Gotham Gazette http://www.gothamgazette.com/component/tags/tag/1048 Tue, 17 Oct 2017 18:34:43 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Even Without Federal Cuts, Signs of Trouble for State Finances http://www.gothamgazette.com/?id=7102:even-without-federal-cuts-signs-of-trouble-for-state-finances http://www.gothamgazette.com/?id=7102:even-without-federal-cuts-signs-of-trouble-for-state-finances dinapoli phillips

State Comptroller Tom DiNapoli, right (photo: @NYSComptroller)


State Comptroller Tom DiNapoli is calmly ringing alarm bells about the New York economy and budget outlook. DiNapoli, the state’s chief fiscal officer, recently announced that overall tax collections for the first quarter of Fiscal Year 2018 -- April through July -- fell by $1.2 billion from the same period last year, a decrease of 6.1% in revenue.

Not only did tax revenues decrease by $1.2 billion from the prior year, but they were also $1.7 billion below a projection made by the Comptroller’s office in February, an indication that things are significantly worse than expected.

The findings were compiled in the comptroller’s monthly state cash report, issued in late July. In an accompanying statement, DiNapoli diagnosed a potential cause of the unanticipated shortfall in state revenues.

"We're three months into New York's fiscal year and personal income tax collections are falling short of what was expected," DiNapoli said. “Taxpayer anticipation of federal tax changes has contributed to the decline. Offsetting that, business tax collections are well over estimates.”

The comptroller, a few days after releasing the cash report, also released a larger fiscal analysis of the state’s enacted budget and other spending plans, including the capital program, which funds infrastructure projects. Already on unstable footing due to lower than expected revenues and questionable uses of budgetary windfalls, the situation is made worse by the looming cuts in federal aid by President Donald Trump and the Republican Congress, who have proposed deep cuts in areas integral to New York ranging from affordable housing to transportation and health care.

The comptroller’s fiscal report signals a potential crisis for the state in spite of what the DiNapoli refers to in his accompanying message as the nation’s “ninth year of economic expansion.” The larger analysis shows decreases in federal aid could have a large impact on the state’s ability to provide healthcare, for instance, with Medicaid funding at particular risk. Medicaid funding saw a significant increase in the new state budget, which was passed in early April after an agreement between Governor Andrew Cuomo and the two houses of the state Legislature.

The balance in the state’s General Fund, which is the state’s destination for non-earmarked revenue, is $7.7 billion, according to the report. According to DiNapoli, the figure “is substantially higher than the levels in the period during and immediately after the Great Recession, largely reflecting monetary settlements received in the past three years. But the State’s budgetary cushion is shrinking: the Enacted Budget Financial Plan projects that the General Fund balance will be one-third lower at the end of the current fiscal year than its recent peak two years previously.”

DiNapoli criticizes the apparent lack of credence paid to the very real threat of cuts in federal aid from the Republican-controlled Congress and White House in Washington D.C. The $153 billion state budget for Fiscal Year 2018 includes in its sources of revenue about $56 billion in federal aid, about a third of the $161 billion in revenue for FY18 according to the Citizens Budget Commission (CBC).

It is unclear just how much the federal budget could cut aid to New York, but the comptroller’s report suggests that the state’s Financial Plan doesn’t sufficiently account for the impact of the increasingly likely scenario of significant cuts in federal grants to New York. Cuomo and the Legislature did pass a new provision that allows the state greater flexibility to adjust the budget mid-year in the face of significant federal cuts, DiNapoli notes, but it is not completely clear how that process will play out and whether the state is truly prepared for such measures.

The comptroller also critiqued the use of funds acquired via financial settlements, which have amounted to about a $9 billion windfall over the past several years, as of January. The comptroller’s message states that the settlement money, which is “nonrecurring,” should be put towards financing capital projects rather than to balance budgets. According to the comptroller, through March 31, “the State had spent over $3.1 billion of its extraordinary windfall in settlement resources. Nearly half that amount had been used for various forms of budget relief, and another $461 million is planned for such use this year.”

In a statement to Gotham Gazette, David Friedfel, the director of state studies at Citizens Budget Commission, noted shared concerns between the comptroller and the nonpartisan, nonprofit budget watchdog.

“We echo many of the Comptroller’s concerns,” he said, “specifically the increasing use of settlement funds to close budgetary gaps. Likewise, it is concerning that personal income tax receipts continue to fall below projections, especially in light of potential cuts in Federal aid.”

Both CBC and the comptroller’s report also cast doubt on Cuomo’s claim that annual spending growth has stayed below 2 percent annually during his tenure. In May, CBC released a report explaining how Cuomo manipulated the numbers to tell his preferred story. The comptroller’s report says similarly, listing such budgetary tricks as “the use of prepayments; certain program restructurings which result in costs being reflected as reduced receipts rather than disbursements; shifting spending to capital projects funds; deferring expenditures to future years; and the use of off-budget resources to pay for certain program costs,” which, when accounted for, results in a 4 percent spending increase this year rather than Cuomo’s touted 2 percent.

“We are glad to see OSC voicing the same concern that state operating spending is really growing in excess of 2 percent,” Friedfel said. “The actual growth rate is still below historical norms, but by utilizing accounting adjustments and financial plan reclassifications, the State is undermining transparency to fit an artificial spending growth cap.”

Another nonprofit budget watchdog, Empire Center, had a similar reaction to the report.

"As usual, the Comptroller’s report was fairly thorough in identifying some of the most important budgetary trends obscured by the governor’s spin as well as the financial risks ahead,” said E.J. McMahon, research director at Empire Center, in a statement to Gotham Gazette. “However, one serious risk surprisingly overlooked by the report is the Trump administration’s proposal to eliminate the federal income tax deduction for state and local taxes, also known as the SALT deduction."

SALT refers to state and local taxes. The average SALT deduction claimed by New Yorker taxpayers is $21,038, the highest in the country and nearly double the national average, according to McMahon, in a July blog post.

"Given the state’s inordinate dependence on taxes paid by wealthy residents,” McMahon told Gotham Gazette, “the repeal of the SALT deduction could seriously undermine our tax base by increasing the net tax “price” of New York compared to states with low or no income tax, such as Florida.”

Other gloomy projections the report makes include $5.7 billion more in capital spending for the five-year plan than projected in the 2016-17 budget capital plan; a total lack of deposits to rainy day reserves in the previous fiscal year and the year that has begun; and an increase of $11.2 billion in out-year budget gaps from last year, to $17.4 billion. DiNapoli forecasts outstanding debt to increase by 4.1% to $63.9 billion this year and to $73.7 billion by the end of the current Capital Plan period in 2022.

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by Ben Brachfeld, Gotham Gazette

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Even Without Federal Cuts, Signs of Trouble for State Finances Tue, 01 Aug 2017 04:00:00 +0000
Calling for Efficiency, Cuomo Pushes Latest Municipal Consolidation Contest http://www.gothamgazette.com/?id=6677:calling-for-efficiency-cuomo-pushes-latest-municipal-consolidation-contest http://www.gothamgazette.com/?id=6677:calling-for-efficiency-cuomo-pushes-latest-municipal-consolidation-contest Cuomo red screen podium

Gov. Cuomo (photo: Governor's Office on flickr)


Since his time as attorney general, Governor Andrew Cuomo has painted a picture of New York as a state cluttered by redundant and inefficient municipalities, attributing the state’s notoriously high property taxes in large part to a bureaucratic web of overlapping government services.

Cuomo’s latest attempt to detangle the web is an incentivized competition challenging two or more local governments to come up with a bold consolidation plan as a way to cut spending, increase efficiency, and lower property taxes. This could mean anything from localities deciding to share park maintenance services or fire departments, for example, or a plan to dissolve a smaller government into a larger one.

The program piggybacks on a series of tax caps and rebate programs Cuomo, a second-term Democrat, has initiated since taking office. The prize is $20 million, part of $70 million earmarked for improving government efficiency in the $155.6 billion 2016-2017 state budget.

