(photo via The Governor's Office)
The recently passed federal tax law will deepen inequality and jeopardize the health and wellbeing of families and individuals across our state. This legislation penalizes New Yorkers by capping the state and local tax (SALT) deduction and will create deficits that are likely to result in catastrophic cuts to the programs they depend on. These tax “cuts” will drive up the national deficit, which will then be cynically used as a rationale for slashing investments in critical programs such as food assistance, public housing, and affordable healthcare.
Our state leaders must take action to ensure that we can weather this storm.
Federal aid accounts for one-third of the New York State budget and directly accounts for 8-10% of the New York City budget. The state is already facing a deficit that will be exacerbated by any federal cuts to state assistance or Medicaid spending. For example, homelessness is a major problem in our city and two-thirds of the New York City Housing Authority’s budget comes from federal aid. Cuts in aid to states would also have a significant impact on our children as 41% of the budget for the Administration for Children’s Services and 8% of the Department of Youth & Community Development funding comes from the federal government. Lack of funds at these agencies would impact foster care, adoption services, after-school programs, and Head Start. When direct aid is cut, families and individuals will rely even more heavily on nonprofit human services organizations. Our nonprofits deliver essential programs through contracts with city and state governments that support people through every stage of life, including early child education, elder care, shelter for people experiencing homelessness, job placement, and nutrition assistance. However, these government contracts rarely cover the full cost of providing services, which has resulted in a chronically underfunded sector.
At the same time, this federal legislation dis-incentivizes charitable giving.
Private fundraising has been an important (but insufficient) tool for filling the deficit that comes with government contracts. The tax bill raises the standard deduction, and with that increase many people will not itemize anymore, meaning that they will not see a tax benefit in making charitable donations. According to the Indiana University School of Philanthropy in a report commissioned by Independent Sector, 82 percent of charitable giving comes from people who itemize their tax return, and it is estimated that charitable giving will go down by about $13 billion.
Too many organizations are already at a breaking point. In New York City, 18% of nonprofit human services organizations are insolvent. This tax bill could push them over the edge at the exact moment when they are needed most. While we know this is a difficult budget year, given the deficit and uncertainty at the federal level, it is now more important than ever that we make sure our nonprofits are financially strong and resilient.
We are asking the state to make investments in our workforce and our infrastructure to ensure we are strong enough to continue serving communities well into the future. The underfunding of human services is not a new issue, but we need the Governor to lead in this area and 1) fund the minimum wage for human services workers contracted by the State, 2) continue the Nonprofit Capital Infrastructure Fund – a highly sought after grant program that assists nonprofits in making crucial improvements to their buildings and technology, and 3) fund a wage adjustment for a workforce that has gone without a salary increase in over eight years.
The Governor’s Executive Budget recognizes the federal threats to New York and includes an impressive agenda, which requires the close collaboration of human services providers across the state who are threatened not only by federal policies, but also by years of state policies and funding decisions that have jeopardized their ability to serve as anchors for their communities. Our organizations are dedicated to elevating the human potential of our families and communities, and we were gravely disappointed that some of our representatives did not act in the best interests of our state in passing this damaging tax legislation. However, New York now has an opportunity to be a progressive leader for the country by making investments in the human services sector. In times of challenge and uncertainty, nonprofits are our communities’ first line of defense and careful planning and adequate financial resources from the city and state are needed to protect these essential services.
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Center for New York City Affairs
Fiscal Policy Institute
FPWA
Human Services Council of New York
United Neighborhood Houses
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Note: this column has been updated to correctly identify Independent Sector as the funder of the Indiana University study, not the United Way as originally written.
Four NYC DAs (photo: @ManhattanDA)
For the past four months, the people of Manhattan have grappled with accusations of their District Attorney cultivating a pay-to-play culture in which the rich and powerful skate by serious criminal charges -- if their lawyers contribute sizable donations to DA Vance’s campaign. In a public display of penance for allowing the appearance of corruption to permeate, Vance requested The Center for the Advancement of Public Integrity at Columbia Law School to investigate ways to better insulate our elected prosecutors from the influence of donors. The CAPI recommendations make for a good headline after months of bad PR for the DA, but will not change the status quo.
