versus 41 percent for the novice Teachout. Dissenting party leaders called him Cuomocchio, a play on Pinocchio. Others said bluntly that they just don’t trust him.

When asked by a reporter if he was now “a true-believing progressive,” the ever-cagey governor dismissed the inquiry and said, “At these political conventions you win or lose. I won.”

Cuomo won, but the price was high. He revealed to the public that he’s a man lacking character and core principles – a political empty suit willing to embrace any heterodoxy to get by.

Good read: Ravitch’s road to fiscal health – By George J. Marlin

Posted June 11, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the June 6-12, 2014 issue of the Long Island Business News:

Eighty-year-old Richard Ravitch has had a remarkable life. The skilled entrepreneur made a fortune early on in Manhattan real estate, and free of financial woes he went on to serve the people of New York in various capacities – most recently as Gov. David Paterson’s appointed lieutenant governor.

In his memoir, “So Much To Do: A Full Life of Business, Politics and Confronting Fiscal Crisis,” Ravitch describes his contributions during New York’s fiscal crisis of the mid-1970s, his stewardship at the Metropolitan Transportation Authority and his role in later years as a “wise man” whose advice on municipal matters has been widely sought.

While his memoir is at times self-serving – all such works are – it is nevertheless filled with lessons taxpayers and elected officials can apply to present-day fiscal challenges.

It all began in 1975, when newly sworn-in Gov. Hugh Carey asked Ravitch to take over the ailing Urban Development Corp. Created by Gov. Nelson Rockefeller in 1968 after the assassination of the Rev. Martin Luther King Jr., UDC issued debt, backed with the state’s moral obligations to build housing in “substandard blighted areas.”

But the corporation was poorly run, and the investment community refused to underwrite additional debt. In February 1975, UDC defaulted on $104.5 million worth of notes.

The politically green Ravitch, with Carey’s blessing, brought the bankers together and threatened to file bankruptcy. “The banks blinked,” he writes in his memoir. “They agreed to withdraw their set-offs against UDC accounts.”

Ravitch helped create a plan that remedied the default, affirmed the state’s “moral obligation” to meet UDC’s principal and interest payments to bondholders and prevented chaos in the financial markets.

The UDC defaulted at the same time that New York City was running into fiscal difficulties. In 1975, city expenditures totaled $12.8 billion and revenues $10.9 billion. Fifty-six percent of locally raised taxes were appropriated for debt services, pension and Social Security payments. Years of budgetary gimmicks, phantom revenues, capitalization of expenditures and excessive use of short-term debt to fund daily operations forced the financial markets to close their doors to the city in 1976.

Ravitch was present at the creation of the Municipal Assistance Corp. and the Emergency Financial Control Board, which saved the city from bankruptcy. He also played a key roll in convincing the teachers union to use pension-fund assets to purchase long-term MAC bonds, whose proceeds were used to pay off the city’s heavy load of short-term debt.

One observation Ravitch makes that all New York elected officials, particularly those on Long Island, should heed: “The city’s most egregiously misleading gimmick … was to treat the proceeds of borrowing as revenues and to use these revenues to claim that the budget was in balance.” This gimmick brought NYC to its fiscal knees and may soon do the same to Nassau and Suffolk counties.

As lieutenant governor, he blew the whistle on the state’s cash accounting abuses, “which enables the state to avoid giving the public the bad news that expenditures may be growing faster than recurring revenues.” He has rightly called for state and local municipalities to abandon deceptive cash accounting and to adopt GAAP accrual standards.

Since that time, Ravitch has served on a long list of boards and commissions. After he left public office in 2011, he became co-chairman of the State Budget Crisis Task Force and has continued to make the case that “deceptive budgeting and borrowing practices are crippling our state’s ability to do what they can do – invest in the physical and human infrastructure the country needs to thrive.”

Just this past month, a judge in Michigan overseeing the Detroit bankruptcy case appointed him a special advisor.

If you want to learn what it takes to fix our current fiscal ills, read Ravitch’s memoir.

1984 Revisited: Archbishop O’Connor vs. Governor Cuomo – By George J. Marlin

Posted June 7, 2014 by streetcornerconservative
Categories: The Catholic Thing

This article I wrote appeared on The Catholic Thing web site on June 7, 2014.

Is it over already for cantankerous Cuomo? – By George J. Marlin

Posted May 27, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the May 23-29, 2014 issue of the Long Island Business News:

When Andrew Cuomo was a candidate for governor, I had several opportunities to chat with him one-on-one. Like many others, I concluded there was a new Cuomo more interested in implementing good public policies than settling political scores.

Cuomo appeared to have a good understanding of the state’s financial and economic woes and seemed determined to govern from the center. As a bona fide conservative living in a very blue state, I figured this was as good as it gets.

In Cuomo’s first months as governor, he took on vested interests to balance a budget that had a projected $10 billion deficit. By the end of 2011, however, the governor began to revert to the old cynical and ruthless Andrew.

