Archive for March 2015

Cuomo should pull recovery ‘propaganda’ – By George J. Marlin

March 17, 2015

The following appears in the March 13-19, 2015 issue of the Long Island Business News:

I don’t know about you, but I’m getting tired of watching Governor Andrew Cuomo’s propaganda commercials touting New York’s so-called economic renaissance.  First of all, in my judgment, the money expended to run the ads is a waste of taxpayer money.

And secondly, the TV ads are delusional.  The claim that New York is job- friendly is nothing more than empty rhetoric designed to promote Cuomo’s image nationally.

To get a realistic picture of New York’s financial and economic plight, here’s some interesting data that was released in the past year:

  • The American Legislative Exchange Council ranked New York as having the worst economic outlook.
  • More people have left New York to find greener economic pastures than any other state in the nation. Over 450 thousand have hit the road in the past four years.
  • An AARP study revealed that 60 percent of New Yorkers over 50 years of age say they are likely to move to a less expensive state when they retire.
  • The Empire Center for Public Policy reported that New Yorkers “pay some of the highest local taxes in the nation.” And, you will be happy to know that the Town of Oyster Bay gets the award for being “the highest-spending and most heavily indebted large town” in the state.  This may help explain why the town is in deep financial trouble, lost its Moody’s insured rating on bonded debt and why, last November, it passed an 8.8 percent property tax increase without any notice to its residents.
  • The Mercatus Center at George Mason University in its 2014 edition of “Freedom in the 50 states” determined that “New York is the least free state in the union.” The state has the highest taxes—14 percent of income.  As a result, the researchers were not surprised that residents have been heading for the exits with, on net, 9 percent leaving since 2000.  This is the highest migration figure in the nation.
  • The University of Illinois ranked New York as having the most corrupt government in the United States.

To add to this dismal picture, this month the John Locke Foundation, a think tank dedicated to transforming government through competition, innovation, personal freedom and personal responsibility, released its “First in Freedom Index.”  The report examines the relationship between tax and regulatory policies and economic growth as well as the fiscal, educational, regulatory, and healthcare freedom of the fifty states.

In the area of taxes, the First in Freedom Index concluded what New Yorkers know instinctively, “that most forms of state and local taxation have statistically significant and negative associations with economic growth.  That is, the lower the tax, the better off the economy is, all things being equal.…”

And after assessing New York’s tax climate which includes income, sales, businesses, property and payroll taxes, the state came in last place.

When it comes to regulatory freedom, New York received a state ranking of 47th.  Only Rhode Island, California and New Jersey received poorer ratings.  In the area of healthcare freedom, New York was rated 49th.

Assessing all the data, the John Locke Foundation was able to make some interesting conclusions:

  • Since 2011, the 10 top states have had a 2.3 percent annual average GDP growth rate while the 10 lowest experienced an average GDP growth rate of 1.5 percent.
  • The 10 states that have highest rankings in healthcare freedom have average healthcare costs of $6,533 per person. The average healthcare costs of the 10 lowest rate states is $7,689 per person—18 percent higher.

All of these studies refute Cuomo’s wishful-thinking TV ads.  His television campaign is an insult to New Yorkers who know better and if he has an ounce of integrity left he should order the commercials to be pulled.

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Remembering Cardinal Egan – By George J. Marlin

March 10, 2015

This article I wrote appeared on The Catholic Thing web site on March 10, 2015.

New York’s crony capitalism agency – By George J. Marlin

March 2, 2015

The following appears in the February 27-March 5, 2015 issue of the Long Island Business News:

In the aftermath of the Martin Luther King Jr. assassination in April 1968, Gov. Nelson Rockefeller forced down the throat of the state Legislature a bill that created the Urban Development Corp. This entity had a wide mandate to provide fast-track housing, industrial development and civic improvements throughout the state.

UDC’s incorporation papers stated there was “legislative intent” to supply money to meet principal and interest on outstanding bonded debt in the event of shortfalls. Since the state had no legal obligation to aid the agency, the concept became known as “moral obligation.” Designed by John Mitchell, who served as Nixon’s attorney general and 1972 campaign manager, “moral obligation” bonds constituted a financial gimmick to get around bonding limitations of the state constitution and to make dubious projects more palatable to the bond underwriters in the investment community.

In early 1975, with cutbacks in federal grants and a recession settling in, UDC had a cash-flow problem when several of its projects went belly-up. On February 25, 1975, UDC defaulted on paying off $104.5 million owed to holders of bond anticipation notes.

Within a month, Gov. Hugh Carey patched together the resources to repay the money, but UDC’s reputation as an economic engine for New York was seriously damaged.

Nevertheless, since that time, the agency has continued to toss bags of money around the state to subsidize various business projects, albeit, since 1995, under the new improved name Empire State Development Corp.

Today ESDC is a huge government leviathan saddled with more than $10.4 billion of debt (20 percent of state public authority debt outstanding), and as a February 2015 report issued by Comptroller Tom DiNapoli points out, it is the primary vehicle for “backdoor borrowing, which is conducted on behalf of the state with no requirement for voter approval.”

The agency has also created more than 200 subsidiary corporations. Audits by the state comptroller’s office have determined the entities do not have adequate oversight by ESDC and that many of them should be dissolved because they no longer serve any purpose.

The comptroller’s office as well as watchdog group Citizens Budget Commission have questioned the effectiveness of ESDC subsidiaries and tax credits. The comptroller concluded that ESDC’s “job creation prowess was relatively meager compared to the amount of state funds spent.”

In fiscal year 2013, ESDC’s total expenditures were $1.3 billion, which included economic development grants of $581 million and reimbursed grant expenses totaling $137 million.

And what was the return in fiscal year 2013 on these so-called investments? ESDC aided 201 companies statewide, which resulted in 12,355 jobs being retained and 2,424 jobs created – 1.8 percent of net private-sector job creation during that year.

Impressive results? I think not. Do the math: $1.3 billion in expenditures divided by 14,779 total jobs saved and created equals $87,962 spent for each job. That’s a lot of money per job.

Even more disturbing: ESDC does not provide the public with any comprehensive data describing how allocations are determined or if the agreed-upon goals of the companies helped are ever met. And approximately 28 percent of the companies assisted in 2013 were not chosen by ESDC but by the state Legislature.

The process, in my judgment, smacks of crony capitalism. The governor or legislative leaders can influence decisions that help their constituents, contributors or pals regardless of the merits – and the meager results prove it.

Job growth will never be sparked by government entities like ESDC. That’s because by its very nature, ESDC is driven by political interests, not economic ones. Until New York’s elected leaders abandon underperforming subsidies in favor of genuine tax cuts and regulatory and unfunded mandate reforms, the Empire State will continue to lag the nation in job growth.