Following the report, Vance said he will adopt the ‘blind’ practice used for judicial candidates who are raising money for their campaigns. Unfortunately the failings of this model are widely known, and are surely no secret to Vance himself. It follows a legal fiction that removing the DA from the fundraising eliminates the potential conflict. That is absurd.
It is pure fantasy to suggest a candidate will have no knowledge of who is donating to their campaign. Full transparency is an ideal all elected officials should be striving for in our electoral system, especially when it comes to the funding of campaigns. That is why the records of who has donated to candidates are fully public, easily obtained by the click of a button. There’s no ‘blind’ approach to raising money when the names, addresses and amount of money donated are so easily accessed by the public, press, campaign, and candidates. Especially for a DA like Cy Vance who has been in office for almost a decade and has built a donor list based on strong relationships with certain criminal defense lawyers and law firms.
Then we come to the donor cap recommendations -- riddled with far too many loopholes. By restricting the $320 donation cap to only attorneys appearing before the DA office, the policy is extremely limited, allowing many other non-appearing attorneys from the same law firm to donate individually up to $3,850. Undoubtedly, high-profile wins for firms are good for business. Perhaps that’s why Marc Kasowitz, Trump’s personal lawyer, had his coworkers raise over $18,000 for Vance just a few months after the DA chose not to prosecute the Trump children. Under the CAPI recommendations, this could continue to happen. In fact, under Vance’s new self-imposed fundraising rules, he would only have to wait six months after a case is resolved to accept donations from the exact lawyers who appeared before his office.
Even with the cap from partners and some lawyers, there are a multitude of ways that law firms with an attorney or attorneys who appear before the DA office can donate significant amounts of money to the DA. It will just take some creativity. This permits the existence of the conflict that CAPI admits exists -- attorneys donate to create "positive relationships" with the DA's office, "which, could, in theory inspire some of them to become contributors to the DA's campaign." An understatement to say the least.
The CAPI recommendations represent an incomplete addition to the conversation of reforming the way we fund our DA races, something the report acknowledges. This report should not signal the tidy conclusion of how the rich and powerful were seemingly able to curry favorable treatment through campaign donations by their lawyers. We need true comprehensive reform to make our system one New Yorkers can confidently rely on. I have legislation that will bring us one step closer to this by forbidding large donations to DAs from criminal defense lawyers or their law firms. Let’s get this passed and move toward a fairer system for all.
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Dan Quart is a member of the New York State Assembly representing Manhattan’s East Side. On Twitter @AMDanQuart.
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Gov. Cuomo in the subway (photo: The Governor's Office)
Governor Cuomo’s “Fix NYC” commission produced a framework for a congestion pricing plan, released just after the governor’s Executive Budget for the 2018-19 Fiscal Year, which begins April 1. The congestion pricing framework outlines a three-year phase-in that would provide revenue of $1 billion to $1.5 billion a year starting in 2020, most of which would be intended for the MTA Capital Plan.
That is also the year the MTA must begin its next five-year capital plan for continued investment in the upgrade and preservation of the subway, bus, and commuter rail systems. The current $30 billion plan, the 2015-19 plan, faced a shortfall of $15 billion when initially proposed in 2014, and it was not until 2016 that the governor and the Legislature finally adopted a framework for that plan. The 2020-2024 plan likely faces a similar funding shortfall of $15 billion, so money flowing from a congestion pricing program for the MTA in 2020 would arrive just in time to fill much of that shortfall, although the Fix NYC framework did not outline a specific disposition of the money from a congestion pricing set-up.
A November 2017 report by State Comptroller Tom DiNapoli, “ Financial Outlook for the MTA,“ stressed that the MTA’s capital funding shortfalls could be even larger than $15 billion because more than $7 billion in the 2015-19 plan that the state government committed to providing the MTA still does not have an identified funding source.
Beyond that, MTA Chair Joseph Lhota’s Subway Action Plan Phase Two indicated a need to add $8 billion in capital funding for the subway system. The MTA is not under an obligation to offer the details of its 2020-2024 Capital Plan until the fall of 2019 so it is not clear how all these unmet needs and proposals might fit together. But a shortfall of more than $20 billion is likely.
The comptroller’s office suggested the MTA accelerate the release of the details of its 2020-24 plan to enable greater public engagement in the process of coming to terms with these important decisions. The MTA should do this -- the governor, the Legislature, and the public need to get a handle on what the MTA thinks is needed sooner rather than later. (The comptroller’s report confirmed the concerns raised in my September column: “The MTA’s Long-Term Financial Problem is Severe and May Soon be Worse.”)