In theory, streamlining government to ease taxpayers’ burden is a good idea, but it is essential to identify not just any municipal consolidation, but the types most likely to produce taxpayer savings. There is also some debate as to whether, and to what extent, municipal consolidation addresses the underlying causes of the New York’s property tax problem. Furthermore, in more affluent localities, residents often say they prefer to pay higher taxes in exchange for the personal touch of smaller government agencies.

In 2010, when Cuomo was running for governor, property taxes were rising at an unsustainable average rate of 5.7 percent per year, with homeowners in 33 of New York’s 62 counties facing a property tax burden surpassing the national median. Initiatives like the new municipal consolidation challenge have been successful at curbing the upward trend, according to Cuomo’s office.

“Over the past five years, Governor Cuomo has restored fiscal responsibility to the state – reducing costs, cutting red tape and delivering relief for New York taxpayers,” said Cuomo spokesperson Abbey Fashouer. “The Municipal Consolidation Competition marks another step forward in these efforts, incentivizing local governments to find innovative ways to share services, find efficiencies and ensure a stronger, more affordable Empire State for all.”

This latest contest supplements Cuomo’s 2014 property tax “freeze,” which is in reality a credit that incentivizes municipalities to find ways to cut costs and stay within the state’s cap of 2 percent annual increase in property taxes, and is projected to save property taxpayers more than $1.3 billion over three years. Cuomo has also instituted an informal 2 percent cap on annual increases in overall state spending.

The tax “cap,” which in 2017 enters its fourth consecutive year, seeks to prevent municipal and school tax levies from increasing beyond 2 percent or the rate of inflation, whichever is lower. This year, at .68 percent, the increase limit -- which applies to all localities except New York City -- is at a record low, and while this is in one way good news for homeowners, strapped municipalities are bound to feel the strain, according to state Comptroller Thomas DiNapoli.

"In what is becoming the norm, New York’s local governments must cope with extremely limited growth for property taxes to stay within the tax cap,” DiNapoli said in his announcement of this year’s tax cap. “Low inflation has positive effects for consumers, but it also reflects an uncertain economic environment. Local officials have faced growing fixed costs and limited budget options for years, but 2017 will necessitate even tougher financial choices.”

In response, a growing number of localities are voting to override the tax cap, with 26 percent opting out in 2016. Cuomo’s new contest, which targets the state’s 13 largest municipalities outside of New York City -- only cities, towns and villages with populations of at least 50,000 (according to 2010 U.S. Census data) may apply as the lead applicant -- may help mitigate that trend for the coming year.

One such municipality is the City of New Rochelle, which will be forced to break through the tax cap next year to invest in the city’s infrastructure, according City Manager Charles "Chuck" Strome III.

The city’s chief administrative officer, appointed by the New Rochelle City Council, Strome explained that the city has been searching for ways to share services with neighboring municipalities since before Cuomo took office, partnering with neighboring suburbs of Pelham Manor, Mamaroneck and Larchmont on services like street cleaning, snow removal, and sanitation.

“I’m not really moved by competing for prizes. For me, that’s just a show,” Strome said in an interview. “I think the state’s policies recently have been very detrimental to municipalities. We've been doing things in New Rochelle long before there was a prize at the end of the rainbow.”

Rochester, the state’s third largest outside of New York City, sees itself as a leader in the region on municipal consolidation, forming cooperative agreements with the Monroe County and neighboring municipalities on things like 9-1-1 dispatch services, waste management systems, telecommunication providers, and more. Officials there were more amenable to Cuomo’s consolidation contest, but said that the most “low-hanging fruit” has already been identified and implemented.

“Given that we've done a lot of this already, we're a little challenged to find additional opportunities, but we are open to it,” said Chris Wagner, budget director for the City of Rochester.

Cuomo often focuses on the number of municipalities in New York, suggesting overlapping and redundant governments are a main driver of rising property taxes. “The cost, the waste, the inefficiency of our 10,500 local governments is still this state’s financial albatross and that is what is driving up the cost,” Cuomo said during his 2016 State of the State address, on January 14.

While it is true that on average New Yorkers continue to pay some of the largest property tax bills in the country -- 13 percent of the average household income -- there is a lively debate among social theorists about whether fewer, and thus larger, governmental bodies results in more efficiency and lower property tax bills. And, the actual number of “local governments” is up for debate.

Some dispute the 10,500 figure, saying it includes “special tax districts” -- in-town sectioning created out of specific residential needs that are brought on by suburban growth -- which often amounts to paperwork rather than additional government expenditure. (The 2012 U.S. Census of Governments places the number of cities, towns, and villages in New York State at 3,453 -- which is fewer than the national average for states across the country.)

Since Cuomo took office, the number of government service providers has been reduced, though savings produced have been relatively small. For example, since 2011, 18 New York water districts consolidated into five with a projected annual savings of $1.2 million; 72 sewer/wastewater districts consolidated into three, with a projected savings of $522,000; and six fire and fire protection districts consolidated into two fire districts, with a projected annual savings of $959,570; all according to Cuomo’s office.

Full consolidation of services or government entities tends to elicit resistance, so functional consolidation is often the most politically expedient solution for overlapping services.

Functional consolidation, in which similar municipal agencies both remain in existence, but cooperate on whether to perform the same or distinct functions for a larger geographic area, has been shown to save money and improve quality of life. Either one government entity pays the other for services or one agency performs a specific function and the other agency takes on a different function in exchange.

These partnerships are typically evaluated on a case-by-case basis. In 2012, when the Town of Brighton voted to dissolve its understaffed West Brighton fire protection district and contract with the Rochester Fire Department instead, it resulted in savings for both taxpayers in Rochester and Brighton, according to Wagner, the Rochester budget director. “From our experience, it not only helps on the property tax side of things, but it helps to improve planning and response time to a situation,” Wagner said.

Meanwhile, several years ago, a plan for the City of Rochester to combine water supply systems with Monroe County was nixed when it was determined that it would not result in savings, according to Wagner.

E.J. McMahon, president of the Empire Center, a conservative think tank, notes that smaller towns and villages often prefer to see their tax dollars used for a personal, responsive touch from police, fire, and sanitation agencies. However, McMahon says, these more localized services are not the primary driver of New York’s property tax problem. McMahon points a finger instead at state-mandated Medicaid, pension, and education costs.

“Municipal consolidation is not a panacea and it’s kind of a dodge,” McMahon said. “[Cuomo’s] premise is we have too many local governments, and that’s why we have high local taxes, and that’s essentially untrue.”

A better way to slash property taxes, he says, would be to reform New York’s 30-year-old Triborough Amendment, which requires public employers to maintain contractual agreements, including automatic pay increases, for unionized employees after their collective bargaining agreement expires -- a policy that adds $300 million a year to school budgets across the state.

The governor’s administration says it has taken steps to reduce the number of unfunded mandates -- a term used to describe burdensome state requirements that do not come with requisite funding -- establishing a Mandate Relief Council in December 2013. But while rising local school costs are offset by huge amounts of state funding -- in the 2016-2017 budget, the state allocated $24.8 billion for education aid, up 6.5 percent from the prior year -- and the state has tried to to reel in pension growth, municipalities say they are forced to make painful cuts and delay important capital projects to meet the tax cap year after year.

Strome, the city manager, noted that municipal expenses account for only 18 percent of property tax bills in New Rochelle. The bulk of it comes from school and medicaid expenses. “Most people, if they knew the facts, they'd be happy to have multiple trash pickups and police and fire services and acres and acres of parks for $3,000 a year,” he said. “The state has dumped millions of dollars in increased school aid, but municipalities have gotten zero. In my opinion, until the state seriously looks at how it deals with education, we’d never address the property tax problem.”

nassau special service districts mapIn other areas, like Nassau County, where residents pay some of the highest property taxes in the country (the average annual property tax bill topped $9,000 in 2013, according to a Zillow report), the imbalance is starker. The Town of Hempstead made several difficult cuts this year, including laying off 36 employees, but only 9 cents per tax dollar homeowners pay goes toward municipal programs and services (incorporated villages pay about 2 cents per tax dollar to the township). More that 60 percent of Hempstead taxes go to schools and libraries, another 16 percent goes the county tax -- which includes Medicaid -- and another 5 percent goes toward special districts (which Cuomo counts among the New York’s 10,500 municipalities). (see map, via the Long Island Index)

Cuomo’s office disputes the charge that the governor has not addressed education and Medicaid costs. In addition to flooding cities with education aid, the administration notes both the governor’s Medicaid reform efforts have saved taxpayers an estimated $34 billion over the last five years and the Global Medicaid Cap, which eliminated any growth of Medicaid expenses for counties (meaning any amount of spending over counties’ fixed dollar amount is picked up by the state).

