Archive for May 2010

The Kessel NYPA Watch, May 24, 2010 – By George J. Marlin

May 24, 2010

Kessel Asides

Last month, NYPA CEO Richie Kessel downplayed the announcement that NYPA Trustee, Elise Cusak, a Pataki appointee and former Erie County legislator, had gone straight from the NYPA Board, where she served for seven years, to employment at NYPA as a community liaison for $77,500 per year.

Cusak had voted against Kessel’s appointment in 2008 but soon capitulated to Kessel’s charms and resumed her role as a docile and dormant NYPA trustee.  She later voted to extend the Kessel regime at NYPA.

Cusak, who previously worked for a communications firm, may have decided with AG Cuomo likely to succeed Kessel’s patron, Governor David Paterson, and with the State Legislature likely to remain in Democratic hands for years that this was a good time to make peace with Kessel in return for an easy-lifting paid NYPA sinecure.  So, in March Cusak “stepped down” in order to turn up moments later on the payroll.

Long-time observers of Kessel will remember that hiring sitting or former County legislators has been a Kessel tactic at LIPA and NYPA to reward a friend or silence a critic.

Finally, don’t underestimate Kessel’s kind treatment of Cusak in keeping on the reservation other NYPA trustees whose terms may not be extended by Governor Paterson or Cuomo.  Getting the Cusak treatment once they depart the NYPA Board may look attractive in today’s harsh job climate for political hacks of the party out of power.

THE KESSEL COUNTDOWN: 222 DAYS UNTIL RICHIE KESSEL IS FIRED BY THE NEW GOVERNOR OF NEW YORK

Oyster Bay: At the mercy of ‘incumbocrats’ – By George J. Marlin

May 21, 2010

The following appears in the May 21-27 issue of the Long Island Business News:

For 15 years, the Town of Oyster Bay leadership has stonewalled a proposed roughly $500 million investment by Taubman Centers in an upscale mall which would create hundreds of construction and permanent jobs and generate millions in tax revenue for hard-pressed governments. Cowed by a small group of NIMBY opponents financed by mall competitors, Town Supervisor John Venditto has taken every possible step to thwart this investment. Taubman, a New York Stock Exchange real estate firm, is reported to have already spent $150 million pursuing its proposed development at the former Cerro Wire site.

This anti-growth kabuki occurs at a time that Long Island employment is more than 7 percent and the Island is facing what may be an incipient jobless recovery. Oyster Bay has said, “Go to hell,” to the 30 percent of those in Long Island’s building trades that are out of work.. That attitude has stopped lots of investment in Oyster Bay over the years. That’s the Oyster Bay way.

As residents and businesses are being suffocated by exorbitant local taxes, the town that is thwarting private-sector investment has purchased a nondescript, contaminated piece of property for $3 million an acre – more than the price of high end property in Old Brookville or waterfront property on the North Shore – that raises the specter of massive stupidity and waste of taxpayer dollars or worse.

In case the Town of Oyster Bay hasn’t figured this out, we are in the midst of one of the worst real estate markets in recent memory. Despite that reality, Oyster Bay recently bought a 3.5-acre parcel contaminated by heavy metals for three to five times the market price for comparable industrial property. Further, in a puzzling abuse of taxpayer funds the town paid 13 percent more than the inflated value because, as Supervisor Venditto said, “Real estate appraisal isn’t a science,” but more of a bargaining tool to use in negotiations.

That property, which is to be taken off the tax rolls, will be used for town soccer fields after town taxpayers invest another $3 million to build the field and related amenities.

Why are Oyster Bay elected officials on the one hand stifling economic growth by blocking Taubman and on the other giving away the store on a real estate transaction for soccer? Call it the arrogance of power.

Representative democracy rests on the principle that people who enter public life are devoted to civic virtue and willing to serve the common good – not the collective good where only select people or groups benefit from government to the exclusion of others.

The Oyster Bay government appears to have evolved into an operation in which a permanent governing class serves themselves and their cronies. They are incumbocrats: members in good standing of that long-ruling coterie that uses fiscal sleight of hand to convince the public that they are responsibly governing, all the while pandering to special interests and increasing spending, taxes and pork.

Incumbocrat Venditto apparently doesn’t grasp or doesn’t care that his residential and commercial taxpayers are being strangled by high town, county and school taxes and that the commercial tax base that provides the revenue to purchase 3-acre soccer fields at grossly inflated prices is rapidly declining. The damage done by this egregious transaction is worsened by the fact that taking these 3 acres off the tax rolls will force the taxes of all other Oyster Bay taxpayers to be raised.

Long Island is at a crossroads – its very survival is at stake. In the midst of this crisis, Oyster Bay has for over a decade taken a strong stand against private-sector investment and job creation and now favors publicly funded bread and circuses for the voters in which no jobs are created. This cynical game can’t go on much longer.

Natural Law – and Neuroscience

May 20, 2010

This article I wrote appears on The Catholic Thing web site on May 20, 2010.

Dr. Death Takes Hollywood – By George J. Marlin

May 5, 2010

This article I wrote appears on The Catholic Thing web site on May 5, 2010.

Nassau tackles expensive assessment mess – By George J. Marlin

May 4, 2010

The following appears in the May 7-13 issue of the Long Island Business News:

During the eight years Tom Suozzi served as Nassau county executive, very little headway was made in dealing with the 800-pound assessment beast hovering over the county, despite plenty of talk and numerous press releases.

In fact, the annual amount borne by taxpayers from assessment screw-ups grew from $67 million in 2006 to $117 million in 2009, an annual 18 percent growth rate.

In Suozzi’s last year in office, 2009, the county borrowed more than $65 million to settle these cases, burdening future generations of taxpayers with the cost of today’s certiorari errors.

