Archive for March 2011

Cuomo proves Medicare mess fixable – By George J. Marlin

March 26, 2011

The following appears in the March 25 – April 3, 2011 issue of the Long Island Business News:

To close the state’s $10 billion budget deficit, Gov. Andrew Cuomo  realized he had to curtail the spiraling costs of the special interests’ No. 1 sacred cow: Medicaid.

Projected to cost $54 billion in New York’s 2011-2012 fiscal year and covering 20 percent of state residents, Medicaid was created in the heyday of Lyndon Johnson’s Great Society. Title 19 of the Social Security Act of 1965 established guidelines for a Medicaid program that states could adopt to provide medical services for welfare recipients. The federal government would cover half the cost and the states would have to pay the other half.

Seeing this as an opportunity to receive huge sums of federal dollars, then Gov. Nelson Rockefeller quickly sent a Medicaid bill to the Legislature. Legislators had a field day. They added numerous amendments that offered coverage not just for welfare recipients but also for those they more broadly defined as “poor.” What’s more, the Legislature decreed that Albany would pick up only half of the state’s portion of Medicaid costs; the rest of the financial burden would have to be shouldered by local governments. So, Albany could in future years expand benefits but only pick up 25 percent of the tab. Local governments would have no say in whether chiropractic care was covered but would have to pay 25 percent anyway.

In essence, the law written in April 1966 mandated that welfare officials must seek out potential beneficiaries, and it exempted all relatives from any responsibility for the care of “indigent” family members. It was designed to make dependency a way of life in New York. The program succeeded in achieving that goal.

Since that time, Medicaid has been New York’s fastest growing budget item – rising at the alarming rate of approximately 11 percent annually. New York spends more than twice the national average and more per capita than the combined expenditures of America’s most populous states, California and Texas.

For years, Albany politicians have watched the oncoming fiscal train wreck without alarm. They viewed the expenditures as constituency services – keeping happy hundreds of thousands of health-care workers, health-care providers and those receiving medical and nursing home benefits.

Because Govs. George Pataki, Eliot Spitzer and David Paterson failed to get a grip on the Medicaid leviathan, the program has had a disjointed, sprawling administrative structure, has been plagued by rampant fraud and has had a payment system that creates financial disincentives for the delivery of cost-effective, quality health care and a caseload that has continued to swell. As a result, taxpayers have had to pony up more money every year to cover the state and county portions of the tab, which grew on autopilot each year.

To fix this mess, Cuomo appointed on Jan. 5 a Medicaid Redesign Team with the mandate to propose concrete formulas that would contain costs and could be attached to the 2011-2012 executive budget.

Because the membership of the team included representatives of every facet of the health-care cartel that has benefited from the status quo, I was skeptical about the outcome. However, when the report was released on Feb. 24, I was pleasantly surprised to learn that many of my fears were unfounded. While not a perfect solution, the recommen-dations are a solid first step because they include genuine cost-cutting initiatives and reform measures that do not impede patient care.

The task force’s report contained 79 recommendations that will generate $1.14 billion in cuts. The permanent statutory cost drivers will be eliminated, medical malpractice awards will be limited to $250,000 and an annual 4 percent growth cap will be imposed. Total savings for the fiscal year that begins on April 1 is anticipated to be $5 billion. George Gresham, president of Local 1199, pointed out that the team succeeded because the recommendations “resulted in pain, but it was shared pain.”

If New York’s county governments and local municipalities are serious about fixing their fiscal plights, they should look to the Medicaid Redesign Team for inspiration and heed the words “shared pain.” If they don’t, expect some local governments to hit the fiscal wall.

The Forgotten: Christians Persecuted in the Middle East – By George J. Marlin

March 25, 2011

This article I wrote appeared on The Catholic Thing web site on March 23, 2011.

The Kessel NYPA Watch, March 21, 2011 – By George J. Marlin

March 21, 2011

Street Corner received the following letter on March 15, 2011 from NYPA’s Corporate Secretary.

Kessel is stonewalling again.  He will not release his updated contribution list until after the March 29, 2011 NYPA annual meeting.

