Archive for the ‘Articles/Essays/Op-Ed’ category

Gov. Hochul’s Budget Gimmicks – George J. Marlin

March 5, 2024

The following appeared on Monday, March 4, 2024, in the Blank Slate Media newspaper chain and on its website, theisland360.com:

In a column I wrote in January, I was pleased to point out that Gov. Kathy Hochul “appeared to acknowledge the state’s deteriorating fiscal condition.” The proof of her concern was in her proposed $230 billion budget that called for a modest increase in spending of $3.7 billion.

Then there was Hochul’s extraordinary pledge to protect taxpayers’ “hard-earned money from politicians who want to raise your taxes.”

I, for one, found Hochul’s budgetary proclamation most refreshing. Perhaps she finally realized that there can be dire consequences if the state government does not halt runaway spending.

Unfortunately, however, the governor’s public embrace of sound fiscal policies is nothing more than play acting.

Why, you ask?

Well, as always, the devil is in the details. And the analysis of Hochul’s budget proposal performed by the office of State Comptroller Tom DiNapoli reveals that it is loaded with ill-considered fiscal gimmicks that on the surface give the illusion of responsible stewardship.

Here’s a summary of the comptroller’s findings:

First, the report states that New York’s “structural budget gap is projected to worsen over the next few years.” Accumulated deficits are expected to hit $20 billion between fiscal years 2025-2026 and 2027-2028.

Next there is the issue of the state’s reserve funds. While state statutory reserve funds have increased to $6.3 billion, there are $13.2 billion set aside as “informal reserves” for “economic uncertainties.”

The informal reserves can be spent at any time on favored projects or causes because they are under the governor’s “discretionary control.” The report notes, “There is no statutory basis for such designated funds and no accompanying guidelines or restrictions or deposits, balance levels, how or when the funding can be used or replenished.”

Very convenient, don’t you think?

This financial gimmick will permit the government to expend state dollars beyond the modest increase in spending she announced in January to much fanfare. Don’t be surprised if a significant portion of those discretionary reserves are used to pay for migrant services.

With recurring spending growing faster than recurring revenue, the governor is using an egregious gimmick to coverup the budget’s structural imbalance: “one shot revenues.” There are $14 billion in “non-recurring resources” that will be expended to balance the budget.  The utilization of “one shots” only augments the out year budget deficits.

Then there is the governor’s scheme to “obfuscate the state’s true debt burden.”

The budget circumvents the state’s debt cap “by utilizing a loophole in the New York Debt Reform Act.” It “misleadingly portrays the Gateway debt [authorized up to $2.85 billion currently estimated at $1.4 billion] as if it is not a part of the state’s direct debt burden.” The Gateway project will expand Northeast Corridor rail travel between Penn Station and Newark.

DiNapoli’s analysts also identified approximately $3.4 billion in spending that is exempt from a competitive procurement process and from the comptroller’s contract oversight authority. “These proposed changes,” the comptroller rightly observes, “reduce transparency, competition, and oversight over a significant amount of taxpayer supported state spending.”

To put it more bluntly, the governor can approve without any oversight billions in contracts to cronies and donors to her campaign treasury.

Finally, there’s the comptroller’s not so rosy outlook on the state economy.

While the national labor force has recovered from COVID, the state has not.

With New York not expected to return “to pre-pandemic employment until the second half of 2026,” this plus the ongoing loss of middle- and upper-class taxpayers to low tax states will the comptroller concluded, “continue to pose a risk to the New York economy and in turn its revenue.”

The governor’s talk about being fiscally responsible is merely empty rhetoric. Hochul’s budget is anything but balanced and the in balance will surely grow after the far-left Legislature finishes with it.

If history is a guide, Gov. Hochul will likely surrender to the demands of legislators to spend more on pork projects and on special interests.

Like many of her predecessors, Gov. Hochul is using sleight-of-hand fiscal tricks to finance her budget, leaving New York’s dwindling number of taxpayers to foot the bill.

