The following appears in the December 14-20, 2012 issue of the Long Island Business News:

Here’s my take on those that gained and those that lost this year in Long Island’s game of politics.

WINNERS:

Steve Bellone: Since taking office Jan. 1, Suffolk’s county executive has actually governed. He has made some tough budgetary decisions, and so far he has not resorted to kicking the fiscal can down Veteran’s Memorial Highway. While one might not agree with every one of Bellone’s policy initiatives (i.e., the police contract), he appears to be on track to avoid turning Suffolk into a ward of the state like neighboring Nassau.

Congressman Peter King: He handily won his 11th term to Congress. This affable and competent congressman has proven time and again that one can be a dedicated conservative who is pro-life and pro-traditional marriage, and still win elections in blue New York. State Senate Republicans should heed his example.

Congressman Tim Bishop: In one of New York’s most expensive and contentious congressional races, Bishop was able to beat back for a second time Repulican challenger Randy Altschuler 52.2 percent to 47 percent. So much mud was flying between the Bishop and Altschuler camps that on Nov. 7 both candidates and their staffs had to take long, hot showers to wash it all off.

Jon Kaiman: The North Hempstead town Supervisor was lucky enough not to be named the chief executive officer of the Long Island Power Authority a few weeks before Hurricane Sandy hit Long Island. If he had received the nod he would now be standing on the unemployment line with other senior staff members.

LOSERS:

State Sen. Dean Skelos: The Rockville Centre senator thought he could not only maintain but expand his Republican majority by bringing the same-sex marriage bill to the Senate floor for a vote and by supporting Gov. Andrew Cuomo’s income tax increases. He was wrong. The Conservative Party, true to its word, brought down recalcitrant Senate Republicans by denying them its nomination. To maintain power and perks for their own sake, Skelos has cut a ridiculous deal with several dissident liberal Democrats. Expect “Bi-weekly” Majority Leader Skelos to be nothing more than Cuomo’s knave.

LIPA’s management team: Hurricane Sandy proved that this important state agency cannot and should not be run by local political hacks. The management team learned nothing from 2011’s Tropical Storm Irene. They failed to improve customer communications and failed to implement simple recommendations to prevent blackouts such as trimming tree limbs. Expect the size of LIPA’s overpaid staff to significantly shrink.

Congressman Steve Israel: He may have easily won his seventh term to Congress but as head of the Democratic Congressional Campaign Committee, he was a dismal failure. Under his leadership the Democrats made little headway in their quest to regain control of the House of Representatives. Also, the special deal Israel cut that reduced his home mortgage repayment by $93,000 did not pass the political smell test.

Nassau Comptroller George Maragos: For reasons known only to him, Maragos thought he was well-suited to take on U.S. Senator Kirsten Gillibrand in 2012. Despite the support of Nassau’s GOP, he came in last place at the Republican State Convention and in the September primary. The hapless candidate, who received only 14 percent of the vote in the primary, proved it takes more than money to be a viable candidate.

The Hempstead Town Animal Shelter’s management team: This animal shelter, which costs twice as much to run as other Long Island shelters, has squandered millions of taxpayers’ dollars on high salaries, perks and excessive overtime. The state audit of this Republican patronage-laden operation concluded it is “a case study in mismanagement, poor recordkeeping and budgetary incompetence.”­

The following appears in the December 7-13, 2012 issue of the Long Island Business News:

In the aftermath of Hurricane Sandy, New Yorkers learned a lot about the nature of their fellow citizens and of their governments.

As for people, the crisis brought out the best in them. Tens of thousands of volunteers traveled to ravaged areas to help feed, clothe and comfort the victims of the storm. These unsung heroes were not looking for awards or overtime pay; they were simply living by the golden rule, “Love thy neighbor as thyself.”

As for federal and state government agencies, they, by and large, failed. Sometimes they appeared to get in the way of progress. The sign posted on a local Federal Emergency Management Agency office door the day after the Nov. 7 nor’easter, “Closed Due to Weather Conditions,” says it all.

The poster child of failed government for residents of Nassau and Suffolk counties, who spent days and weeks without electricity (my power was out for 14 days, two hours and 30 minutes) is the Long Island Power Authority, a New York state public benefit corporation.

LIPA was created by the state in 1986 so Gov. Mario Cuomo could pursue his ill-conceived plan to stop the LILCO-owned Shoreham nuclear plant from ever opening.

In 1998, Gov. George Pataki used LIPA – despite a campaign pledge to the contrary – to acquire LILCO with $7 billion of tax-exempt debt. Having served on the LIPA transition team in 1994-95, I know that LIPA was intended to be a holding company with 25 staffers to oversee the financing and National Grid’s operation of the electric system going forward.