“Governor Cuomo has implemented a number of targeted reforms to deliver relief for New York taxpayers – and they are working,” said Fashouer, a Cuomo spokesperson. “Today, taxes are at their lowest level in decades, we’ve capped [growth of] property taxes at 2 percent, we’re making record investments in education while delivering quality healthcare more effectively and efficiently than ever before.”

The most ambitious type of consolidation is full-scale city-county merger, in which a city and the surrounding county combine to create a metropolitan form of government, or a “super” county. Over the last 30 years, major Upstate cities have faced rising poverty rates and an increased dependence on state aid to balance their budgets. Social theorists say that in addition to consolidating duplicate services, city-state consolidation can curb urban sprawl and compel suburbanites to contribute more significantly to services provided by the city, which are utilized by everyone.

Cuomo’s municipal consolidation contest coincides with the ongoing effort to merge the City of Syracuse and Onondaga County, called Consensus. The region was granted $500 million in a similar 2015 state-funded contest, a portion of which Cuomo said was contingent on Syracuse following through on its ambitious consolidation plan.

Studies on whether larger municipalities are actually more efficient have produced mixed findings. A study done 10 years after the 1998 amalgamation of Toronto, for example, indicates that larger governments become more less responsive and more sluggish, resulting in increased costs.

Not that taxpayer savings should be the primary, or only, motivation for large-scale municipal consolidation.

In the case of the Syracuse merger, more equitable distribution of better quality services across the the county is a major focus. One of the most influential advocates for this type of merger is David Rusk, the former mayor of Albuquerque, New Mexico, who long-argued for what he terms an “elastic city” — one free of geographic limitations — which could help rectify economic, social and racial inequities, he says, and encourage greater political participation county-wide. However, in places like Syracuse, people of color who live in the city fear they’ll lose political influence with a larger unified government, while suburbanites feel that the consolidation could dilute their quality of service.

City-county mergers are notoriously difficult to pull off. While there has been some success in other parts of the country, all recent merger attempts in New York, like a proposed Buffalo-Erie merger in the early 2000s, have failed. The state’s only major regional consolidation was in 1898, when the City of New York was formed out of five boroughs, and the Syracuse-area Consensus plan is seen as an experiment of whether a consolidation of this scale can work again.

Cuomo has enthusiastically supported the Syracuse merger, but as Politico reported, the plan is at risk of being derailed by long-standing differences among Cuomo, Onondaga County Executive Joanie Mahoney, and Syracuse’s Mayor Stephanie Miner, and there are still more questions than answers about how it would meet the at times conflicting interests of city residents and suburbanites.

Occasionally, villages vote to dissolve themselves into neighboring municipalities -- since 1921, 47 village governments in New York have dissolved, 10 of them in the past five years, according to a recent Empire Center report (see graph below). As attorney general, Cuomo pushed through a bill easing the village dissolution process and sweetening the pot for eligible villages with a $58,006 “Community Empowerment Tax Credit” when the dissolution is approved.

village dissolutions nys

In these instances, however, the tax savings per household are usually small, and more often than not, villagers resist consolidation, saying they’d prefer to pay slightly higher taxes to retain their community identity and personal touch from local government.

An example of this is the Village of Cayuga Heights (the Ithaca suburb where this reporter grew up), which has its own mayor and government and where residents consistently vote against joining its fire and police services with neighboring municipalities. “I think if we were to say, ‘Oh, let’s just join up with the Village of Lansing,’ we’d be bigger than the city of Ithaca, but we’d lose a lot too,” said Joan Mangione, the village clerk and treasurer. “When our residents come in to pay taxes, they want to feel ‘this is my best tax dollar at work.’”

Despite an attachment to these extra amenities, Cayuga Heights officials tout the village’s extensive record of looking for consolidation opportunities that make sense: it is a partner in Bolton Point, a water supply plant built in 1976 that serves five municipalities and it is represented in Tompkins County Council of Governments (TCCOG), one of two county committees in the state that meet regularly to discuss shared services, including a progressive healthcare consortium that has saved taxpayers millions of dollars.

Other examples of residents electing to pay a higher price tag for uniquely responsive municipal services can be found in many towns, villages and hamlets of Westchester County, where residents consistently pay the highest property taxes in the nation (an average of $13,842 per household in 2013, according to Zillow). The bloated bill is often justified by the county’s exemplary schools -- where between $20,000 and $50,000 a year is spent on each pupil --- and a small town approach from police, fire, and sanitation workers.

Political scientist and SUNY New Paltz professor Gerald Benjamin, a proponent of municipal consolidation, says that these New York municipalities should be more open to compromise.

“Look, we want low costs, we want our services, we have to have a hierarchy of values, and we want democracy -- which we are not always getting, because it’s too complex,” Benjamin said. “If we want all those things, they run into each other; they are not all aligned. Sometimes you are presented a range of desserts at Thanksgiving — but if you eat them all, you are going to get fat.”

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

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Calling for Efficiency, Cuomo Pushes Latest Municipal Consolidation Contest Mon, 19 Dec 2016 05:00:00 +0000
Does Higher Pay Attract Better Politicians? http://www.gothamgazette.com/?id=6651:does-higher-pay-attract-better-politicians http://www.gothamgazette.com/?id=6651:does-higher-pay-attract-better-politicians state of the state auditorium standing

(photo via The Governor's Office)


After months of deliberating, a commission tasked with recommending salary adjustments for state lawmakers and executive branch employees met for the final time on Nov. 15 and did not suggest raises. The salary of New York state legislators has remained the same since 1999, and could stay unchanged until the commission meets again in another four years, as established by the 2015 law that created a new process for such pay raises.

Governor Andrew Cuomo and members of the Senate and Assembly could override their recent decision to leave raises up to a commission and pass compensation reform earlier. 

One of the main arguments made in support of raising lawmaker salaries is that a higher salary would “attract the best possible people to pursue the position,” since “a depressed salary will eventually discourage qualified people from pursuing those offices,” as Assembly Speaker Carl Heastie wrote in a letter sent to the commission Oct. 5.

Though the notion that increasing politicians’ pay is needed to attract better candidates to office may be quite disagreeable to the public, Heastie is not alone in that line of thinking.

Some government reform advocates, academics, and, naturally, Heastie’s appointee to the commission, Roman Hedges, have argued that better pay generates increased competition among candidates, leading to more choices for voters, and, as Hedges put it, would attract “the best people available” and create a “more professional Legislature." 

But is that true? The body of academic research examining this question has produced somewhat mixed results, though the findings generally support the claim. Most studies have shown that higher wages do result in increased political competition and attract more educated candidates (more college degree holders). Most research also shows that higher pay increases the rate at which incumbents seek reelection.

Some studies shows that higher salaries improve lawmakers’ performance in office (as measured by the number of bills submitted and approved), while others have found that lawmakers with higher salaries spend less time on legislative activities.

New York State lawmakers currently earn a base salary of $79,500 annually for what is technically a part-time job. Lawmakers may still hold employment elsewhere and earn outside income (and almost half do), and most lawmakers earn an additional $9,000-$41,500 annually from legislative stipends, or lulus, and also get per diems for traveling to Albany. 

Even though they haven’t had a raise in 17 years and the job is part-time, New York lawmakers are still the third highest paid in the nation, behind only California ($100,113 per year) and Pennsylvania ($85,339). How often state legislatures meet and how they function differ vastly from state to state, with some, like New Hampshire, paying its lawmakers only $100 a year in order to maintain a more citizen legislature. 