NY’s Hochul Missing in Action, Destined to Fail – By George J. Marlin

March 2, 2024

This article I wrote appeared on the Newsmax.com web site on Friday, March 1, 2024.

Is There Still a “Catholic Vote?” – By George J. Marlin

February 28, 2024

This article I wrote appeared on Crisis Magazine’s web site on Wednesday, February 28, 2024.

Gotham Desperately Needs a Leader, Adams Isn’t One – By George J. Marlin

February 20, 2024

This article I wrote appeared on the Newsmax.com web site on Tuesday, February 20, 2024.

Albany’s Wasteful Tax Breaks – By George J. Marlin

February 19, 2024

The following appeared on Monday, February 19, 2024, in the Blank Slate Media newspaper chain and on its website, theisland360.com:

Since the turn of the century, New York has granted huge tax cuts on in-state movie and TV production—a cause favored by media companies, studio owners, producers and movie labor.

Here’s a list of the tax credit programs which are targeted at the entertainment industry and the year they were enacted:

  • Empire State Film Production Tax Credit (2004)
  • Empire State Film Post – Production Tax Credit (2010)
  • NYS [TV]Commercial Tax Credit (2007)
  • Empire State Musical and Theatrical Tax Credit (2015)
  • NYC Musical and Theatrical Tax Credit (2021)

These enormously generous programs have cost taxpayers a whopping $7 billion in subsidies since 2004. In effect, taxpayers have picked up the tab for “30% of qualified production costs for movies and TV shows made in the Empire State.”

When the tax credits were first proposed in the state Legislature, advocates argued that Connecticut and Louisiana and other states had lowered taxes on movie production and were stealing business from the Empire State.  Leading Hollywood types explained that while they loved New York State, movie production is a business and they have to focus on the bottom line.

The question now is: Are taxpayers getting a return on these giveaways to the entertainment industry?

Well, the good news is Section 108, Article 8, of the New York State Tax Law requires the Department of Taxation and Finance to hire an outside expert to conduct a “comprehensive analysis of each tax credit, tax deduction, and tax incentive under New York tax law that relates to increasing economic development” to determine the effectiveness of these programs

Such a report on the entertainment industry, performed by the investment advisory firm PFM Group, was posted without any fanfare on the Finance and Tax Department website in January.

And taxpayers should be grateful that E.J. McMahon, of the Empire Center think tank in Albany, picked up on the 360-page analysis and revealed its dismal findings.

Here’s a summary of PFM’s study prepared by the Empire Center:

  • The Film Production credit “does not provide a positive return to the state.”
  • “It is highly likely…that much of the economic activity [attributed to the tax credit] would occur without it.”
  • Television and movie production would have happened regardless of the tax breaks because of New York’s “prominence in U.S. culture.”
  • The jobs subsidized by the credit are “high paying” and thus create “enduring value,” but “it is likely that the production credit will never ‘go away’ in the sense of leaving behind a stable, job growth industry absent the credit.”

“Based on objective weighing of the cost and benefits,” PFM concluded, “the film production credit is at best a break-even proposition and more likely a net cost to New York State.”

However, these failed tax breaks, E.J. McMahon warned, “are likely to be ignored by the Hochul administration and the Legislature’s Democratic super majorities. The taxpayer giveaway to Hollywood East enjoys strong support from a politically powerful, deep-pocketed constellation of producers, actors, labor unions, and real estate interests enriched by the subsidy.”

In my judgment, the government should abolish such companies’ specific economic subsidy programs and use the cash freed up to lower the cost of doing business in the state for all businesses—cut the corporate income tax, lower the cost of Workers’ Comp and reform the Wicks Law, which prohibits the government from using general contractors and thereby inflating construction costs.

The state should stop trying to guess which industries and companies will be winners and losers; it isn’t good at making those calls. The entertainment industry should make decisions on its own after the government performs its proper role of creating a business environment conducive to investment and job creation and providing the transportation and other infrastructure necessary for the state to compete.