Gotham Gazette Gotham Gazette is an online publication covering New York policy and politics as well as news on public safety, transportation, education, finance and more. http://www.gothamgazette.com/component/tags/tag/empire-center 2018-09-23T20:36:50+00:00 Webmaster webmaster@gothamgazette.com State Commission Boots Charter Communications from New York, Raising Questions 2018-08-06T04:00:00+00:00 2018-08-06T04:00:00+00:00 http://www.gothamgazette.com/?id=7847:cuomo-commission-boots-charter-communications-from-new-york-raising-questions Ben Max <p><img src="http://www.gothamgazette.com/images/28130476424_262dd10d5a_z.jpg" alt="Cuomo Charter broadband" width="600" height="400" /></p> <p>Gov. Cuomo at a broadband event (photo: The Governor's Office)</p> <hr /> <p>The revocation of Charter Communications’ ability to do business in New York State may be seen by many as a win for <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/07/27/new-york-charter-spectrum-what-means/851039002/" target="_blank" rel="noopener">consumers</a> and for <a href="http://www.nydailynews.com/new-york/ny-metro-spectrum-strike-20180726-story.html" target="_blank" rel="noopener">striking workers</a>, but several key questions remain unanswered, including what cable operator will replace it, and if the company will really be forced to relinquish its assets in the first place.</p> <p><a href="https://ilsr.org/wp-content/uploads/2018/07/profiles-of-monopoly-2018.pdf" target="_blank" rel="noopener">Charter is the largest cable operator in the state</a>, with its umbrella including most of New York City (the Bronx and parts of Brooklyn are dominated by Cablevision) and large swaths of upstate New York. Cable companies are sometimes described as “<a href="https://www.cnet.com/news/john-oliver-compares-cable-companies-to-drug-cartels/" target="_blank" rel="noopener">cartels</a>,” divvying up territory where each can be the only operator, enabling higher prices and poorer customer service. Some have accused cable companies of <a href="https://arstechnica.com/information-technology/2017/05/comcast-and-charter-agree-not-to-compete-against-each-other-in-wireless/" target="_blank" rel="noopener">explicit collusion</a>.</p> <p>When Charter acquired Time Warner Cable, New York City’s previous main cable operator, in 2016, the state’s Public Service Commission (PSC) approved the merger on the condition that Charter provide statewide broadband at 100 megabits per second (mbps) by the end of 2018 and 300 mbps by the end of 2019, and to provide broadband access to 145,000 unserved or underserved households in rural parts of the state.</p> <p>The state says that Charter failed to live up to its promises and attempted to deceive the public into thinking that it had fulfilled them, via advertising campaigns. As such, the state revoked its approval of the Charter-TWC merger on July 27 in a <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/08/01/new-york-charter-spectrum-vote/878542002/" target="_blank" rel="noopener">hastily called meeting</a>&nbsp;without one of its most vocal members, and banned Charter from operating in the state.</p> <p>The PSC ordered Charter to “file within 60 days a plan with the Commission to ensure an orderly transition to a successor provider(s).” Charter can appeal or sue to block the decision, but as of yet has not done so.</p> <p>As it was for Charter, approval from the PSC of a franchise agreement for the replacement provider is potentially extremely lucrative. It is not clear which company will become the successor, though the list of potential suitors includes large donors to Governor Andrew Cuomo’s campaigns.</p> <p>Cablevision, the regional behemoth that operates in the Bronx and upstate, has donated $617,500 to Cuomo’s gubernatorial campaigns since 2008, with $92,500 coming since July of 2017. The donations have come from various LLCs affiliated with local affiliates (e.g. Cablevision of New Jersey, Cablevision of Rockland/Ramapo, etc.) as well as from a corporate PAC, though all donations list the address of its headquarters in Bethpage on Long Island.</p> <p>Cablevision is now a subsidiary of European telecom giant Altice, which is not listed as having ever donated to Cuomo under its name.</p> <p>Comcast, which has a limited presence in New York State, has given Cuomo $164,700 since 2009, with $55,180 coming on November 27 of last year. With Charter being evicted from the state, Comcast, the largest cable provider in the United States despite being routinely criticized for poor customer service and anticompetitive business practices, may attempt to gain a foothold in the Empire State and the single largest media market in the country.</p> <p>AT&amp;T and Verizon, both of which compete with cable companies with fiber optic offerings, have donated $137,900 and $72,815.89, respectively, to Cuomo’s gubernatorial campaigns. AT&amp;T donated $20,100 on May 28. Cuomo received $187,800 from Time Warner, whose parent company his administration banned from the state.