Archive for February 2014

The Nassau County Mangano-Kaiman Watch, February 25, 2014 – By George J. Marlin

February 25, 2014

The Jon Kaiman “Plan to Modify Wage Freeze”:

 A Review

Nassau County wage freezes imposed by NIFA, at the request of County Executive Mangano in 2011, 2012 and 2013, have saved the County approximately $230 million and has saved the County from financial insolvency.

In other words, instead of making additional spending cuts or renegotiating union contracts or raising property taxes, the County has saved its fiscal skin by taking $230 million from Nassau workers.

Because the County has not adequately addressed its projected operating deficit for 2014, it will have to request NIFA to impose another wage freeze in March 2014.

It is interesting to note, however, that ever since Nassau County PBA boss, Jim Carver, met with the Executive Deputy Secretary to Governor Cuomo in October 2013, NIFA Chairman Jon Kaiman has been desperately trying to get a deal done that would lift the wage freeze on police personnel in 2014.

Kaiman’s “Hail Mary” effort was described in a memorandum he distributed to NIFA board members titled “Plan to Modify Wage Freeze” dated February 4, 2014.

What was most remarkable about Kaiman’s rambling memo was that it did not contain any financial numbers.  That’s probably because PBA proposals do not meet the goal of being cost neutral.

Time and again the PBA has put on the table proposals that have been rejected because its rosy financial assumptions do not hold up when analyzed by NIFA staff.  For instance, in October 2013, a NIFA analysis of a PBA proposed Memo of Agreement revealed that the document was not cost neutral but would cost the County “approximately $240 during the term of the Multi-Year Plan with additional expenses continuing during an extensive period.”

In addition, PBA proposals always insist on counting police force attrition which is already included in the County’s operating budget.  Attrition savings cannot be counted twice!

Proposals work if the projected savings are equal to or more than the wage freeze in real dollars during the life of the proposal.  A proposal fails if it costs even a dollar more than the wage freeze saves.

Time and again when the math did not work, the PBA threw down intangibles on the table—like morale.  And that’s exactly what Kaiman resorted to in his numberless memo.  Given police minimum manning and the extraordinarily high overtime, and that median police compensation is higher than the median compensation of Nassau taxpayers, it seems unlikely that the police are depressed.

Furthermore, to suggest that the wage freeze “has had a serious affect on morale and is leading to a crisis scenario”, does not speak well of the policies of Kaiman’s boss, Governor Andrew Cuomo.  Lest one forget the Governor has supported a “0, 0, 0” position on wage increases for state employees.

For Kaiman to argue that his numberless proposal, if implemented, could lead to a “permanent lifting of the wage freeze” is ridiculous and legally impossible.  NIFA under its statute cannot commit not to impose a wage freeze.

Then there is the issue of the union lawsuits against NFA that argue the wage freeze is unlawful.  The PBA’s offer to withdraw its lawsuit and waive future litigation if a deal is struck is equivalent to giving sleeves off a vest.  The unions know the case law on wage freezes side with NIFA.

Finally, Kaiman’s latest “Hail Mary” pass—counting $8 million of very rosy projected fines from additional red light cameras—just doesn’t cut it.  In the unlikely event fines reach projected amounts, it would not be enough to fund the PBA proposal.

The Kaiman memo is ultimately all gibberish without numbers.  To get headlines and his photograph in the press, Kaiman is willing to capitulate and to destroy the public integrity of NIFA.

The Nassau County Mangano-Kaiman Watch, February 24, 2014 – By George J. Marlin

February 24, 2014

PREAMBLE

I had the privilege of serving the people of Nassau County as a Director of the Nassau Interim Finance Authority (NIFA), a New York State financial oversight and control board, for four years.  During most of my tenure as a NIFA Director, Nassau was in a control period because the County had failed to adequately address its fiscal deficit.

Since the NIFA control period began on January 26, 2011, the County has failed to stop illusory budget practices and to stop juggling money to keep on the budgetary lid.  Instead of managing fiscal realities, County officials have governed by finger-pointing, issuing rosy press releases and attending ribbon-cutting events.

As a result of the County’s incompetence, negligence and indifference, the NFIA staff projects operating deficits of $157 million in fiscal year 2015, $190 million in 2016 and $255 million in 2017.

A control period is a Draconian measure that a locality should wish to avoid and if it occurs, to climb out of as quickly as possible.  But not Nassau.  It prefers to defer tough decisions and blithely go along la de da, tomorrow is another day.

The Nassau County Mangano-Kaiman Watch is dedicated to exposing fiscal and political shenanigans of County and NIFA officials and to waging a genuine reform campaign to prevent fiscal catastrophe and to restore taxpayer confidences.