Had New York state lawmakers’ salaries kept up with inflation, legislators would earn about $114,000 annually. The median household income in New York is $58,687. New York City Council members recently voted themselves raises, to increase the base salary to $148,500 per year, but they also banned outside income and lulus, and are subject to a maximum of two four-year terms. There are no term limits in the state Legislature, which is “in session” from January to June each year.

Peverill Squire, a political science professor at the University of Missouri, has a body of research measuring the impact of salaries on state lawmakers across the United States. Overall, Squire has found that more seats go uncontested when legislative pay is lower (giving voters fewer choices); higher pay allows lawmakers to spend more time on their legislative responsibilities; and higher salaries are more likely to attract lawmakers who hold college degrees. For example, 88 percent of California state lawmakers, who earn $100,113 annually, have college degrees, while only 49 percent of New Hampshire state lawmakers, who earn $100 annually, have graduated from college.

Squire sent testimony to the New York State compensation commission, per the commission’s request, summarizing some of the findings from academic literature examining the influence of salaries on lawmakers. More professionalized legislatures (meaning legislatures that meet longer and supply lawmakers with higher salaries and more staff) pass a greater percentage of bills overall and enact more bills per legislative day.

Squire also noted that turnover declines as salary levels increase (the effects of which are debatable), and that lawmakers in legislatures with a higher degree of professionalization “have more contact with their constituents” and “are more attentive to their concerns.”

Some academics and policy experts caution against thinking of higher salaries as a panacea for Albany’s dysfunction. New York lawmakers are relatively well-paid among state legislatures nationally, yet that has neither deterred corruption in the state capital nor resulted in a more functional legislature.

The state Legislature is “more transactional than they’ve ever been,” said E.J. McMahon, research director of the Empire Center, a conservative think tank that studies the state economy and public policy. “At this point, by historical standards for sure, the Governor and the state Legislature, given their responsibilities, are not paid enough…but the Legislature stands out for how poor a job it does in many ways,” McMahon said.

“They introduce thousands and thousands of bills, do very little in the way of real deliberation,” McMahon added, highlighting frustrations raised in responses to a public opinion survey posted on the compensation commission’s website. “They’re as bad as they’ve ever been at waiting till the last minute to sheepishly go along and rubber stamp something that legislative leaders have cut a deal on” with the governor, McMahon said.

Adjusting the compensation levels of elected officials is a tricky situation for many reasons, especially because lawmakers inevitably have to prompt their own raise in some way, which is always a politically unfavorable move. And in New York, legislators living in and around New York City have a far greater cost of living than others.

“I think we need to pay people commensurate with our expectations of them,” said Gerald Benjamin, professor of political science and director of the Benjamin Center at SUNY New Paltz, who served on a compensation commission in Ulster County. Benjamin would prefer that state lawmakers do “full-time work for full-time pay,” in accordance with what is needed to “live reasonably as a family person in New York.”

Yet since that needed amount would differ in different areas of the state, “and compensation needs to be equal because of the nature of the task,” compensation would be skewed toward the higher end, and salaries should “be adjusted formulaically after a base is established…Pay must be targeted to open up the possibility to serve to a broad spectrum of New Yorkers,” Benjamin said. 

Benjamin’s suggestion calls attention to the difficulty of adjusting the salaries of elected officials based on one measurement alone, which is what led Italian economists Stefano Gagliarducci and Tommaso Nannicini to examine the relationship between pay and the quality of Italian mayors, as the wage of mayors in Italy depends on population size. Like New York state lawmakers, Italian mayors may also earn outside income. Gagliarducci and Nannicini found that higher wages attracted more educated candidates (as measured by the amount of years spent in school). 

Another study examined whether higher wages improve lawmakers’ performance in office, increase competition for office, and attract “higher quality candidates” amongst municipal councilors in Brazil after a constitutional amendment introduced caps on their wages according to population size, resulting in some legislators receiving higher pay than others. 

Economists Claudio Ferraz and Frederico Finan analyzed the educational and professional background of everyone who ran for municipal government in the year the amendment took effect, and tracked what the winning candidates did while in office. They found that higher wages increased political competition by attracting more candidates (though it also increased reelection rates among incumbent candidates), and attracted more educated legislators with more experience, though this effect was modest. As with New York state lawmakers, the role of a municipal councilor in Brazil is not a full-time position, and a majority of councilors still have an additional professional role.

Additionally, Ferraz and Finan found that higher salaries improved politicians’ performance in office, as measured by both the number of bills submitted by legislators and the number of bills approved, which they believe may be due to the higher incentive to be reelected.

However, not all academic research points to the same conclusion. In 2014, Columbia Business School economist Raymond Fisman and others analyzed the impact of salaries on the educational background of members of the European Parliament, and the performance of those MEPs while in office (as a law had just been introduced which equalized MEPs’ salaries, which had previously differed significantly) and found that increased salaries actually decreased the number of MEPs who came from highly-ranked universities.

Like Ferraz and Finan, however, Fisman also found that higher salaries also increased the number of incumbents who ran for reelection, and that higher salaries did “induce more political competition.”

Significantly, Fisman’s study found that MEPs whose pay increased did not become more productive in terms of their attendance at legislative sessions or their legislative output (including the number of reports prepared, written declarations, motions for resolutions, etc.). The researchers concluded that in this instance, “monetary incentives have no discernible impact on politicians’ effort, which seems more influenced by non pecuniary motivations.”

Fisman believes this could perhaps be the result of extrinsic rewards (more money) overriding the intrinsic ones (a personal calling to represent people). Though most academic research has found that higher pay does indeed increase political competition by prompting more candidates to run for office, Fisman’s findings suggest that higher pay may not necessarily lead to “better” representatives, though the additional money does attract some candidates who may not have otherwise run for office.

“There is a relationship between higher pay and inducing more people to run,” said Fritz Schwarz, Jr., chief counsel at the Brennan Center for Justice and chair of New York City’s 2015 quadrennial advisory commission, which was called to evaluate the salaries of the city’s elected officials and led to pay raises for City Council members, the Mayor, and other positions. “But I think it’s not a one-to-one relationship,” Schwarz said. “There are good people who choose to run with the low pay, and not everybody who is induced to run with the high pay is going to be Alexander Hamilton or James Madison.”

Another 2014 study, one which examined the salaries of state legislators and governors across the United States over the past 60 years, found that politicians in states with higher wages “spend greater time on fund-raising and on constituent services, but no more time on legislative activities.” Professors Elizabeth Lyons at the University of California and Mitchell Hoffman at the University of Toronto caution that their findings call into question the claim that increasing legislators’ salaries will improve the quality of state governments. However, their study did again find that higher salaries are associated with increases in political competitiveness, though the effect was modest.

Overall, most studies find that higher pay does lead to more competitive elections, which is good for voters, and generally attracts candidates with more years of education. Higher pay alone does not necessarily improve the performance of politicians while in office, which is itself tricky to define, though it does give them a greater incentive to get reelected, which may influence them to work harder to maintain their position.

Adjusted for inflation, New York state lawmakers are making less now than at most points since their last raise, in 1999. State lawmakers in California and Pennsylvania, the two states that pay their legislators more than New York, regularly see their salaries increased incrementally every year -- Pennsylvania's are pegged to a cost of living adjustment and in California a commission meets every year to adjust legislator salaries.

The question of whether or not lawmakers should receive a raise often becomes entangled by other questions: should they be able to earn outside income, or should the position be considered full-time? Should members who don’t hold leadership positions still receive stipends? Should pay be based on how effective lawmakers actually are?

Strong differences of opinion on these questions ultimately led to the state compensation commission’s failure to do the one thing it was called to do: recommend salary adjustments.

Government reform advocates, academics, and even some members of the commission were generally in agreement that New York state lawmakers ought to be paid a bit more, despite the fact that they are already the third highest paid lawmakers in the nation and Albany is still very dysfunctional. Governor Andrew Cuomo and his appointees to the compensation commission are, in fact, demanding other reforms to the position, like limits on outside income, in exchange for a salary increase -- something legislative leaders have balked at and called inappropriate given the duties of the commission.