Dear Mr. Marlin:

This is in response to your letter dated February 20, 2011 and received by this office on February 22, 2011 requesting the following records:        

1.  Information and records as to contributions, grants, donations, sponsorships, payments and purchase of tickets (collectively, “Expenditures of NYPA Public Money”) to or from not-for -profit entities, colleges, universities and research centers (collectively, “Recipients of NYPA Public Money”) from NYPA or any subsidiary or affiliate for the period July 1, 2010 through and including December 31, 2010;

2.  Information and records as to whether each Expenditure of NYPA Public Money to each Recipient of NYPA Public Money from NYPA or any subsidiary or affiliate for the period January 1, 2009 through and including December 31, 2010 was processed in full compliance with NYPA board or entity policy and procedure for Expenditure of Public Money;

3.  For each Expenditure of NYPA Public Money which involved purchase of tickets for an event held outside a NYPA facility, provide the names and relationship to NYPA of each person who used the ticket purchased or acquired by or through the Expenditure of NYPA Public Money;

4.  Information and records as to health insurance coverage or benefits or indemnification against health insurance liability or reimbursement of expenses of any such health insurance coverage provided now or at any time in the past to any present or former NYPA Board member;

5.   The names, titles and salaries of each person hired by NYPA since September 30, 2008, excluding union members covered under a collective bargaining agreement with NYPA. Provide in addition to name, title and salary for each such hire whether

a. the hire was to fill an existing vacant position/title as specifically reflected in the annual budget approved by the NYPA Board;

b. the vacancy was posted internally and/or externally; and

c. the position was newly created and did not exist prior to the hiring of such person;

6.  The names, titles and salaries of each person who has been promoted to vice; president or above by NYPA since September 30 2008 and the three year salary history of each such person, excluding union members covered under a collective bargaining agreement with NYPA.  Indicate whether each such promotion was considered by or approved by the NYPA Board; and

7.  The names, titles and amount of increase in salary of each vice president or higher who has received a raise in his or her salary since September 30, 2008, excluding union members covered under a collective bargaining agreement with NYPA.

Authority staff need an additional period of time to identify, locate, retrieve and review any such responsive records and will contact you on or about April 11, 2011 with the status of your request. 


Karen Delince
Corporate Secretary
New York Power Authority

The Kessel NYPA Watch, March 13, 2011 – By George J. Marlin

March 13, 2011


 To:    Senator George Maziarz and the Senate Energy
             and Telecommunications Committee

Re:     Review of Richie Kessel’s Tenure as CEO of NYPA

A Consumer Advocate or a Consummate Fool?

Since becoming the CEO of NYPA, Richard Kessel has made a score of political hires, many from Long Island and most not having the credentials to do the job in which they were placed.  For example, the Vice President for Emergency Planning and Chief Labor Negotiator, has no Emergency Planning or Labor Relations experience.  The Vice President of Human Resources, was formerly Receiver of Taxes for the Town of North Hempstead.  Many of these positions were created by moving existing approved budgeted positions from other departments to create openings for political hires from Long Island and elsewhere.  In the past year, Kessel has given some of these people promotions and salary increases in excess of 20 percent without informing the Power Authority Board of Trustees or putting out public announcements on the promotions.  This at a time when Governor Cuomo has imposed a wage freeze and may have to lay off thousands of state workers.

Also in less than a year, Kessel’s new assistant, Fran Evans, was promoted to the newly created position of Executive Vice President, Chief Administrative Officer and Chief of Staff and received a $30,000 increase in salary at a time when most employees at the Authority were subject to a salary freeze.

Kessel created an additional position for a Senior Vice President of Government Relations when one already existed.  In addition he has two Vice Presidents, a few staff directors and three outside lobbyists all working on State Government Relations for a state authority.

Kessel also hired a former Power Authority Trustee, four weeks after she stepped down from her position on the Board, to be a part-time employee at $77,500 per year!  Her assignment is to represent the Authority in Buffalo.  It is uncertain what she does or has accomplished.

Kessel has failed to comply in a timely manner with a number of requests for information under the Freedom of Information Law, many of which would confirm the above information as well as reveal expense account filings of his top management.

At Kessel’s direction, the Power Authority has made a number of contributions and grants that did not comply with Attorney General Cuomo’s 2007 Opinion on this subject, were not reported to the Authority’s Trustees and, in many cases, did not follow contributions approval procedures of NYPA.  Many were directed to Long Island organizations having no business relationship with NYPA or state energy issues including thousands to his hometown Chamber of Commerce.

Kessel has pursued the development of a number of new projects that are known by internal staff and external electricity experts to be significant money losers which would threaten the financial viability of the Power Authority and likely result in a significant reduction in the organization’s credit rating.  The following highlights the major projects that NYPA staff is working on developing, with the estimated annual loss in net present value dollars for each one.