‘Progressive’ de Blasio a boon for LI? – By George J. Marlin

February 20, 2014

The following appears in the February 14-20, 2014 issue of the Long Island Business News:

Most candidates who get elected running to the far left or far right of the political spectrum generally move toward the center once they’re sworn in.

This is not the approach of New York City Mayor Bill de Blasio.

In his first month in office, de Blasio made it clear he’s sticking with an extreme leftist agenda. He insists that free markets and trickle-down economics won’t reduce inequality, and to achieve a more “just society” his administration is preparing to take serious “actions” and make “substantial government investments” – aka increased welfare spending.

His progressive actions to date, as one New York Post wag wrote, appear to be about doling out punishment: “punishing the wealthy by raising their taxes, punishing [school] charters by depriving them of space, punishing cops by branding them as racist, even punishing workers whose only crime is to take folks on horse rides around Central Park.”

One policy he’s adamant about is raising the city’s income tax rates. During the campaign, he stated that the tax increase was to fund universal pre-kindergarten classes. But after Gov. Andrew Cuomo announced the state would provide the money to pay for pre-K programs, de Blasio admitted he still wanted an income tax increase. His war on “income inequality,” he said, requires it.

If de Blasio gets his way, a very small pool of people – about 40,000 out of 8.5 million – will be affected. These wealthiest, who presently pay about 50 percent of total city income taxes, will have to fork over considerably more: Those who make more than $1 million, on average, will have to pay an additional $7,793 annually; over $5 million, $33,518; over $10 million, $182,893.

However, the increased income tax revenue will not be sufficient to fund all de Blasio’s social welfare plans and to pay off his key supporters – public sector employees, who expect $7 billion in back pay and significant salary increases going forward. Hence, property tax levies will probably go through the roof.

Compared to Nassau County, taxes on NYC single-family residences are relatively low. In the borderline Village of Floral Park, for instance, a post-World War II Cape Cod home on the Nassau side pays about $9,000 in total taxes, while across the street a city resident pays about $3,000 on the identical house. This disparity exists because city folks have the additional burden of paying a local income tax.

But de Blasio doesn’t care about that. To pay for his redistributive programs, he’ll happily increase the property taxes on the very middle class he claims he wants to help.

There could be economic and financial opportunities for Long Island to reap if the cost of living in the city skyrockets and the quality of life declines (i.e. crime goes up), and the mayor increases the regulatory burdens on small businesses such as expanding wage laws and paid sick and maternity leave.

To escape the city’s progressive policies, a significant number of the top 40,000 may look to suburbia. Despite Long Island’s high property taxes, on a net-net basis, the city’s 1 percenters might pay less by making the move.

Some may move to LI to avoid the income tax while keeping their city apartments. Remember, people who relocate – to, say, Sands Point – can spend up to 180 days annually in their city apartments and still claim their Long Island home as their permanent residence.

Instead of the governor of Texas poaching New York’s wealthiest folks and entrepreneurs, maybe it’s time for Long Island’s elected leaders to put out the red carpet – particularly, for those who aren’t quite ready to move to the culturally barren Southwest.

Convincing them to relocate here could be a layup – even for our bumbling county officials.

Pope Francis’ Economics – By George J. Marlin

February 19, 2014

This article I wrote appeared on The Catholic Thing web site on February 19, 2014.

New Book Exposes Liberal ‘Social Snobs’ – By George J. Marlin

February 17, 2014

This article I wrote appeared on the Newsmax.com web site on February 17, 2014.

Election-year follies with Gov. Cuomo – By George J. Marlin

February 6, 2014

The following appears in the January 31-February 6, 2014 issue of the Long Island Business News:

Gov. Andrew Cuomo’s proposed budget for fiscal year 2014-15 is a classic election-year budget that attempts to be all things to every voting group in the state.

To appeal to fiscal conservatives he’s proposed keeping spending increases under the rate of inflation, at about 2 percent. He’s also claiming that the success of his policies will result in a $2 billion surplus that could fund some tax cuts and property tax credits for select homeowners.

What the governor failed to mention is that his so-called “tax relief” is nothing more than income redistribution. That’s because he raised taxes on the rich – breaking his solemn pledge not to do so – and the $2.6 billion in revenue generated from the increases will be used to fund this so-called relief.

As for the governor’s boast that his outstanding stewardship of the state’s finances has turned a projected $3 billion deficit into a $2 billion surplus, experts are questioning his veracity.

After reviewing the governor’s proposed financial plan, E.J. McMahon, president of the Empire Center for Public Policy, said: “There is no $2 billion surplus, not really. Not by any traditional standard of measurement. In fact, if the executive budget is adopted as proposed, the state will still face a budget gap of $1.6 billion in 2006, $2 billion in 2017 and $3 billion in 2018.