</p> <p>Asked whether the campaign contributions could influence the process to replace Charter, Cuomo spokesperson Tyrone Stevens called any such notion "baseless" and noted that the replacement process is controlled by PSC without interference from the governor.</p> <p>“The Governor believes the PSC should not back down to a media giant that has failed to live up to its promises and violated its obligation to build out our broadband system," Stevens said. "The PSC stepped up and took aggressive action to enforce the law, and the Governor stands with New York consumers who deserve the broadband service Charter-Spectrum promised, but has failed to provide."</p> <p>The PSC, which regulates public utilities in the state such as gas, electricity, water, and telecommunications, is made up of five commissioners, each appointed by the governor. The <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/06/14/spectrum-cable-hit-big-fine-slow-internet-rollout-new-york/702439002/" target="_blank" rel="noopener">PSC fined Charter $2 million</a> in June for failing to adequately expand its network.</p> <p>Charter has 60 days to present to the PSC a six-month transition plan to another cable operator. Charter is entitled to make its preference known as to which company it wants to replace it, but any new operator must prove to the PSC that it intends to serve the public interest in order to be approved to conduct business, and the actual broadband contracts are with localities, not the state.</p> <p>“The properties that are owned by Charter/Time Warner in New York State are very profitable, and they’re essentially a known entity,” said Richard Berkley, the executive director of the Public Utility Law Project, a non-profit representing low-income and rural consumers seeking better service and consumer protection by public utilities, in an interview with Gotham Gazette. “So I think you’d see a lot of private entities interested in that.”</p> <p>Charter can seek a “temporary restraining order” from a court, which Berkley had expected the company to do, but as of Monday afternoon, August 6, Charter does not appear to have filed any motions for a restraining order, or filed an appeal or lawsuit.</p> <p>“In the same way that the state had a role in deciding whether or not Charter could buy Time Warner, or for that matter Comcast could buy Time Warner, whoever is proposed by the company will have to go through that same process,” Berkley said of PSC approval.</p> <p>A large and profitable network of infrastructure suddenly being up-for-grabs may lead to intense lobbying of the PSC for the franchise.</p> <p>“I would assume to the extent that they’re interested in stepping into the shoes of Charter that they have probably started checking in with the department or the state,” Berkley said.</p> <p>“It’s a very profitable enterprise, and there are any number of large telecom firms that would want to step forward and try to buy it. The thing which is gonna make it more difficult still is that they have to be responsible. They have to be able to run the operation.”</p> <p>A spokesperson for Altice declined to comment. Spokespeople for AT&amp;T and Verizon did not respond to requests for comment. A spokesperson for Comcast told Gotham Gazette, “at this time we aren’t commenting on this issue.”</p> <p>A spokesperson for the PSC told Gotham Gazette, “The final decision as to who succeeds Charter is up to the PSC.” The spokesperson did not respond when asked whether telecom companies had been lobbying the PSC, or whether they were expected to. Cuomo <a href="https://www.timesunion.com/business/article/Consumers-cheer-Charter-decisions-while-suitors-13116256.php" target="_blank" rel="noopener">told reporters</a> Auburn on July 27 that the PSC is “talking to a number of companies.”</p> <p>Cuomo has repeatedly publicly criticized Charter in the wake of its failure to live up to the terms of the merger deal. On July 31 in Queens, in response to a question about the Crystal Run straw donor scandal by NY1 reporter Zack Fink, Cuomo <a href="https://twitter.com/JonCampbellGAN/status/1024391131071754240" target="_blank" rel="noopener">said</a> that Charter/Spectrum had been “defrauding” the state. NY1’s future in a Spectrum-less New York is uncertain.</p> <p>“You are defrauding the people of this state,” Cuomo told Fink. “That’s a fraud.”</p> <p>A Cuomo spokesperson has insisted the governor was discussing Spectrum and has no ill-will toward Fink, a veteran reporter who has covered Cuomo for several years. Still, many noted Cuomo's response to legitimate questions about a campaign finance scandal that is being investigated by federal authorities.</p> <p>In Auburn, where Cuomo was announcing a $10 million economic development initiative, the governor said that he asked the Attorney General to investigate advertisements making potentially false claims about Charter’s adherence to the conditions.