He broke his pledge “to veto any increase in personal or corporate or sales taxes” and forced through the State Legislature a bill to extend New York’s biggest income tax increase since Nelson Rockefeller.

In addition to breaking pledges and succumbing to blue smoke-and-mirror policies, Cuomo became increasingly isolated, meeting with few outsiders. Even his public appearances have been completely controlled, generally held at government facilities to avoid protesters or questions from enquiring taxpayers or reporters.

Stories circulate in Albany that Cuomo’s overworked staff has had to put up with his micromanaging, temper tantrums and verbal abuse. When a low-level employee at the Department of Transportation was quoted in an upstate newspaper without preclearance from the governor’s office, the governor ordered the man terminated – even though his comments were favorable. The reason: to instill fear.

It get’s worse: Here’s what Cuomo said in January on “The Capital Pressroom,” an Albany radio talk show, about a large segment of New York voters:

“Who are they? Are they these extreme conservatives who are right-to-life, pro-assault weapons, anti-gay? Is that who they are? Because if that’s who they are and they’re the extreme conservatives, they have no place in the State of New York, because that’s not who New Yorkers are.”

If that’s the standard, the leader of the Catholic church in New York, Timothy Cardinal Dolan, is not welcome because he upholds Catholic teachings opposing same-sex marriage and abortion.

Answering accusations that he tampered with the independent Moreland Commission on Public Corruption, Cuomo made this bizarre comment: “The Moreland Commission was my commission. It’s my commission. My subpoena power, my Moreland Commission. I can appoint it. I can disband it. I appoint you. I can un-appoint you tomorrow. So, interference? It’s my commission. I can’t interfere with it because it is mine. It is controlled by me.”

Now perceived as a man who has no core beliefs, Cuomo has managed to alienate people on both the right and the left of the political spectrum.

Energized pro-fracking, pro-gun, pro-life voters are expected to come out in droves this November to punish the governor. On the left, supporters of the Working Families Party may put up a candidate to oppose him, or just sit out the election.

Here’s what progressive Bill Samuels, a leading New York entrepreneur and former finance chairman of the N.Y. State Senate Democratic campaign, said of Cuomo on the PBS show “New York Now”:

“He is just not a Democrat. He shut down the Democratic Party … It’s over for him as a Democrat nationally. There is no coming back for him. He’s dead nationally unless he becomes a Republican … I don’t have any friends in the business community who like [him]. People say ‘I’m afraid of him.’ When history is written, he’ll just be a mediocre governor that had a Nixon personality.”

Cuomo’s mean-spirited behavior is hurting him. And if he continues in that vein, the GOP’s Rob Astorino may begin to look like the guy on the white horse New Yorkers have been searching for to restore the economic and political wellbeing of the Empire State.

NIFA inks Nassau’s death warrant – By George J. Marlin

Posted May 12, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the May 9-15, 2014 issue of the Long Island Business News:

At 2 a.m. Saturday, May 3, 2014, the board of directors of the Nassau Interim Finance Authority voted 6-1 to approve deals with four municipal unions based on financials everyone knows are delusional.

With that, NIFA sanctioned the fiscal demise of Nassau County and forfeited its reputation as an above-the-fray oversight board.

As for the deal, it’s not cost-neutral and will cost the county as much as $290 million in expenses over its present multiyear plan.

Worse yet, the deal doesn’t factor in the 15 percent decline in sales tax revenues in the first quarter of 2014, the decline in mortgage recording tax revenues and the $85 million misstatement of Nassau’s pension obligations.

Nassau’s budget for fiscal 2014 is so out of whack that even hapless Comptroller George Maragos warned the county must prepare to deal with shortfalls by either making significant spending cuts or by raising taxes to the tune of $70 million.

NIFA’s lone dissenting voice was Director Chris Wright, a topnotch certified public accountant who has a razor-sharp mind and an articulate debating style. Wright correctly argued that the agreements cost nearly $300 million more than they’ll save over the four years of the county’s current multiyear plan.

“Every objective, competent analyst concerned with the county’s finances understands that,” Wright says. “So does our staff. And so do we.”

To give themselves a fig-leaf cover, the NIFA board passed a resolution ordering the county executive to provide a modified financial plan within 60 days “detailing how Nassau County will cover the costs of new labor agreements, with the understanding that NIFA thereafter shall exercise its own power to modify the financial plan as needed.”

Unless the NIFA board actually plans to follow through this time, this resolution is merely bad theater. Time and again, such NIFA orders have been defied; as recently as January, NIFA’s order that Nassau revise its multiyear plan and overturn raises to non-union employees in 30 days was ignored by the county.

Who is to blame for this NIFA mess? Gov. Andrew Cuomo.

Cuomo doesn’t like control boards. One reason might be that oversight boards are the legacy of one of New York’s greatest governors: Hugh Carey, a man both Cuomos, Mario and Andrew, have despised. Another reason: Cuomo is a control freak who doesn’t want independent-minded financial experts governing public agencies.

