The following appears in the April 9-15, 2010 issue of the Long Island Business News:

In the post-World War II era, New York was truly the Empire State, indeed the leading industrial state in the nation.  Twenty-five of America’s top 50 companies were headquartered in New York and nearly 2 million people were employed in manufacturing.  The state’s industrial base was diverse, both in terms of size and importance: apparel and textiles topped the list followed by printing, food production, machinery of various kinds, sundry chemicals, fabricated metals and transportation equipment.

But beginning in the 1960s, New York began to experience a manufacturing collapse which continues to this day.  In 1990, New York’s total manufacturing jobs dropped below 1 million – the lowest number since 1906.  Upstate New York, traditionally dependent on blue-collar employment, has been enduring large job losses and the accompanying decline in population and revenues.  As a result, today a majority of jobs north of Putnam County are government or health-care related.

Buffalo, for example, once the largest flour milling city in the western world and America’s fourth largest manufacturing city, is now on the edge of bankruptcy.  It has lost 48 percent of its population since 1960, lost its heavy industry and manufacturing base, and has 35,000 abandoned single-family homes.  In 2006, Buffalo’s mayor even called for the dissolution of his city.

Between 1990 and 2009, manufacturing employment in the United States declined by 33 percent, 17.7 million jobs versus 11.8 million.  New York’s numbers for the same period are even more depressing, 911,000 versus 471,000, a 51 percent decline. Long Island fared almost as poorly: 139,000 manufacturing jobs in 1990 versus 75,000 today, a 46 percent decline.

Economists are all over the map as to why New York has been losing the manufacturing battle in both economic downturns and booms.  Some point to cheap labor overseas, others to bad research and development decisions. Eastman Kodak, for instance, having missed the digital camera revolution, was forced to downsize its Rochester work force from 60,000 in 1981 to 18,000 today.  In my judgment, however, the state government bears the bulk of the blame for years of overtaxing, overspending and overregulating.

In survey after survey, New York’s business climate is rated the worst in the nation.  The U.S. Economic Freedom Index listed the state in last place.  Compared to the other 49 states, New York’s combined state and local taxes are the highest; state and local government spending per capita, second highest; cost of doing business, second worst; average cost of workmen’s compensation cases, second highest; average retail price of electricity, second most expensive.

Manufacturers have moved to the South, to Europe and to India at an alarming rate to escape New York’s taxes, worker comp costs and burdensome regulations.  As a result Buffalo, Rochester, Syracuse, Schenectady and Long Island – one-time centers of commerce, industry and technology – are facing financial and economic doom.

While top-tier research institutions in places like Long Island and Buffalo produce cutting-edge research and development, the state and Long Island in particular have done a dismal job in holding on to the companies created from that research.  State economic development programs have spent billions over the last 20 years with little to show for it.  Those subsidy programs have proved once again that government programs selecting business winners and losers don’t work but do burden the taxpayers with the cost of assisting the politically favored.

Until Albany potentates take responsibility for the cumulative consequences of the bad decisions made during the past 20 years and take steps to lighten the burden on taxpayers and to improve the climate for job producing businesses, expect the state and Long Island manufacturers to continue fleeing to employer-friendly states.

The following appears in the March 26, 2010 issue of the Long Island Business News:

On his 75th day in office, Nassau Executive Ed Mangano revealed to taxpayers, in his first State of the County address, the dire financial condition of the county government he inherited from Tom Suozzi.  Mangano characterized the county’s finances as “deeply troubled.”

The county executive was brutally honest and wisely quoted these words from Lincoln at the beginning of his presentation: “I am a firm believer in the people.  If given the truth, they can be depended upon to meet any national crisis.  The great point is to bring them the real facts.”

Mangano has learned that in 2009 Suozzi – who was telling anyone who would listen that he planned to bid farewell to Nassau on January 1, 2011 because on that day he would be sworn in as New York’s governor or lieutenant governor or attorney general or comptroller – utilized fiscal smoke and mirror techniques, cut deals that will haunt taxpayers for years to come and buried plenty in the proverbial bottom desk drawer to get by in fiscal years 2009 and 2010.

Here are a few examples of what Mangano has so far discovered:

In fiscal 2009 Suozzi budgeted only $50 million for tax assessment errors. The actual payout was $114.5 million.

