Archive for July 2012

The time for whining is over in Nassau – By George J. Marlin

July 26, 2012

The following appears in the July 27-August 2, 2012 issue of the Long Island Business News:

After weeks of procrastinating, Nassau County Comptroller George Maragos has finally confirmed that the county incurred a cash deficit of $50.4 million and a generally accepted accounting principles, or GAAP, deficit of $173.4 million for the year that ended Dec. 31, 2011. (These deficits would have been $30 million higher if the Nassau Interim Finance Authority had not ordered a wage freeze.) He also announced a “deficit of approximately $45 million is projected for a year-end fiscal 2012 unless immediate steps are taken to end in balance.”

Back in September 2010, when NIFA announced that the county’s proposed 2011 budget and its multiyear financial plan did not “meet the standards of prudence necessary for us to project balance at this time,” the county dismissed this assessment, insisting its budget was balanced.

Time and again, Nassau argued that the 2011 budget “was definitely balanced.” Even after NIFA declared a control period on Jan. 26, 2011, the Wall Street Journal reported “Mr. Mangano insists the budget is balanced and has said NIFA is requiring him to come up with unnecessary contingency plans.”

As late as August 2011, the county was still maintaining that its 2011 budget was balanced. Nassau’s chief financial officer, Tim Sullivan, told the county Legislature that it will have a balanced budget. “I know the budget is balanced when a Big Four audit company signs off on it.”

It is now official: Nassau’s budget prognostications were wrong, and NIFA’s deficit analysis released in January 2011 was pretty much on the mark. NIFA had projected a GAAP deficit of $155.5 million and a cash deficit of $53.4 million.

Why was the county’s 2011 budget a fiscal disaster? Many of its revenue and expense estimates were delusional:

And let’s not forget the $61 million in labor contract savings that never materialized.

The unaudited actual budget results and the revenue and expense variances confirm that NIFA had a statutory obligation to declare a control period in January 2011 because there existed a substantial likelihood of the county incurring a major operating funds deficit of 1 percent or more in the aggregate results of operations during its fiscal year 2011.

Nassau has squandered the past 19 months denying inconvenient facts, promoting a $400 million Coliseum referendum the voters had the good sense to overwhelmingly reject, seeking irresponsible Albany bailouts and pursuing dangerous one-shot revenue proposals.

The time for scheming, whining and finger-pointing is over. The time to govern is at hand. The county executive must be responsible and take the necessary corrective actions to restore fiscal integrity. It will mean making difficult and unpopular decisions. Such, however, is the price for holding executive office.

Time to Bury Lenin – By George J. Marlin

July 25, 2012

This article I wrote appears on The Catholic Thing web site on July 25, 2012.

The 2012 legislative session a dud – By George J. Marlin

July 12, 2012

The following appears in the July 12-19, 2012 issue of the Long Island Business News:

The 2012 session of New York’s state Legislature ended – to borrow the words of  T.S. Eliot  – “Not with a bang but a whimper.”  But this is not what Albany’s potentates would have us believe.

True, they did pass the state budget on time. But that is part of their job description. Legislators don’t deserve pats on the back for simply doing what is expected. That would be like Long Island Rail Road commuters giving conductors rounds of applause for announcing station stops.

The Legislature also increased school aid and Medicaid spending. But that was possible because Albany raised state income taxes last December and used the $2 billion in additional tax revenue to reward teacher and health care unions for failure in an election year.

Lest one forget, New York spends more on Medicaid than Texas, California and Florida… combined.  As for education, New York spends more than any other state in the nation, about $18,000 per student. The results, however, prove that exorbitant spending does not guarantee a good education. New York ranks 39th nationally in the percentage of high school kids that graduates in four years.

The new state pension Tier VI for government employees is neither “bold” nor “transformational” as supporters have been insisting. It is merely an incremental nonstructural change that will affect future employees. E.J. McMahon of the Manhattan Institute has called projections that this new tier will save taxpayers $80 billion during the next three decades, “meaningless and speculative.”

Genuine reform that is financially sustainable will be accomplished when the state implements a defined-contribution model, or 401(k) plan, similar to the one offered to State University of New York employees for the past 50 years. The Empire Center for New York State Policy has pointed out that the successful SUNY plan, which is portable if one leaves government service, “is built on insurance annuity contracts, which deliver a stream of retirement income like a pension, in order to protect against the risk that retirees will outlive their savings.”

Albany failed to give struggling local governments unfunded-mandate relief. For years Albany has been evading its responsibility to fund programs they want by ordering municipalities and school districts to provide and pay for a host of services. Complying with these unfunded mandates has forced scores of municipalities to the edge of a fiscal abyss. Albany’s failure to act may force some cities into insolvency in the coming months. The governor should order a special session of the Legislature to deal with this pressing issue.