To emasculate control boards, he has been appointing political knaves as directors. This has been most evident in his recent NIFA appointments. NIFA Chairman Jon Kaiman is known as one of Nassau’s leading political hacks; this vulgar, intemperate man is also on Cuomo’s payroll earning $150,000 a year for a job with no real description.

Another political lightweight Cuomo put on the board was Paul Annunziato. This Republican, a crony of Deputy County Executive Rob Walker, made this inane statement when he voted in favor of the bogus union deals: “We can’t deny the county’s union labor raises because we have a deficit anymore than we can stop plowing streets because it snowed a lot.”

The comparison of wages and deficits to plowing and snow is idiotic. Needless to say, if the county runs out of money because of its massive deficits, exacerbated by these deals, the raises won’t be the issue; making payroll will be the issue.

To secure the endorsement of Republican lobbyist Al D’Amato, and to ensure that Nassau’s rusty GOP machine sits on its hands this fall, Gov. Cuomo has destroyed New York’s greatest contribution to the cause of saving ailing municipalities from becoming Detroit – the financial control board.

Thanks to Gov. Cuomo and his NIFA hacks, expect Nassau County to have a cash crisis; expect the credit agencies to drop Nassau’s ratings; and expect boomers and young people to continue the mass exodus to tax- and job-friendlier regions.

Memo to NIFA members on union deals – By George J. Marlin

Posted April 28, 2014 by streetcornerconservative
Categories: Articles/Essays/Op-Ed

The following appears in the April 25-May 1, 2014 issue of the Long Island Business News:

The Nassau Interim Finance Authority was created as an independent state authority in 2000 to help restore the county’s fiscal health, which had been suffering from mismanagement, cronyism and sleaze.

Prior to the state taking action, the Nassau County Legislature unanimously approved a home rule message requesting that Albany create a state oversight panel to guide the county’s budget policies. By asking for an authority possessing budgetary oversight powers, legislators conceded they couldn’t trust the elected government to manage the county’s finances responsibly.

To give elected officials time to reform the tax certs mess and to achieve a structurally balanced budget, the NIFA Act also permitted the county to borrow – and count as “operating revenues” – money to pay down accumulated tax certs refunds totaling $947 million through the end of 2007 only.

NIFA’s authority to approve or disapprove budgets and fiscal plans expired in 2008. Sadly, Nassau pols quickly reverted to bad fiscal behavior, forcing NIFA to impose a control period in January 2011.

By approving in April 2014 the Kaiman union deals, Nassau elected officials proved, once again, they are incapable of managing the county’s finances responsibly. They succumbed to pressure to approve contract amendments that every objective analysis concluded are not cost neutral and could cause the county to become insolvent.

NIFA directors are required to bring their own independent judgment to the table. Now it’s up to you to exercise that vested authority, to decide whether to approve or reject the Kaiman deals. But before casting your vote, here’s some food for thought for directors who either voted “yes” on the plan when it was presented, fact-free, on March 10, or from whom the public has yet to hear on the matter:

Director John Buran: As the CEO of a major banking institution, if a proposal came before your loan committee with questionable revenue streams and inaccurate cost assumptions similar to those in the Kaiman deals, would you vote for it?

Director Paul Leventhal: As a certified public accountant, would you sign off on a deal with these numbers? Would Nassau’s cash flow projections survive the analysis required to consider a “clean opinion?”

Director Lester Petracca: As a successful commercial real estate developer, would you invest in a project based on financial projections similar to those in the Kaiman deals?

Director Paul Annunziato: As a federally licensed financial advisor, would you recommend to your clients an investment with rose-colored estimated revenues and blinders-on cost estimates similar to the Kaiman deals?

The first control board was created in 1975 to prevent NYC from becoming a Detroit. To eliminate excessive short-term borrowing and to achieve a GAAP-balanced budget, the city had to eliminate 20 percent of the workforce and abolish scores of programs and departments.

The NYC Control Board succeeded because its members did their jobs and made unpopular decisions. Since 1982, NYC has had a GAAP-balanced budget every year and, as a result, the city has prospered.

If you vote to approve the Kaiman deals, you will cause irrevocable harm to existing and future control boards. You’ll destroy the belief that control boards are above the political fray. Ratings agencies and investors will lose all faith in them.

Approval of the Kaiman deals will also cause the county to issue more short-term debt to pay bills. Since rating agencies are very sensitive to such cash flow problems, expect county debt ratings to be downgraded.

Whether or not Nassau becomes a Detroit is up to you. How you exercise the independent judgment required of you is also up to you, not anyone else. You own your own votes and the consequences will inure to your personal and professional reputations.

I recommend you contemplate the words of Sir Thomas More: “When statesmen forsake their own private conscience for the sake of their public duties, they lead their country by a short route to chaos.”


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