“I think a lot of legislators in both houses, in both parties, are very frustrated with the way things work, and pay is a varying part of that frustration for some of them,” said McMahon. “But most of them are not going to be any less frustrated - they’ll simply be paid more and just as frustrated. They see how badly the system works and they’d like to change it, but they can’t figure out how to do it.”

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by Meg O'Connor, Gotham Gazette
     

Read more by this writer.

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Does Higher Pay Attract Better Politicians? Sun, 04 Dec 2016 05:00:00 +0000
Cuomo Seeks to Undermine Comptroller’s Check on His Power http://www.gothamgazette.com/?id=6485:cuomo-seeks-to-undermine-comptroller-s-check-on-his-power http://www.gothamgazette.com/?id=6485:cuomo-seeks-to-undermine-comptroller-s-check-on-his-power cuomo dinapoli flags state of the state

Cuomo, left, and DiNapoli, middle, in 2012 (photo: The Governor's Office)


Gov. Andrew Cuomo’s recent assertion that Comptroller Tom DiNapoli should “educate himself” and that the comptroller’s audits on state economic development projects are “dead wrong” and “opinion” drew a lot of attention. Many Albany observers took it as a sign of Cuomo’s growing sensitivity to criticism about his signature projects.

Those projects, like the Buffalo Billion, are the subject of a federal investigation headed by U.S. Attorney Preet Bharara. The state Legislature remained fairly removed from oversight of the projects until very recently. However, several government watchdogs say that Cuomo’s attacks on DiNapoli are part of a long-running pattern of Cuomo trying to weaken the comptroller’s oversight of the executive branch.

“The governor hates oversight and the governor actively works to undermine and weaken anyone who is keeping an eye on him,” said John Kaehny of Reinvent Albany, a group that has closely followed the Buffalo Billion economic development project. Kaehny noted that Cuomo and the Legislature approved a measure in 2011 that prevented DiNapoli from reviewing contracts at SUNY and CUNY ahead of time. “The governor has been undermining the comptroller from his first budget,” said Kaehny of Cuomo, who took office in January 2011.

A recent DiNapoli audit of the Empire State Development Corporation’s Excelsior Jobs Program, which gives businesses refundable tax credits for creating jobs in certain areas of the state, found that there wasn’t proper oversight to make sure companies were providing the jobs they pledged to create and that they weren’t simply relocating jobs from elsewhere in the state. Further, the audit found ESDC didn’t obtain the proper paperwork to justify handing out tax breaks to some organizations. Cuomo told reporters that DiNapoli’s audits on his economic development programs are invalid partly because DiNapoli is a former member of the state Assembly.

“The comptroller is not just the comptroller. The comptroller was an Assemblyman for many, many years. And that New York State Assembly, first of all, passed numerous economic development plans for many, many years,” Cuomo explained. “For an Assemblyman to now critique economic development programs in upstate New York - what did you do? What bills did you vote on? And how did you allow this situation to develop?”

When asked by a reporter from The Observer why he then put DiNapoli in charge of auditing New York’s homeless shelters, Cuomo responded: “You get in some audits the person’s opinion, right? ‘I think this about economic development.’ Some audits are pure quantifications: count how many people are in a homeless shelter. Go ‘one, two, three.’”

The combination of comments appeared aimed at undermining DiNapoli’s work and authority, and fit the Cuomo mold of punching back at critics, whether they are advocates, local elected officials, or the elected chief fiscal officer of the state, DiNapoli.

Empire State Development issued a detailed rebuttal to DiNapoli’s Excelsior audit that challenged some of its more damning assertions. ESD claimed DiNapoli’s staff failed to grasp how the program actually works and the mandate of certain statutes. DiNapoli’s office responded that ESD staff had not been cooperative.

Jason Conwall, spokesperson for ESD, issued a statement to media outlets after the report was released, stating: "Any truly objective review would show this program is cost-effective, performance-based, and incentivizes business growth by only providing tax credits to those that have achieved their job commitments and investments. The reporting requirements to this agency, as well as to the Department of Labor, are rigorous and companies have to demonstrate to ESD that they met their job commitments before any credits are issued."

The comptroller also recently released audits of Cuomo’s Charge NY program and of Medicaid. DiNapoli’s Medicaid audit found dead people were still receiving benefits.

Cuomo’s dismissal of the comptroller’s audits seems to discount the fact that the comptroller oversees an army of professional auditors that base their reports on figures and facts.

E.J.McMahon of The Empire Center, a conservative think tank, said that it is generally expected that there will be tension between a Comptroller and Governor and that it is unsurprising that Cuomo, who has a reputation for “ad hominem denunciation” over “the substantive argument,” is feuding with someone charged with monitoring him. Yet accounting for those points, McMahon said there is still something surprising about Cuomo’s animosity toward DiNapoli.

“Cuomo has exhibited a peculiar mix of antipathy and disrespect for Tom DiNapoli. It's hard to explain. After all, DiNapoli generally has been cautious and measured in his criticisms of administration policies, which reflects an institutional tradition in the comptroller’s office. He’s not exactly a confrontational kind of guy. If anything, DiNapoli seems to go out of his way to avoid taking potshots or unduly juicing up the wording of criticisms he does make..”

Representatives from Cuomo’s office repeatedly pointed to press releases of critical audits by DiNapoli’s office as salacious, saying they do not jibe with what is contained in the reports. During legislative hearings on economic development programs held earlier this month, administration officials quizzed on DiNapoli’s audit failed to provide detailed rebuttals, only indicating they did not agree with the audits.

Cuomo spokesperson Dani Lever said in a statement, “When someone makes false or misleading attacks, our administration aggressively defends and corrects the record and we make no apologies for doing so.” She did not offer comment to the assertion that Cuomo has worked to undermine the comptroller’s office. She also did not respond to a request to elaborate on what might have been “false” in DiNapoli’s audits.

In a statement, DiNapoli reiterated his role: "As state Comptroller, my office provides checks & balances and oversight to ensure that the state is working efficiently for our taxpayers. Government should always be working to improve itself. We have a job to do, and we will continue to do it.”

Cuomo and DiNapoli are both Democrats.

In October, as news about Bharara’s investigation broke, DiNapoli faced questions about why his office wasn’t more involved in providing oversight into how two SUNY nonprofits were awarding million-dollar contracts. He told Susan Arbetter of The Capitol Pressroom that Cuomo and the Legislature had taken away his ability to review contracts before they were issued by SUNY and CUNY.

Kaehny of Reinvent Albany said that it is important to note that these powers were stripped from DiNapoli as the Buffalo Billion program began to take off. “The governor has worked methodically to undermine and resist the comptroller’s oversight. His first budget stripped the comptroller’s oversight over SUNY Research Foundation, which has been essential in the unfolding scandals in what appears to be pay-to-play for millions of dollars of contracts,” said Kaehny.

Just as McMahon said, many watchdogs see Cuomo’s reaction to DiNapoli’s audits as concerning because they don’t believe DiNapoli has been as critical as he could be and has not hit some of the more sensitive areas of Cuomo's economic development programs.

At the same time they see DiNapoli as standing mostly alone as a check on Cuomo’s economic development spending given the Legislature has been relatively absent. “There is no question Tom DiNapoli has been standing alone on this,” said Ron Deutsch of the Fiscal Policy Institute, a liberal think tank. “The comptroller should be praised for doing his constitutionally-mandated job and the governor shouldn't begrudge him for doing it. The governor needs to learn to take the criticism along with the praise.”

Kenneth Giardin of The Empire Center agreed, “The comptroller has been picking up the slack that has been all but abandoned by the Legislature. The responsibility for oversight has fallen exclusively to the comptroller.”

In New York City, Comptroller Scott Stringer has released a series of troublesome audits of city government, which have painted different levels of waste, dysfunction, and ineffectiveness by the administrations of Mayor Bill de Blasio and his predecessor, Michael Bloomberg. While de Blasio has contested different points and looked to downplay the findings, he and his administration have not dismissed the office as one that simply delivers ‘opinion.’ Nor has de Blasio called Stringer’s work politically motivated, even though Stringer is thought to be a potential 2017 challenger to de Blasio.

