Archive for February 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.