Suozzi buried $120 million of property tax increases in his four-year financial plan.  Suozzi’s assumption that a 2010 cigarette tax increase would yield $16 million in revenue was wrong.

Suozzi’s 2010 county sales tax revenue projection is expected to be off by $12.7 million.

Suozzi approved collective bargaining contracts that included $43 million in raises and back pay without a plan to pay for these reckless giveaways.

Thanks to Suozzi’s wishful thinking and miscalculations, a projected 2010 deficit must now be funded to the tune of $48.5 million.  Worse still, in 2011 (the year Suozzi planned to move to Albany) Nassau’s deficit could be more than $250 million – a staggering 10 percent of county tax revenue.

To deal with this mess, Mangano has developed for 2010 a $49 million Taxpayers Savings Plan.  The strategy rests on the plausible assumption that there are plenty of managerial positions in county government that can be eliminated.

Big government types, who are more concerned with empire building and process than achieving results, build layers of redundant management to enhance their personal power.  When I was executive director of the Port Authority of New York and New Jersey, I identified 14 layers of management over the people who did the real work at the region’s airports, bridges and tunnels.

In an agency reorganization that held the line on toll and fare increases, seven layers of management were eliminated while improving services.

Ed Mangano is taking a similar approach.  To set an example, he has slashed the cost of his executive staff by $2 million.  Total staffing has been cut by $22 million and the headcount is expected to decline even further after a job-by-job review of Nassau’s 47 departments is completed.

The county executive also admitted that if Nassau is not to fall into the fiscal abyss, if it is to retain and grow jobs, the county’s broken assessment system must be fixed and a new four-year financial plan must be developed “based on our taxpayers’ limited resources to fund government.”  Mangano understands that county government must be right-sized “because the taxpayers can’t afford the government we have.”

Mangano has proposed an ambitious, sensible and necessary plan to clean up Suozzi’s mess.  Hopefully big government leeches, imperious political bosses and their lackeys don’t hamper its implementation.

Observers of Richie Kessel’s career know that he started as an inconsequential consumer gadfly and worked for the inconsequential Mark Green before leveraging himself into an inconsequential post for then Governor Mario Cuomo who Richie served as Chairman of the Consumer Protection Board.  Senior advisors to the Governor have in the past remarked that Kessel was one of their worst appointments.

On Long Island, Richie positioned himself for political advancement by opposing the Shoreham nuclear power plant and attacking never popular rate increases—how brave!—and making silly press statements on Sunday when a news-hungry press would lap up all that Richie dished out.

Interestingly, Kessel’s career was picked out of the dustbin of history following Governor Cuomo’s loss to George Pataki in 1994.  Richie enlisted his lobbyist friends and had Al D’Amato and political boss Joe Mondello carry his water.  Given their Long Island provenance they had Kessel installed at LIPA where he did incalculable damage to Long Island to support his ego-driven need to have his picture in Newsday and on News12.  When reform Governor Eliot Spitzer fired him early in 2007, Kessel once again went back to his base—Albany lobbyists and Republican political bosses—and had them pressure the unengaged and incompetent David Paterson to install him in an even bigger sinecure, as CEO of NYPA.

Richie now repays his political patrons by pushing the wind mill project in the Great Lakes which is unlikely to see the light of day, but will generate lots of work for politically connected lawyers like Pataki and lobbyists like D’Amato.

Kessel’s world has now come full circle. In order to repay his lobbyist base, Richie now proposes a massive industrialization of the Great Lakes that he surely would have opposed in his days as a young activist.  And just as Richie’s line of demagoguery worked in advancing his career, tomorrow’s young activists and future candidates for office oppose his billion dollar boondoggles.  As County after County and community after community comes out in opposition to the GLOW (Great Lakes Offshore Wind) project and fishermen and boaters and sailors oppose the project that will enrich lobbyists and other rent seekers all over the State, our Richie has morphed into the caricature he once opposed—a cynical insider dealing with the politically connected against the public interest.  Just ask businesses and consumers on Long Island paying the sky-high bills he left behind.

THE KESSEL COUNTDOWN: 285 DAYS UNTIL RICHIE KESSEL IS FIRED BY THE NEW GOVERNOR OF NEW YORK.