Asked about the conflict between Cuomo and DiNapoli on Thursday, de Blasio said that he wasn’t familiar with all the specifics, but that the comptroller was asking “valid” questions about the efficacy of economic development programs and that he’s known DiNapoli to be a “a very serious public servant.” “And obviously the state Comptroller should be respected,” de Blasio added.

“The city comptroller does much, much broader audits,” said Kaehny. “When the state comptroller does an audit that looks at how the executive branch spends money they don’t pull back and ask questions about the bigger picture of nonprofits cutting million-dollar checks to campaign donors.”

Former Gov. George Pataki had a relatively cordial relationship with Comptroller Carl McCall despite the fact that McCall was a political rival. Former Gov. Mario Cuomo’s dislike for Republican Comptroller Edward Regan was not much of a secret - Regan was considered a possible serious challenger, though he never ran for Governor.

The New York Post recently reported rumors that DiNapoli could challenge Cuomo in a 2018 primary and capitalize on Cuomo’s weakness with liberal voters. DiNapoli dismissed the notion in an interview with Politico New York and said he plans to run for re-election as Comptroller.

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: this article has been updated to include ESD rebuttal to the Comptroller's Excelsior audit.

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Cuomo Seeks to Undermine Comptroller’s Check on His Power Thu, 18 Aug 2016 04:00:00 +0000
Several Significant Questions About The Governor's Budget http://www.gothamgazette.com/?id=6203:several-significant-questions-about-the-governors-budget http://www.gothamgazette.com/?id=6203:several-significant-questions-about-the-governors-budget Cuomo built to lead sots

Gov. Cuomo at his State of the State (via The Governor's Office)


Gov. Andrew Cuomo's 2016-2017 budget proposal has legislators and budget experts scratching their heads as to how major capital projects will be paid for, how the state plans to make good on a promise to fund the MTA, and how certain measures might affect funding for New York City. Many are wondering if the governor will keep his pledge that his plan to shift millions in costs for CUNY and Medicaid "won't cost New York City a penny."

These questions linger almost two months after the plan was first released, rankling Mayor Bill de Blasio, City Council members, and city-based state legislators, and alarming budget watchdogs.

Only one month remains until the April 1 start of the new fiscal year and budget negotiations have been muted. State of Politics reports that there was an initial budget conversation on Wednesday morning among Cuomo and legislative leaders. The way Cuomo has positioned things, there are questions about whether the State Assembly and Speaker Carl Heastie, de Blasio's most important ally, will be willing and able to take on the political cost of going to battle for the city - on CUNY, Medicaid, and other issues like affordable housing bonds and homelessness-prevention vouchers. The Legislature recently finished holding budget hearings and the Assembly and Senate one-house budgets are expected imminently.

Potential state cuts loomed large over the initial New York City Council preliminary budget hearing on Tuesday, at which de Blasio's budget director reiterated several times that possible state cuts could be crippling to the city, but that the city plans to hold the governor to his word and that Assembly Democrats will be essential in the process.

Cuomo's move to have New York City assume additional MTA, CUNY, and Medicaid cuts are among his most controversial, along with the governor's plan to take more control of affordable housing being built in the city. While many await more detail from the governor as the clock ticks, there is also mystery around major infrastructure projects for the metropolitan region that the governor is overseeing as well as a proposal from the governor to create a new entity to take more control of such projects.

As the governor pushes other policies that city Democrats back, like a minimum wage increase and paid family leave, he appears to be exacting whatever costs from the city he can in order to both undermine de Blasio and help the state pay its obligations.

Cuomo has a variety of government ethics reform proposals in his budget, but he has not been promoting them publicly, leaving many to wonder their fate. Meanwhile, in recent days new light has been shone on billions of dollars in the governor's budget with no determined purpose, to be used by Cuomo and legislative leaders as they see fit at a later date.

The City's Burden
A recent evaluation of New York City finances by State Comptroller Thomas DiNapoli warned that Governor Cuomo's budget provides major economic threat to the city. "The largest and most immediate budget risk is the proposed state Executive Budget, which includes three proposals that would increase the city's costs by $985 million in FY 2017 and by about $1.2 billion in each subsequent year (a total of $4.8 billion during the financial plan period)," reads the comptroller's report.

It continues: "The two proposals with the greatest budgetary impact ($785 million in FY 2017 alone) would require New York City to pay a larger share of the local cost of Medicaid and of the costs of the senior colleges of the City University of New York. After the release of the Executive Budget, the Governor stated that efficiencies would be identified to mitigate the budgetary impact of these proposals, but such savings have not yet been identified."

The Citizens Budget Commission, a nonprofit, nonpartisan watchdog based in New York City, quickly cried foul over the proposals in Cuomo's budget that would move costs for CUNY and Medicaid to the city (both are joint city-state programs that the state has traditionally supported to a far greater degree than the city).

CBC estimates the shift would cost the city $800 million. De Blasio pledged he would do "whatever it takes" to stop the plan, saying it could impact major plans to expand pre-kindergarten and other initiatives. As focus on the budget measure intensified Cuomo characterized the plan as a mutual agreement between the city and state to find efficiencies in the programs. De Blasio had only met briefly with Cuomo before the State of the State address and said he had learned about the shift that could cost the city nearly a billion dollars when most New Yorkers did.

Cuomo, in a NY1 interview, claimed "At the end of the day, what you will see is it won't cost New York City a penny, but we will make joint streamlining policy efficiency changes."

Some observers expected Cuomo to adjust the plan in his 30-day budget amendments, but nothing about it changed - apparently leaving it up to the city's allies in the Legislature to negotiate it.

Assembly Speaker Carl Heastie, the city's most powerful advocate in Albany, has expressed major concern over the plans, but it appears that he would have to own the cost of a change as part of budget negotiations, possibly preempting other major initiatives his conference wants.

E.J. McMahon, president of the Empire Center, a budget-focused think tank, said he believes that undoing Cuomo's plan would cost Heastie "$500 million" during negotiations which would limit what else Assembly Democrats could bargain for given that Cuomo appears committed to a 2 percent overall cap on spending growth.

The governor's budget makes for 1.7 percent spending growth so there isn't much room for new initiatives and losing the savings created by the cost shift would further tighten the equation. "1.7 to 2 [percent] is $300 million," said McMahon, "So $500 million is a pretty significant number in budget negotiations."

Dave Friedfel of the CBC agrees. "To add $500 million back on to the budget would blow through the governor's spending cap. It will have a major impact on negotiations," Friedfel said.

The Fiscal Policy Institute, also a think tank, argued in its budget testimony that the state should scrap the 2 percent spending cap. "There is no reason to hold annual spending growth below two percent if it means that we are under-investing in education and poverty reduction," reads the FPI testimony. "This unforced austerity has already caused the state to underinvest in several critical areas, and the continuation of the cap guarantees further harmful cuts to local governments, education and human service programs."

Meanwhile, Heastie has pressed for a millionaire's tax that would allow the state to spend more on education. The Cuomo administration has derided the plan and Heastie has fired back. Mayor de Blasio has continued to express support for raising taxes on the highest earners, but he has not made a focused push on the issue since his efforts failed in 2014.

Asked about whether there have been joint efforts between the Cuomo and de Blasio administrations to find efficiencies as the governor discussed, Morris Peters, spokesperson for the division of budget, said in a statement: "We have been having conversations with our partners in government and we will continue to do so."

During City Council budget testimony on Tuesday, de Blasio's budget director Dean Fuleihan said that talks had yet to occur between the city and state but that he expects them to take place soon.

"I've also said I'm going to take him at his word, but I'll hold him to it," de Blasio told a gathering of the state Legislature's Black, Puerto Rican, Hispanic, and Asian Caucus last month, referring to Gov. Cuomo and the CUNY and Medicaid cuts. "When the budget is passed on April 1 I fully expect there won't be any negative impact on New York City," de Blasio continued. "He said it won't cost us a single cent. That's what we expect, and I think a lot of people are going to make sure that happens."