</p> <p>“They have breached their franchise agreement by being behind schedule in their build-out, even though their ads state the exact opposite, and they have not been forthright with the consumers in this state,” Cuomo said. “If you watch Spectrum-Charter, this issue has been going on for months. They haven’t even reported on it. Meanwhile, they’re running advertising that says the exact opposite. So, that’s why the PSC took that action today, and I support it.” Last Thursday, Charter <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/08/02/charter-spectrum-halts-what-ny-calls-misleading-ads-cuomo/888435002/" target="_blank" rel="noopener">halted</a> its ad campaign touting its expanded broadband network, described by Cuomo and the PSC as misleading, a month after <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/06/27/spectrum-cable-misleading-customers-why-new-york-says-its-so/738365002/" target="_blank" rel="noopener">being ordered by the PSC</a> to do so.</p> <p>Berkley is skeptical that the donations to Cuomo’s campaigns by cable companies would significantly influence the PSC’s decision. “In the end, the Public Service Commission is an independent entity,” he said, despite the fact that Cuomo has a <a href="https://www.nytimes.com/2014/07/23/nyregion/governor-andrew-cuomo-and-the-short-life-of-the-moreland-commission.html" target="_blank" rel="noopener">history of interfering in purportedly independent entities</a>. “The governor doesn’t sit on the board. Yes, he gets to pick the people who come before the Senate to be vetted and confirmed. But, you know, the Senate has the ability to say ‘no’ to people.”</p> <p>Berkley said that, rather than looking at large donations to Cuomo’s campaign coffers, the greater political influence lies in how much money companies have invested in state and local economic development initiatives. The cable infrastructure is privately owned and constructed, but built on public land, which is what makes it a public utility. Time Warner had, as a public utility, invested in local economic development initiatives such as the governor’s now-tarnished Buffalo Billion, <a href="https://www.governor.ny.gov/news/governor-cuomo-announces-time-warner-cable-build-new-facility-and-create-150-jobs-buffalo" target="_blank" rel="noopener">announcing in 2013</a> that it would build a new call center in Buffalo. The larger Buffalo Billion program was at the center of a major public corruption trial earlier this year, which resulted in the conviction of a top Cuomo economic development official as well as Cuomo donors.</p> <p>Berkley is not optimistic about the chances for municipal broadband to take hold in New York over private companies. Democratic State Senate candidate Ross Barkan has higher hopes: he thinks that the state should create a publicly owned internet company to compete with private cable companies and “break these monopolies once and for all.”</p> <p>“Many New Yorkers are stuck with expensive, slow internet, and can't even shop among companies,” Barkan said in a direct message. “A public option for the internet would force private companies to provide better service, lower their prices, and would guarantee everyone in this city and state has a right to access the internet.”</p> <p>Barkan, who is running in a competitive Brooklyn primary to try to unseat Republican Senator Marty Golden, said that if the proposal could be done through the legislative, rather than executive, process, he would be on the front lines for it.</p> <p>“Either way, we need it. If it came down to introducing and passing a bill, I would do it,” he said.</p> <p>In contrast to Cuomo and the PSC, who blame Charter, the <a href="https://www.empirecenter.org/publications/cuomos-cable-hit/" target="_blank" rel="noopener">Empire Center, a think tank, has laid blame</a> for the situation on the cozy relationship between Cuomo and the International Brotherhood of Electrical Workers Local 3, which represents Spectrum workers who have been striking for over a year. Just one day before the PSC announced Charter’s banishment, New York City <a href="http://www.nydailynews.com/new-york/ny-metro-spectrum-strike-20180726-story.html" target="_blank" rel="noopener">launched its own probe</a> into whether Spectrum was fulfilling the conditions of its franchise with the city, namely whether their “cable techs” were local union workers; the IBEW told the Daily News that Spectrum had begun utilizing out-of-state staffers. And on July 31, 23 New York City Council Members called for <a href="http://www.nydailynews.com/new-york/ny-metro-charter-20180731-story.html" target="_blank" rel="noopener">Charter</a> to not be considered for any future contracts in New York City.</p> <p>Ken Girardin, a policy analyst at the Empire Center, cited a speech by Cuomo at a rally for striking IBEW workers, where he questioned how Charter could “improve customer service without the workforce that knows how to provide customer service” in the wake of the merger and its attached conditions.</p> <p>“Cuomo’s rhetoric makes it impossible to separate the PSC’s actions from the Charter-IBEW dispute,” Girardin said. He doubted that Charter would even be kicked out of the state at all, asserting instead that the PSC would revise the merger’s conditional deadlines if Charter acquiesced to the demands of the striking workers. Charter can seek a restraining order and settlement to block the state’s actions, but has not filed motions to do so at this time.