Instead, under the ego-driven leadership of the former, longtime CEO, LIPA ballooned to over 100 staffers, ravenously consumed tens of millions of dollars on ad campaigns for a monopoly public-sector utility, morphed into activities inappropriate for a public utility and became another unresponsive level of government.

LIPA was in the past chastised by the state comptroller and elected officials of both parties for its misdeeds and skated close to the ethical edge. LIPA improperly authorized spending of public monies for polling regarding elected officials, awarded no-bid contracts worth tens of millions of dollars and was well-known for hiring the sons and daughters of the politically connected and members of the political class seeking high-paying employment. In short, LIPA became a refuge for hacks of both parties.

Most critically, LIPA’s performance in communicating with its customers and restoring service after Hurricane Irene last year was profoundly deficient. That’s not my opinion; that’s what Gov. Andrew Cuomo said at the time. Not surprisingly, LIPA’s customer satisfaction ratings are the lowest in the United States.

LIPA’s dismal response after Hurricane Sandy revealed that the agency learned nothing from last year’s disaster. In fact, LIPA failed to implement common sense recommendations intended to prevent blackouts, such as trimming tree limbs, replacing damaged electrical poles and updating ground workers technology equipment and customer communication systems.

LIPA’s fundamental problem has been the absence of competent leadership. And the state doesn’t need to spend money on investigative commissions and panels to confirm that.

The governor must first fill LIPA board spots he has left vacant for too long and replace holdovers with smart public-spirited members, not stone-deaf hacks. Then he must order the reorganized board to find a utilities expert to fill the CEO job, which has been vacant for over two years. This will mean offering a competitive salary. No well-paid potential CEO is going to leave a smooth-running power agency to take over the LIPA mess for $200,000 a year.

LIPA staff and overhead must be significantly shrunk. LIPA’s wasteful advertising campaigns must be halted and the “LIPA brand” must be phased out. LIPA’s expensive environmental “investments” should be pursued by the New York State Energy and Research Development Authority, a state agency with relevant experience.

The state created the LIPA monster and now it is time for Albany officials to focus on downsizing and reforming it. Long-suffering and overburdened customers deserve no less.

The following appears in the October 19-25, 2012 issue of the Long Island Business News:

Shortly after Barack Obama took office in 2009, he promised the American people his $860 million stimulus program would jumpstart the economy, be spent on shovel-ready infrastructure construction projects and bring down unemployment to 5.8 percent by the end of his first term. He also pledged to cut the budget deficit in half by 2012.

Well, here we are four years later, and we now know that Obama’s promises were hollow ones and his much touted 2010 “summer of recovery” never materialized. The stimulus failed to move the economy into top gear and failed to put millions of people back to work.

The president’s economic analysis, titled “Job Impact of the American Recovery and Reinvestment Plan,” which predicted the unemployment rate would peak at just under 8 percent in 2009, was wrong. The actual annual unemployment rate hit 9.3 percent in 2009, 9.6 percent in 2010 and 8.95 percent in 2011.

Explaining this phenomenon, the president, in a candid moment, admitted that the shovel-ready construction projects were never really shovel-ready.

The fact is, the bulk of the stimulus money was spent to pay back public employee unions for their 2008 support. Hundreds of billions of one-shot dollars were allotted to state governments to plug their operating deficits and to avoid bureaucrats’ layoffs. And when the stimulus money ran out in 2011, many governors had no alternative but to lay off workers to balance their budgets. New York had to eliminate a $10 billion deficit with major across-the-board cuts.

As for the federal government’s operating deficit, Obama has not only failed to cut it in half, he has permitted it to spin out of control. The national debt, which Obama said was “irresponsible” and “unpatriotic” when it hit $9 trillion in 2008, has grown to $16 trillion on his watch.

Obama supporters jumped for joy in early October when the unemployment rate, which was 8.1 percent in August, suddenly dropped to 7.8 percent in September. Their celebrations, however, may have been a little premature. That’s because the drop was primarily caused by more people giving up looking for work. Over 8 million unemployed who have thrown in the towel are not counted in the Labor Department’s unemployment figures.

Three years after the Great Recession officially ended, 12 million Americans are still looking for work. Five million have been out of work for six months, 3.5 million for over a year. If the number of underemployed (i.e. part-time workers) and those who have stopped looking are added in, the number jumps to 23 million, putting real unemployment at 15 percent.

While our nation’s population has grown by 31 million since 2000, fewer people are working because only 2 million of the 8 million jobs lost in the recession have been recovered. As a result, 15 percent of the population is below the poverty line, 48 million receive food stamps, 9 million are on disability, half of 2012’s college graduates are unable to find work and 60 percent of Americans believe the nation is on the wrong track.

The failed economic and fiscal policies of the president of hope have driven many people to give up hope.

Shortly after Obama signed into law his stimulus legislation in 2009, he said, “You know, a year from now, I think people are going to see that we’re starting to make some progress, but there’s still going to be some pain out there. If I don’t have this done in three years, then there’s going to be a one-term proposition.”