Construction & Housing Takeovers
Another, little-discussed measure contained in Gov. Cuomo's budget would see the creation of "The New York State Design and Construction Corp." that would be given oversight of public construction projects worth over $50 million. The DCC would be a subsidiary of the state's Dormitory Authority and would be headed by three commissioners, all appointed by the governor.

"The DCC's primary purpose will be to provide additional project management expertise and oversight on significant public works projects undertaken by state agencies, departments, public authorities and public benefit corporations throughout the state," reads the governor's State of the State policy book.

The proposal has raised concerns for legislators and budget watchdogs who believe Cuomo is trying to have more influence over independent authorities like the MTA. The MTA board is made up of members appointed by the city and other localities serviced by the agency. The Governor also appoints members and names the chair. Representatives of Citizens Budget Commission (CBC) are concerned the body would create more bureaucracy and confusion. For example, the DCC could void contracts signed by the MTA. CBC has written legislators urging them to oppose the plan.

John Kaehny, of watchdog group Reinvent Albany, said he was taken aback by the plan. "The Dormitory Authority is the premier slush fund for pork barrel spending. To house a project management agency within it is alarming. We agree with budget watchdog groups who view this as a power grab and another attempt to reduce transparency and accountability."

"What is his motivation for proposing this unprecedented design and construction corporation?" asked McMahon, of The Empire Center. "It will allow [Cuomo] to reach in and take control of any project he wants. The governor is the kind of guy who will say 'Stop that, give it to me, I can do it better!' The governor likes to draw power to the center, to the top, to him."

Cuomo is also looking to increase the state's say over New York City development of affordable housing. Per the governor's plans, The Public Authorities Control Board would be allowed to veto individual housing projects proposed by the city that utilize tax-exempt bonds, given to the state by the federal government, which the state then allocates to municipalities.

Cuomo administration officials say the plan would add a new level of transparency to a system that allocates billions of dollars to construction each year. City officials and affordable housing developers say that there is no need for another level of bureaucracy.

The Control Board is made up of the governor and both legislative leaders. Mayor de Blasio has panned the proposal, as have a number of contractors and housing advocates who worry the plan will create overlap and uncertainty around badly-needed projects that increase affordable housing stock. The Real Estate Board of New York has also raised concerns that more state say would create uncertainty and possibly confuse lending institutions.

"We think adding these additional layers will only slow down the process at a point where thousands and thousands of people are waiting for housing that will allow them and their families to be able to make ends meet," de Blasio told legislators during budget testimony earlier this year.

Adding to the drama around the city's affordable housing plans, De Blasio administration officials, housing advocates and developers are also growing nervous that Cuomo may continue to divert some of the flow of federal housing bonds that the city relies on to create affordable housing. After doing so with millions of dollars in bonds that the city thought it could count on in 2015, Cuomo is considering using the bonds for the state's newly expanded role in creating affordable housing. During his State of the State, Cuomo outlined general plans to invest billions in affordable housing, but he has yet to flesh those plans out. His policy book promised details "in the coming weeks."

MTA Financing
Last year, Cuomo and his MTA Chair Thomas Prendergast began a campaign to push the city to contribute more to the MTA capital plan. Eventually a deal was struck where the city agreed to contribute $2.5 billion and the governor pledging an additional $7.3 billion, bringing the state's total pledged contribution to $8.3 billion, all part of the $26 billion overall five-year plan. For months Cuomo was asked how the state would pay its share and he retorted that the question would be answered in his budget.

His budget plan simply raised more questions. Cuomo's plan appropriates $1 billion for the MTA capital plan and pledges to provide more of the promised $8.3 billion when the MTA spends through other capital funding. The city has in turn put off its commitment to extra funding since the city-state agreement was contingent upon parallel fund allocation.

Budget experts believe the Cuomo administration will allow the MTA to issue bonds to raise the $7.3 billion once it spends the funds it has on hand. "[The governor] already committed to $8.3 million for the MTA and we all wondered where that would come from," said McMahon. "The answer is that the MTA commitment he signed was not worth the paper it was written on. Once the MTA is done spending money it raises itself, the state will direct them to issue their own bonds."

Jamison Dague of CBC said that while the MTA has a backlog of projects that need to be addressed, he would like to see the state spell out specific funding for the agency. "What they've done here is tell the MTA, 'You have resources to draw down before we come in with the pledge.' The MTA has a lot of capital funding sources they are still trying to spend."

However, Dague said knowing where the state funding is coming from is prudent for both the MTA and state's long-term planning. "You always want to identify revenue for big capital work before you get going with big contracts," Dague said.

Legislators expressed outrage over the plan during a budget hearing last week. "I have no idea how we can actually do a capital program and actually approve a capital program with language that 'it'll be there when you need it.' Corporate America would laugh at this. Any country would be surprised with this type of approach in funding," said Senator Marty Golden, a Republican from Brooklyn, according to Politico New York.

The Cuomo administration has vigorously defended its position. "The Governor put unambiguous and iron-clad language in the budget to make good on his commitment to provide $8.3 billion towards the MTA's capital plan," Morris Peters of the Division of The Budget told Gotham Gazette in a statement. Peters pointed to budget legislation that he said would cement the state's commitment to funding the MTA "in law."

Infrastructure Spending
This year's State of the State address was centered around the idea that Cuomo is rebuilding New York. "Built to Lead" was the theme and the governor announced a myriad of projects including revamping Penn Station, retooling the Javits Center, reconstructing LaGuardia Airport, and a major contribution to the rail tunnel underneath the Hudson River. The combined cost of the projects is estimated at over $100 billion.

Budget watchdogs say Cuomo's plans are bold but not backed up with detailed funding mechanisms. The governor's budget points to federal funding, cash from public authorities, and investment from public/private partnerships to fund a number of the projects. It leaves the state assuming $29 billion of project costs. Watchdogs say the budget only appropriates two-thirds of that cash. "I think the situation was created by the governor's desire to portray himself as having a grand plan. So we all wondered: 'With what money?'" said McMahon.

Cuomo has also already allocated billions of dollars worth of the state's bank settlement funds to other projects such as upstate revitalization. The state is also relatively close to bumping up against a borrowing cap that was signed into law under Gov. George Pataki, so it is unlikely the state could fund all of the projects if it wanted to.

"I think the governor's ambition is admirable," said Dague of CBC. "But one of the concerns is he has promised to take on so many projects while leaving the funding details to be filled in. Another concern the legislature has is that the projects aren't being put through rigorous analysis. There isn't a discussion of how the state makes use of its limited capital projects funds--why this and not that. And there also is the question in some cases of: 'Why are these projects in the governor's budget and not the MTA's?'"

Peters, of Cuomo's administration, said that the budget clearly lays out how Cuomo's grand plans will be paid for. The list of major infrastructure projects are funded by a combination of resources, including from the state and federal governments, public authorities, and private investment, as clearly laid out in our budget materials."

Cash Stash
Another major concern for budget watchdogs is the $2.4 billion in funds stashed in 80 different pots in this year's executive budget not labeled for any specific use, as identified by good government group Citizens Union in a new report.

It is actually common for the governor and both houses of the Legislature to create slush funds in the budget each year. The practice came under increased scrutiny last year after the arrest of (now former) Assembly Speaker Sheldon Silver, who used cash from one of those pots of money in a scheme to earn referral fees through his law firm. Silver has been convicted on federal corruption trials and faces sentencing soon.

This year, according to the Citizens Union "spending in the shadows" report, the governor has $2.2 billion worth of this discretionary money, the Senate $815 million, and $686 million for the Assembly. Last year, Cuomo inserted language into the budget that would have required legislators to reveal their connections to any organization that received funding from these pots of cash, but he has not reinserted the language this year. Cuomo has outlined a series of ethics reforms that he says he intends to negotiate with legislative leaders

"With former Speaker Silver convicted in part because of his access to and illegal use of a healthcare-related lump sum pot, we need no greater reason to reform this form of budgeting," said Dick Dadey, executive director of Citizens Union, in a statement. "We need a whole new set of rules and level of transparency to ensure that taxpayer dollars are not used to personally enrich elected officials or used in unseemly pay to play schemes."