</p> <p>A spokesperson for IBEW did not respond to a request for comment from Gotham Gazette. The union and its affiliates have also donated generously to Cuomo’s campaign accounts.</p> <p>In an interview, Girardin described the PSC as a “kangaroo commission,” an institution that is operating on Cuomo’s behalf unchecked by the state Legislature, and said that if the Charter decision stands it would allow the governor to extort favorable outcomes out of companies lest they be kicked out of the state, too.</p> <p>“The governor makes no illusion about the control he exercises over the PSC,” Girardin said. “The PSC has done mental and legal backflips to implement policy on the governor’s behalf. And that ranges from inventing a way to subsidize nuclear power plants to creating a basis for expelling Charter out of the state. The PSC’s core mission is to ensure the reliability of utilities and to regulate the rates that they charge. Governors going back to Pataki have exploited the PSC’s statutory authority.”</p> <p>Girardin is also more suspicious of the cable companies’ donations to Cuomo’s campaign.</p> <p>“I can't speak to how contributions influence decision-making,” he told Gotham Gazette in an email, “but if the governor were to let the PSC operate as intended -- as an independent panel of experts focused on rates and reliability -- there would be less incentive for regulated utilities to contribute to his campaign.”</p> <p>Cuomo has been a regular target of pay-to-play allegations given the state’s porous campaign finance laws, his acceptance of campaign contributions from entities with or seeking state business, and policy decisions that have favored donors. Cuomo’s office has consistently said that government decisions are based on the merits, not influenced by campaign donations of any size.</p> <p>Nevertheless, Girardin said that, despite some seemingly political decisions such as the seizure of the Fitzpatrick Power Plant when the operator wished to close it, and bailouts for nuclear plants lacking in transparency, the banishment of Charter would be without precedent in the state.</p> <p>“Nothing that the PSC has done in the past rises to this level,” Girardin said. Girardin said that the PSC, in normal circumstances, would simply levy a fine and lay out an enforcement plan against Charter, and that it should attempt to foster competition in the market instead of simply choosing a replacement for Charter’s franchise.</p> <p>Republican gubernatorial nominee Marc Molinaro also claimed that the revocation of Charter’s franchise was politically motivated, in order to punish NY1, which is owned by Charter/Spectrum.</p> <p>Molinaro called on the state’s Inspector General to look into the decision to revoke Charter’s franchise, to determine if the Cuomo administration had “orchestrated” the action for political purposes.</p> <p>“I’ll come right out and say it: It looks to me like Andrew Cuomo is trying to send a chilling message to the news media—’don’t mess with me’—and I hope the Inspector General can prove me wrong,” Molinaro said.</p> <p>

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by Ben Brachfeld, Gotham Gazette

Read more by this writer.

</p> <p>Note: this story has been updated to reflect additional comments from the governor's office.</p>
<p><img src="http://www.gothamgazette.com/images/28130476424_262dd10d5a_z.jpg" alt="Cuomo Charter broadband" width="600" height="400" /></p> <p>Gov. Cuomo at a broadband event (photo: The Governor's Office)</p> <hr /> <p>The revocation of Charter Communications’ ability to do business in New York State may be seen by many as a win for <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/07/27/new-york-charter-spectrum-what-means/851039002/" target="_blank" rel="noopener">consumers</a> and for <a href="http://www.nydailynews.com/new-york/ny-metro-spectrum-strike-20180726-story.html" target="_blank" rel="noopener">striking workers</a>, but several key questions remain unanswered, including what cable operator will replace it, and if the company will really be forced to relinquish its assets in the first place.</p> <p><a href="https://ilsr.org/wp-content/uploads/2018/07/profiles-of-monopoly-2018.pdf" target="_blank" rel="noopener">Charter is the largest cable operator in the state</a>, with its umbrella including most of New York City (the Bronx and parts of Brooklyn are dominated by Cablevision) and large swaths of upstate New York. Cable companies are sometimes described as “<a href="https://www.cnet.com/news/john-oliver-compares-cable-companies-to-drug-cartels/" target="_blank" rel="noopener">cartels</a>,” divvying up territory where each can be the only operator, enabling higher prices and poorer customer service. Some have accused cable companies of <a href="https://arstechnica.com/information-technology/2017/05/comcast-and-charter-agree-not-to-compete-against-each-other-in-wireless/" target="_blank" rel="noopener">explicit collusion</a>.