Hudson River Transmission Project * $40 to $80 million per year for 20 years
GLOW (Great Lakes Wind) $80 to $120 million per year for 20 years
100- Mw Solar Project $20 to $30 million per year for 20 years

 *This project, as now constituted, bears little resemblance to the one that was selected as part of the winning bid by the Power Authority in 2006 following a competitive Request for Proposals process.

In addition, NYPA resources will be further drained by a contribution of $100 million to New York State this year as well as obligations to make annual payments totaling tens of millions of dollars to local governments and projects in Western and Northern New York.  The existence of these commitments makes Kessel’s blind pursuit of money-losing projects all the more reckless.

Finally, in his first two years at NYPA, Kessel’s management had led to significant underperformance in NYPA operating income including an approximate $150 million plus operating income shortfall in 2010 alone.  NYPA’s lagging income threatens its finances, its ability to afford to pursue Kessel’s grandiose projects and NYPA’s double AA credit rating.

The information stated above has come from a number of sources including current and former employees of the New York Power Authority.  Street Corner encourages all who wish to contribute to this effort to write with additional information to further expose Kessel’s incompetence and his blatant inability or unwillingness to conduct himself as a responsible and prudent public official.

Cuomo exposing budget process sham – By George J. Marlin

March 10, 2011

The following appears in the March 11-17, 2011 issue of the Long Island Business News:

Because there weren’t any consequences for irresponsible fiscal behavior by Albany’s power brokers during the Pataki, Spitzer and Paterson administrations, state spending over the past decade has increased on average 5.7 percent annually while revenue during the same period rose only 3.8 percent. As a result, the Paterson budget adopted for the present fiscal year that ends on March 31, which included ridiculously unrealistic tax revenue projections and over $16 billion in one-shot revenue (an astounding 30 percent of General Fund spending), is out of balance to the tune of $750 million and has caused the state’s structural deficit to surge to levels that threaten the very solvency of the state.

With a projected deficit for the fiscal year beginning April 1 of $10 billion, Gov. Andrew Cuomo decided it was time to put an end to the fiscal follies that are responsible for New Yorkers paying the highest combined state and local taxes in the nation. Declaring the state “functionally bankrupt” and the budget a “special interest protection program,” the governor exposed a sham budget process that includes codified formulas – designed by lobbyists – that automatically increase Medicaid and education spending every year with no regard to revenue availability, an astounding 13 percent – five times the inflation rate. He pledged to terminate these “deceptive practices” with the same vigor he used as attorney general to end such practices in the private sector.

To address the fiscal quandary he inherited, Cuomo proposed a budget that not only radically changes the way Albany does business, but tackles this year’s deficit and the state’s structural deficit as well.

According to state Comptroller Thomas DiNapoli, the proposed Cuomo financial plan brings “recurring spending into better alignment with recurring revenue” and reduces out-year deficits by $13 billion, $15.4 billion and $17 billion in state fiscal years 2012-13, 2013-14 and 2014-15, respectively.

The comptroller’s report also made these observations:

  • The Executive Budget avoids significant new tax increases and largely avoids borrowing for operating expenses to close the projected $10 billion deficit. The budget primarily uses recurring spending reductions (totaling 89 percent of the gap-closing plan) for budget balance.
  • The proposed budget is less reliant on temporary and nonrecurring actions than in previous years. The financial plan relies on $7.7 billion in temporary and nonrecurring actions in (State Fiscal Year) 2011-12, a 54 percent reduction from the $16.7 billion used in 2010-11.
  • The governor proposes to create or restructure several grant programs to be competitively and/or performance-based in many substantive areas including education, local governments, economic development and energy.
  • The current year (SFY 2010-11) General Fund deficit, largely caused by lower than anticipated General Fund tax collections, is expected to be closed with revenue received earlier than anticipated, including an accelerated payment (or spin-up) of existing temporary utility tax revenue, and reduced spending, some of which may include changing the timing of payments.

To eliminate the $10 billion deficit, Cuomo calls for shared sacrifice and spares no facet of state spending. Savings and spending reductions in state operations are projected to be $1.37 billion. This could include 9,800 layoffs and the elimination of 3,500 prison beds. As for assistance to local municipalities and school districts, proposed spending reductions and savings total $7.48 billion.

If the governor continues to stand firm, rallies the overtaxed public to his side and fully utilizes his broad executive budgetary powers, he can change the political culture in Albany, checkmate legislators and their union masters, and put the Empire State on the road to fiscal and economic recovery.