Policy Questions
Cuomo has again packed his budget with his major legislative priorities, a practice that has earned the governor criticism - some say that the budget should only include operational and capital spending, not new policy. This year, Cuomo is including an increase of the minimum wage toward $15 per hour, paid family leave, and raising the age of adult criminal responsibility from 16 to 18, among other policies.

The governor has the support of Assembly and Senate Democrats on the outlines of all of these issues while Senate and Assembly Republicans have voiced varying levels of dissent. The Governor recently told reporters the minimum wage issue might be removed from the budget debate.

Assembly Democrats, who control that chamber, are pushing for The DREAM Act, which Cuomo has included in his budget but has not rallied for publicly this year. Senate Republicans, who control that chamber, have been vigorously opposed to the plan, which would allow undocumented residents access to education aid.

Also on the Assembly to-do list is the millionaire's tax they argue will allow an increase in education spending, among other things. The Cuomo administration and the Senate have both rejected the idea.

Cuomo has remained nearly silent on the package of ethics reforms he pitched in January. Although he's taken to touring the state in an RV to tout his wage plan at a series of rallies, he has discussed ethics reform when prompted by reporters. His plans would strictly limit legislators outside income and close the LLC loophole that allows corporate donors to avoid campaign finance limits.

The governor was asked about the lack of discussion around ethics reform during one of his RV stops last week. He replied that discussions were happening "in phases."

"There's not a lot of continuity between $15 minimum wage and ethics," he said. "It's kind of a hard transition: 'I want to talk to you about a $15 minimum wage, oh, and now I wanna talk to you about limiting income for legislators.' It's not the most fluid transition. Maybe you could do it. It's tough for me."

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: this article has been changed to reflect the report of the initial budget meeting between Cuomo and legislative leaders.

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Several Significant Questions About The Governor's Budget Wed, 02 Mar 2016 22:16:00 +0000
Heastie Takes to Twitter to Respond to Cuomo on Tax Plan http://www.gothamgazette.com/?id=6158:heastie-takes-to-twitter-to-respond-to-cuomo-on-tax-plan http://www.gothamgazette.com/?id=6158:heastie-takes-to-twitter-to-respond-to-cuomo-on-tax-plan cuomo heastie standing photo

Cuomo and Heastie (photo: The Governor's Office)


Assembly Speaker Carl Heastie's Twitter account lit up Tuesday with a stream of "fun facts" about income inequality and his proposed millionaire's tax just a day after Gov. Andrew Cuomo dismissed the plan.

"I don't believe there's any reason or appetite to take up taxes this year," Cuomo told reporters on Monday, responding to questions about the taxation agenda put forth by the Democratic Assembly majority on Feb. 2, which calls for increasing taxes on the state's highest earners.

Heastie's tweet storm appeared to be a rebuke to Cuomo, though it did not mention the governor by name.

A few hours after Heastie's tweets stopped, the Working Families Party issued its own retort. "We need our tax system to put working families first, not hedge funds and wealthy campaign donors. That's what both Democratic presidential candidates have been calling for, and it's what New Yorkers expect from our elected officials in Albany too," said WFP New York State Director Bill Lipton in a statement.

Heastie surprised some when he proposed expanding and extending the state's millionaire's tax that isn't set to expire until 2017. Assembly Democrats' plan would create a number of higher tax brackets with those who earn from $1 million to $5 million a year paying the state's current highest rate of 8.82 percent. Those earning from $5 to $10 million annually would pay 9.32 percent and those making over $10 million would pay 9.82 percent.

The increase for millionaires would be paired with a middle-class tax cut. And according to Heastie the income generated by new tax brackets would add funding to education, infrastructure repair, and "other priorities."

Many see Heastie's plan as a way to strengthen his position as leader, cater to major interest groups that back his conference, and give him a popular proposal to use during budget negotiations.

Republican Senate Majority Leader John Flanagan has said that higher taxes would drive millionaires out of the state. "We don't support raising taxes," replied Scott Reif, spokesperson for the Senate Republican Conference when asked for a comment on Heastie's tweets.

A spokesperon for Gov. Cuomo, Rich Azzopardi, said by email that "What the public is hungry for, post Shelly Silver, is ethics reform -- specifically the pension forfeiture bill that was agreed to last year and promptly reneged on by the assembly. We hope they will join us this year and pass this and the other important reforms the Governor outlined."

Heastie's office did not reply to inquiries about whether Heastie was the author of the tweets. As the day progressed, Heastie's spokesperon, Mike Whyland, also took to Twitter on the subject, and more directly criticized the governor.

The speaker's earlier messages had a distinctly populist tone:

E.J. McMahon, director of the fiscally conservative Empire Center, quickly responded to Heastie on Twitter, questioning the data Heastie cited and combatting the notion he said Heastie was propagating that millionaires don't pay anything.

"The whole premise that they are not paying their fair share is nonsense," McMahon told Gotham Gazette of millionaires and taxes. "There is no standard in existence under which they don't pay a major share of their income. Eighty percent of filers in New York pay 15 percent of the taxes collected."

"The premise of these tweets is unsupported by facts," McMahon continued. "They aren't tweeting 'Hey, we need money and here is the best way to get it.' The whole point of these tweets seems to be to make someone who doesn't know better think millionaires aren't paying anything and that just isn't true."

McMahon said that he felt Heastie's tax proposal was motivated by the education lobby that wants to see an increase in education spending. Cuomo's budget factors in a 4 percent increase in education spending but advocates and unions have demanded no less than eight percent.

"You can see the people who support this and are retweeting Heastie are the people tied to the education lobby who think taxes can never be high enough," said McMahon.

Michael Kink, director of Strong Economy for All, a labor-backed progressive group falling into the category mentioned by McMahon, praised Heastie's proposal and said that it is about funding schools as well as having enough funding for other major proposals and needs.

Kink and his allies appear ready to hammer Gov. Cuomo on recent infrastructure problems such as a water main break in Troy that shut off water to at least two towns and the environmental disaster in Hoosick where it was found that toxic chemicals had poisoned the public water supply. Cuomo has recently tried to downplay the Hoosick issue.

"Assembly members have sat in day-long hearings about the budget and heard parents and students testify they need school funding, heard businesses say they support the $15 minimum wage but need some help so it doesn't overburden them; they know about the water line explosion in Troy and not too far away they've seen families drinking poisoned water coming out of a source that should have been overseen by an agency that is suffering under the governor's austerity budget," Kink told Gotham Gazette. "If the state wants to meet these significant needs it is entirely responsible to have a strong funding mechanism."

Kink said that the tenor of the presidential race shows that the electorate is in a populist mood. "I think these will be an interesting set of budget negotiations because the Assembly is more in tune with the populist mood than Flanagan or the austerity version of Governor Cuomo," Kink said.

The idea that there are 'two versions' of Cuomo have supporters of the tax plan ready to campaign hard for it as they've seen Cuomo flip on proposals after gauging voter sentiment. It was only last year that Cuomo said a $13 minimum wage was a non-starter and there was "no appetite" for paid family leave. Now the Governor has made a $15 minimum wage and paid family leave top priorities, expressing strong personal connections to both issues.

McMahon notes that Cuomo actually changed his position on the millionaire's tax in 2011. "He pivoted in 2011 on this issue. So nothing he says is frankly dispositive that this tax will be part of the budget," said McMahon. "The fact [the governor] does things like this encourages them to keep pushing."

Karen Scharff of Citizen Action NY, a grassroots progressive group that supports Heastie's plan, said she certainly won't be writing off the plan until the budget is actually decided on, since negotiations tend to lead to surprising results, no matter what any stakeholder has said. "This is the right time for this plan because one, the wealthiest New Yorkers are wealthier than ever, and, at the same time, the state has desperate needs that have to be funded. Every year things in the budget are up in the air until negotiations are over. And they aren't over."

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by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: this story has been updated with comment from the governor's spokesperson and news of social media response from Heastie's spokesperson.

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Heastie Takes to Twitter to Respond to Cuomo on Tax Plan Tue, 09 Feb 2016 21:43:46 +0000