If the Legislature does not enact a formidable congestion pricing plan, worth $1 to $1.5 billion a year, enough revenue to support $10 billion or more in bonded funds for the mass transit system, or find some other alternative, it will be catastrophic for the subway, bus, and commuter rail systems, the fundamental infrastructure that allows for the wealth of the New York City metropolitan area. In fact, even if the proposed congestion pricing plan is adopted, the MTA’s greater than $20 billion shortfall would only drop by half and there would still be $10 billion to find unless the federal government were to step in to provide much larger amounts of money than at present.
Mayor de Blasio’s proposal to tax millionaires was envisioned to raise $750 million a year, with $500 million to fund $8 billion worth of bonds for the MTA, and $250 million to subsidize low-income New Yorkers’ subway and bus rides with half-fare MetroCards. Together the congestion pricing plan and the millionaires tax might raise nearly $20 billion for the MTA, coming close to closing the gaps in meeting mass transit capital needs.
Both proposals face significant opposition in the Legislature, from State Senate Republicans opposed to the millionaires tax, to everyday legislators of both parties who simply don’t wish to impose new charges or fees on their constituents to drive into Manhattan, either because they feel the charges are unfair or won’t solve the congestion problem.
Governor Cuomo has not yet submitted a bill to the Legislature that provides the details of the congestion pricing plan or how the money would be used. He has said he wants to discuss the issue with the Legislature first, although he has embraced the concept advanced by Move New York that the tolls on the outer borough bridges that don’t feed the Manhattan central business district should be reduced. That means some of the Fix NYC revenue would be diverted to reduce those particular tolls and not available to the MTA for its capital needs.
The governor has also submitted bills in the budget to force New York City government to come up with much more money for the MTA, a move the de Blasio administration is strongly opposing.
One bill would force the City to pay the 50% of Chair Lhota’s Subway Action Plan that the chair had demanded of the City and that Mayor de Blasio had refused to pay. Another bill would give the MTA the power to create special districts in New York City where subway expansions add property value and allow the MTA to obtain portions of city property taxes related to the new value created for the MTA Capital Plan. The concept was used to pay for the 7-train extension by dedicating revenue from property in the Hudson Yards area to cover the costs, although that plan was a creation of the City of New York and the City controlled the dispositions of funds, unlike the governor’s proposal here, where it does not appear the City would have a say in the matter.
Another Cuomo budget bill is perhaps the most dramatic of all -- it says the City of New York must pay the full cost of the New York City Transit Authority capital plan. The City of New York has a seat on the MTA Capital Review Board and a vote on the New York City Transit Authority Capital Plan, so it has the power to veto that part of the plan. This power does not quite fit with the obligation to fund the plan, nor does it square how parts of the New York City Transit Authority Capital Plan might get funded from other sources of revenue and how the City negotiates the package. The MTA’s capital needs are so immense it is reasonable to ask New York City government to increase its contribution, perhaps even in a major way, but the governor’s proposals are orders rather than requests and may simply be opening gambits for negotiation.
Another major issue is the gargantuan expense of the MTA’s construction programs and purchases. A recent New York Times series described the immense waste of funds in the projects. The MTA, the governor, and the Legislature cannot ignore the problem -- the size of the MTA’s needs just costs too much money and the City and State just can’t afford to write checks to cover $20-30 billion shortfalls.
Right now congestion pricing is the main issue on the table. Mayor de Blasio and the Legislature should support it.
Governor Cuomo and Mayor de Blasio should bury the hatchet, at least as far as the mass transit system goes. There needs to be a consensus about addressing the giant shortfalls faced by the capital needs of the system. It’s also worth mentioning that both former Mayor Bloomberg and the newer Move New York plan sought to use congestion pricing funds to improve express bus service in areas of the City poorly served (or not served at all) by the subway system, and that issue, among others, certainly needs to be taken into account.
The MTA needs an astonishing $2 billion a year in new sources of revenue for the cash and debt service on bonds to cover more than $20 billion needed through 2024-25. If congestion pricing fails and there is no meaningful replacement the prosperity and public safety of the metropolitan area will be threatened.
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Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.
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