“That ‘$2 billion budget surplus’ is, or was, strictly aspirational,” McMahon added. “Or a better word, notional. Or hypothetical. Or something other than actual, based on adoption of the actual budget proposed by the governor.”

To placate the extreme leftists who control the state’s Democratic Party, New York’s City Hall and the teachers’ union, Cuomo has vowed to fund universal full day pre-K, which is expected to cost $100 million next year and is projected to top $500 million annually by year five.

He has also proposed to put before the voters this November a $2 billion bond proposal. If approved, the money would be used to fund “the technology of tomorrow” for schools and to pay for the construction of pre-K classrooms.

The benefits of 4 year olds in full day pre-K programs are dubious at best. The political and practical reason for implementing the program: It creates thousands of new teaching positions, which further empowers teachers unions. New York City’s Mayor de Blasio has another motive for supporting pre-K: He can force charter schools, which he and the teachers union despise, out of city public school buildings, citing the need for space.

As for the $2 billion bond issue, incurring long-term debt to buy laptops and iPads – which have short life spans – is ludicrous. The Empire Center points out that the real motive for borrowing is “to cover expenditures heretofore subsidized out of the state’s annual operating budget in the form of school aid, including funds dedicated for building and ‘hardware and technology.’”

This is a classic fiscal gimmick perfected by the governor’s father, Mario Cuomo, whereby one issues long-term debt to pay for today’s operating expenditures. Such fiscal shell games brought New York City to the edge of bankruptcy in the 1970s.

Hopefully, the voters in November will have the good sense to reject this sop to the teacher unions.

Cuomo’s boast that he is “Building on Success” and that he has “reversed decades of decline and made dramatic and undeniable progress” appears to be falling on deaf ears. Between July 1, 2012, and June 30, 2013, New York lost 104,000 residents than it took in. The Empire State has the worst domestic migration record in the nation.

People are leaving economically depressed areas like Broome County, where Cuomo forbids hydrofracking, for fast-growing states like North Dakota, which have been experiencing a fracking-fueled boom.

Until Cuomo champions genuine tax cuts and promotes real job growth, expect New Yorkers to continue flocking to the exits.

Get the Port Authority back to basics – By George J. Marlin

February 5, 2014

The following op-ed piece I wrote appeared in Newsday on February 2, 2014.

The repeated claim by Port Authority bureaucrats over the years that the agency is removed from the political environment and exercises the best scientific management theories is nonsense.

Because the ultimate overseers of the bi-state agency created in 1921 are the governors of New York and New Jersey, the authority will always be managed by their political allies. However, that does not mean the authority’s practices and policies cannot be reformed or improved.

For several months, the Port Authority has been embroiled in scandal amid allegations that a top authority appointee of New Jersey Gov. Chris Christie abused the power of his office to create traffic havoc on the George Washington Bridge to punish a political foe — and that Christie knew more than he has acknowledged. A federal investigation is underway, and a spotlight has been cast on the agency’s operations.

One glaring shortcoming at the agency that can be eliminated with the stroke of a pen is the Port Authority’s Regional Economic Development Program — also known by authority insiders as “The Bank.” Established along with the 1984 toll hike, The Bank funded some $400 million in pet projects on either side of the Hudson River.

This fund, which has been replenished after each toll hike, has been a reward to governors for not objecting to toll increases.

Abolishing the program would send a strong message that the governors are serious about reforming the agency.

The Port Authority lost its way in the 1980s and early 1990s when its mission was redefined as a regional economic engine instead of a brain trust for transportation policy. Authority officials, who did not understand market forces, funded countless economic initiatives that failed, including the Brooklyn Fishport fishing complex; industrial parks in Bathgate, Yonkers and Elizabeth; a World Trade Institute that included a language school; and a downtown hotel.

Fortunately, some of those economic projects were sold or closed during my tenure as executive director — and others the authority has been saddled with for decades are being unloaded. Its Essex County Resource Recovery Facility was sold last year; the Newark Legal Center is being sold; and the Teleport office park on Staten Island is on the market.

For the authority to get back on track, it must recommit to its core mission — transportation — and examine all its undertakings and projects to determine whether they are germane to the agency’s mission. Financial resources should be shifted from headquarters staff to line department operations — aviation, port commerce and transportation. And an aggressive capital program to overhaul its aging infrastructure should move ahead.

Some of this is already in the making: About $5 billion in investments have been committed to rehabilitating Kennedy and LaGuardia airports. More than $2.6 billion is being dedicated to fix the infrastructure of the George Washington and Bayonne bridges. And plans to build a new Goethals Bridge are underway.

If the Port Authority gets back to basics and efficiently meets the critical transportation needs of the region, the public will be the winner. But that will require two governors to stop using the agency as a bank to fund their pet projects.

George J. Marlin, a former executive director of the Port Authority (1995-1997), is a director of the Nassau Interim Finance Authority.