Since it hasn’t been “done” in four years, voters should take Obama at his word and deny him a new four-year lease on the White House.

The following appears in the October 5-11, 2012 issue of the Long Island Business News:

The Office of the New York State Comptroller announced Sept. 19 that total state tax revenues for the period April 1 through Aug. 31 were $147 million less than projected and $204 million below collections for the same period in 2011.

“Almost halfway through the state’s fiscal year, the state’s budget is still on relatively solid ground, but weak revenue collections and slow economic growth signal a need for caution going forward,” Comptroller Tom DiNapoli said.

What should sound alarms throughout the state is the comptroller’s report on personal income tax, or PIT, collections. These revenues, which totaled $11.2 billion as of Aug. 31, were down $149.5 million and are lower than the total income projected in the state’s revised fiscal plan.

The PIT figures indicate that three years after the recession ended, New York’s economy is not experiencing a robust recovery. The state Labor Department confirmed this when it announced Sept. 21 that the Empire State’s unemployment rate is stuck at 9.1 percent versus 8.1 percent nationally. The total number of unemployed, which was 869,400 in July, increased in August to 872,100.

Don’t expect the job situation to get any better during the fourth quarter of this year. That’s because the financial sector, which is the key component of the state’s economy, will contract, not expand, by the year’s end.

The nation’s second largest bank holding company, Bank of America, announced in September it will lay off 16,000 employees and close 200 more branches by the end of the year. New York will take a big hit because Bank of America has a large presence in the state. In addition, Wall Street investment banking firms are expected to downsize due to declining revenue, particularly in corporate finance departments.

On another front, American Airlines, which is a major employer at the region’s airports, has sent out layoff notices to 11,000 employees and intends to fire at least 4,000.

Other bad news for the state: The economic slowdown in Europe is beginning to hit our economy. There is less demand for American goods and as a result, traffic in New York’s ports is expected to decline. A prolonged European downturn will also hurt the state’s If Italy or Spain or Ireland or Greece throw in the towel, abandon the euro and default on debt, a worldwide recession could ensue, further damaging New York’s stressed financial sector.

Another potential problem: If the Bush tax cuts, the payroll tax cut and various business tax credits all expire in December, and the mandatory federal sequestration of across the board cuts in discretionary spending is triggered, there will be a fiscal shock that will severely harm New York’s already weak economy.

The Congressional Budget Office has announced that if these events come to pass, the nation will plunge into a recession in the second half of 2013. And New York, which is dependent on major government spending and has a high concentration of high earners, will take a major hit.

In a recent analysis, the American Action Forum has pointed out that if the U.S. falls off this “fiscal cliff,” total federal and state marginal rates for New York’s small business owners and high-earning taxpayers will exceed 50 percent. They predict this would increase the costs of doing business for every small and medium-sized company and “would reduce the probability that a small business would undertake expansion by nearly 15 percent, and reduce the capital outlays of those who do by almost 20 percent.” The AAF estimates that New York could lose between 171,000 and 614,000 jobs.

This fall, don’t let any politicians con you into believing all is well. National and international events could easily shatter New York’s fragile economy.

Statement by
George J. Marlin
Director
Nassau Interim Finance Authority

September 24, 2012

            The County’s proposal to finance property tax judgments is another scheme to evade the approval process to borrow money.

           If the County could execute a deal with RPTF LIC of Uniondale (a firm Newsday reports “has not been incorporated and does not have a web site or phone number listed in public records”) it would not be “selling” judgments it would be borrowing money for seven years at an outrageous annual interest rate of 5.95%.

           When a government entity sells its unpaid bills or liens or uncollected judgments, it sells them at a deep discount (i.e., 10 cents on a dollar) then it writes down the receivables on its balance sheet and gives up any future claims.  The vendor who purchases these government uncollectibles has the right to go out and try to collect the unpaid balances.

           The County’s proposal is completely different.  The County would not be selling receivables, it would be borrowing money at 5.95% to pay down tax refunds which are listed on the County’s balance sheet as liabilities.  County Comptroller Maragos got it right last week when he said the proposal would be “adding millions of dollars of debt to the County’s books.”

           The CountyAttorney claims he has the power to settle judgments under $100 thousand.  This may be true.  But it does not mean he has the authority to borrow money to pay the judgments he settled.  That approval must come from the Legislature.

           As for the 5.95% annual interest rate, the County announced it would be willing to pay on a seven-year loan—it is an egregious amount.  The County could issue tax-exempt municipal bonds for seven years at an approximate rate of 1.50% or lower.  The County’s claim that it can issue only 20 year tax-exempt bonds is wrong.

           If the County does not abandon this ill-conceived borrowing scheme, County legislators should go into court and request a Temporary Restraining Order (TRO).