Albany also surrendered to union bosses and supported legislation that takes away a court-approved right of parents to receive and review teacher evaluations.

Most disappointing, for registered Conservatives like me, was Gov. Andrew Cuomo’s shameless accusation that New York’s Conservative Party engaged in “extremism” for daring to oppose changes to existing marijuana-possession laws. Cuomo, whose locution was dripping with moral indignation, said, “There is no place in this state for extreme conservative theory.”

If the Conservative Party is a hotbed of extremists, why did Cuomo, as attorney general, speak at the party’s February 2009 Albany conference and urge an alliance to pass his proposed legislation to initiate referendums to reorganize or eliminate inefficient local governments? If Conservative Party Chairman Mike Long is an extremist crackpot, why did Cuomo enthusiastically accept Long’s endorsement of the bill and praise him as a man of principle? And, by the way, am I to suppose that I was the token “extremist” member of Governor-elect Cuomo’s transition team?

If the governor is committed to combating extremism, he might begin by repudiating the ACORN/public employee-controlled Working Families Party, whose endorsement he accepted in 2010. Since he has taken office, those big-government, “soak the rich,” tax-and-spend ideologues have vigorously opposed the implementation of Cuomo’s New New York Agenda to stem the state’s economic hemorrhaging.

As a summer project, the governor should clean out from his own political backyard the extreme left-wing alarmists and cranks who have been hiding in the weeds.

The Original Godless Terrorists – By George J. Marlin

July 11, 2012

This article I wrote appears on The Catholic Thing web site on July 11, 2012.

More government hiring is not the answer – By George J. Marlin

July 2, 2012

The following appears in the June 29 – July 4, 2012 issue of the Long Island Business News:

President Barack Obama’s recent statement, “The private sector is doing fine” will rank in the annals of presidential quotes next to President Nixon’s “I’m not a crook” and President Ford’s, “There is no Soviet domination of Eastern Europe and will never be under a Ford administration.”

The fact is that 35 months after the Great Recession ended, the United States is experiencing the most anemic private sector recovery in the past half-century.  Between 1960 and 1999, average annual economic growth was 3.5 percent; between 2000 and 2009, 1.7 percent; and since then, economic growth has averaged 0.6 percent.

Many Americans still believe the economy is a mess because unemployment has been over 8 percent for 40 straight months, 23.2 million people are in need of work and the net worth of the middle class has been hemorrhaging. The Federal Reserve Survey of Consumer Finances, released in June, revealed that the overall net worth of the average household in 2007 was $126,000 and in 2010 it was $77,000 – down 40 percent in three years.

With the media spotlight on Obama’s private recovery statement, what was largely overlooked, however, was his follow-up comment: “Where we’re seeing weakness in our economy has to do with state and local government.”

Actually, the public sector is doing well versus the private sector. State and local government employment has been up 4 percent since the recovery has commenced.  Between 2007 and 2010, thanks to gratuitous public employee union contracts, annual wages grew 40 percent faster than wages in the private sector.

Also, public sector workers have benefits far superior to their neighbors who work for private companies.  According to the U.S. Bureau of Labor Statistics, 90 percent of state and local government workers have access to pensions versus 65 percent in the private sector.  Access to health insurance: 87 percent public, 69 percent private. Workers’ average cost of benefits: $14.51 per hour for public workers, $8.55 for private employees.

Obama and his big-government friends do not understand that their prescription – more federal stimulus dollars to state governments to maintain or increase public employee jobs – does not produce economic growth.

In New York, for instance, the billions of Obama stimulus dollars that arrived in 2009-2010 were used not to spur the economy but to expand state expenditures at pre-recession levels – about three times the inflation rate. And when the stimulus money dried up, not only did Albany have to deal with a $10 billion structural deficit, the state’s economic recovery lagged behind most other states.

New York’s unemployment rate in May stood at 8.6 percent versus 8.1 percent a year ago.  The state added only 6,100 private sector jobs in May, significantly behind lower tax and regulation-friendly Ohio’s 19,600 new jobs.

For New York to prosper, it must be acknowledged that public employee salaries and benefits are destroying local economies, not improving them.  Long Island’s residential and commercial real estate values continue to decline because there is little hope that local government spending will be curtailed due to the size of unfunded pension and health care liabilities. Right now, Nassau and Suffolk municipalities and school districts, on average, dedicate 8 percent of their operating funds to pension contributions. Because of increasing pension payouts and lackluster investment returns on pension fund assets, local contributions are expected to grow to 20 percent of operating budget expenditures within the next five years.

Contrary to President Obama’s claims, expanded government has been hindering local economies and destroying municipal tax bases. And if political leaders refuse to say “enough already,” expect ballot-box revolts, similar to San Diego and San Jose, Calif., where voters approved measures June 6 to cut pension and health care benefits to municipal employees and retirees, to spread like wildfire across the nation.