As a result of the failure to come to grips with the problem, half of Nassau’s $2.4 billion in total long-term debt was incurred to settle tax certiorari cases.  That amount, about $1.13 billion, was not spent to build a road, rehab a building or improve a park, but merely shuffled from one property owner to another, with lawyers grabbing their customary third.

And it costs county taxpayers $150 million in principal and interest each year to service the debt incurred to settle these cases.

Now, however, Nassau’s new county executive, Ed Mangano, who campaigned on fixing the broken assessment system, apparently means to take on the beast.

In his first weeks in office, Mangano demonstrated he intends to govern by managing the county like the small business owner he was rather than ruling by press release.  He repealed the energy tax – saving county taxpayers $40 million a year – created an assessment task force consisting of residential and commercial property owners and leading lawyers in the field to help develop a lasting fix, and lowered the interest rate paid on commercial property certiorari claims that will save the county $1 million a year.

In April, Mangano took the bold step of moving the county from the failed system of annual assessment, which has enriched assessors and nearly bankrupted the county, to a quadrennial assessment approach.  This move, plus his executive order that requires commercial property challengers to submit certified appraisals by October 1 or face a $5,000 fine, could save taxpayers up to $50 million next year and as much as $300 million over four years.

By attacking assessment fatigue and allowing the stressed county assessment apparatus the time to be repaired, Mangano will save administrative costs and join Nassau to the two-thirds of taxing jurisdictions in the state that already tax on a periodic system.

Significantly, unlike his predecessors, Mangano has focused on the source of the problem – the commercial real estate assessment mess – that accounts for fully 80 percent of the annual liability.  Mangano has said he has zeroed in on the commercial side because, quoting Willie Sutton, the famous bank robber from an earlier era, that’s where the money is.

In his March state of the county address, Mangano revealed that the county’s finances are deeply troubled.  Taking on assessment is the first step in attacking a 2011 deficit that could reach $300 million.  If he can begin to reduce the burden on county taxpayers from the assessment mess, there is hope that he can take on the public employee unions and others that rely on the county’s largesse.

Mangano faces a challenge in convincing those special interests that the game is over and that the choice is making a deal with the rookie county executive or dealing with a state takeover.

The beast killer Mangano may look like the lesser of two governing evils.

Not-so-fun city – By George J. Marlin

May 3, 2010

This article I wrote appears in the New York Post on May 3, 2010.

No more budget gimmicks – by George J. Marlin

May 3, 2010

The following appears in the April 29, 2010 issue of the Long Island Business News:

The City of New York in the 1960s and 1970s invented every conceivable budgetary gimmick to conceal its fiscal excesses. The most egregious was the transfer of the city’s general fund expenses to the capital fund. By 1975, more than half of the city’s construction dollars – $875 million – was used to cover day-to-day expenditures.

To avoid municipal bankruptcy Gov. Hugh Carey and the state Legislature imposed stringent internal financial reforms and oversight that eliminated such abuses, restored the city’s credibility and stifled temptation by local officials to backslide.

“New York’s Deficit Shuffle,” an explosive exposé released this month by state Comptroller Thomas DiNapoli, reveals that Albany has not employed the transparent budgetary standards it ordered New York City to follow and has, instead, utilized sleight-of-hand fiscal techniques similar to those that brought the city to its knees in 1975.

According to the DiNapoli report, Albany potentates for years have raided special revenue funds, capital project funds and debt service funds to create the illusion that the state has closed its annual general fund deficit.

Since 2000, more than $17 billion in general fund expenses have been dumped into the Health Care Reform Act fund, and more than $3.7 billion have been transferred into the General Fund from various dedicated state funds. And in 2007 these imprudent one shots were codified. The Division of Budget has “blanket” authority to sweep funds without public disclosure.

In New York’s 2008-2009 fiscal year, fund shuffling totaled $5.3 billion. The number topped $6.4 billion for the fiscal year that ended on March 31, 2010. Also in 2009-2010, $1.4 billion in temporary loans to dedicated funds remained outstanding and $200 million in new debt was issued to pay for what was supposed to be pay-as-you go capital spending.

Here are a few dedicated funds from which money was swept into the General Fund under the “blanket” authorization:

  • $134.9 million – Health Care Reform Act
  • $21.0 million – Elderly Pharmaceutical Insurance Coverage
  • $15.0 million – Hazardous Waste Oversight and Assistance
  • $12.5 million – Local Wireless Public Safety
  • $9.8 million – New York City Veterans Homes (St. Albans and Oxford)
  • $6.6 million – Indigent Legal Services
  • $1.0 million – Assisted Living Residence Quality Oversight

The fiscal manipulators in the governor’s budget office have been shameless. To cover up Albany’s reckless spending, they have even grabbed money from programs created to help the elderly and veterans.

Also misused were temporary loans from the state’s Short-Term Investment Pool, which are permitted to cover state fund cash shortfalls until cash receipts become available later in a fiscal year. Since 2000, the state has ended each budget year with an average of $1.4 billion in temporary loans that have not been repaid. These loans are becoming perpetual and are covering up recurring deficits in special revenue accounts.

The DiNapoli report points out that “the net result of this dizzying array of transactions is that the true extent of the state’s fiscal distress is masked and commitments made to New Yorkers are broken as their ‘dedicated’ tax and fee payments are used for other purposes.”

The use of “transactions” by governors George Pataki, Eliot Spitzer, David Paterson and their accomplices in the state Legislature have caused an ever- widening budget gap that is destroying New York’s fiscal integrity and its overtaxed economic base.

To restore the state’s fiscal health, the next governor must have the courage and fortitude to tell tax-and-spend legislators that budget manipulations described in the DiNapoli report will end, the actual deficit will be addressed, the government will learn to live within its means and will no longer be the major growth industry in the state.