</p> <p>When Charter acquired Time Warner Cable, New York City’s previous main cable operator, in 2016, the state’s Public Service Commission (PSC) approved the merger on the condition that Charter provide statewide broadband at 100 megabits per second (mbps) by the end of 2018 and 300 mbps by the end of 2019, and to provide broadband access to 145,000 unserved or underserved households in rural parts of the state.</p> <p>The state says that Charter failed to live up to its promises and attempted to deceive the public into thinking that it had fulfilled them, via advertising campaigns. As such, the state revoked its approval of the Charter-TWC merger on July 27 in a <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/08/01/new-york-charter-spectrum-vote/878542002/" target="_blank" rel="noopener">hastily called meeting</a>&nbsp;without one of its most vocal members, and banned Charter from operating in the state.</p> <p>The PSC ordered Charter to “file within 60 days a plan with the Commission to ensure an orderly transition to a successor provider(s).” Charter can appeal or sue to block the decision, but as of yet has not done so.</p> <p>As it was for Charter, approval from the PSC of a franchise agreement for the replacement provider is potentially extremely lucrative. It is not clear which company will become the successor, though the list of potential suitors includes large donors to Governor Andrew Cuomo’s campaigns.</p> <p>Cablevision, the regional behemoth that operates in the Bronx and upstate, has donated $617,500 to Cuomo’s gubernatorial campaigns since 2008, with $92,500 coming since July of 2017. The donations have come from various LLCs affiliated with local affiliates (e.g. Cablevision of New Jersey, Cablevision of Rockland/Ramapo, etc.) as well as from a corporate PAC, though all donations list the address of its headquarters in Bethpage on Long Island.</p> <p>Cablevision is now a subsidiary of European telecom giant Altice, which is not listed as having ever donated to Cuomo under its name.</p> <p>Comcast, which has a limited presence in New York State, has given Cuomo $164,700 since 2009, with $55,180 coming on November 27 of last year. With Charter being evicted from the state, Comcast, the largest cable provider in the United States despite being routinely criticized for poor customer service and anticompetitive business practices, may attempt to gain a foothold in the Empire State and the single largest media market in the country.</p> <p>AT&amp;T and Verizon, both of which compete with cable companies with fiber optic offerings, have donated $137,900 and $72,815.89, respectively, to Cuomo’s gubernatorial campaigns. AT&amp;T donated $20,100 on May 28. Cuomo received $187,800 from Time Warner, whose parent company his administration banned from the state.</p> <p>Asked whether the campaign contributions could influence the process to replace Charter, Cuomo spokesperson Tyrone Stevens called any such notion "baseless" and noted that the replacement process is controlled by PSC without interference from the governor.</p> <p>“The Governor believes the PSC should not back down to a media giant that has failed to live up to its promises and violated its obligation to build out our broadband system," Stevens said. "The PSC stepped up and took aggressive action to enforce the law, and the Governor stands with New York consumers who deserve the broadband service Charter-Spectrum promised, but has failed to provide."</p> <p>The PSC, which regulates public utilities in the state such as gas, electricity, water, and telecommunications, is made up of five commissioners, each appointed by the governor. The <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/06/14/spectrum-cable-hit-big-fine-slow-internet-rollout-new-york/702439002/" target="_blank" rel="noopener">PSC fined Charter $2 million</a> in June for failing to adequately expand its network.</p> <p>Charter has 60 days to present to the PSC a six-month transition plan to another cable operator. Charter is entitled to make its preference known as to which company it wants to replace it, but any new operator must prove to the PSC that it intends to serve the public interest in order to be approved to conduct business, and the actual broadband contracts are with localities, not the state.</p> <p>“The properties that are owned by Charter/Time Warner in New York State are very profitable, and they’re essentially a known entity,” said Richard Berkley, the executive director of the Public Utility Law Project, a non-profit representing low-income and rural consumers seeking better service and consumer protection by public utilities, in an interview with Gotham Gazette. “So I think you’d see a lot of private entities interested in that.”</p> <p>Charter can seek a “temporary restraining order” from a court, which Berkley had expected the company to do, but as of Monday afternoon, August 6, Charter does not appear to have filed any motions for a restraining order, or filed an appeal or lawsuit.</p> <p>“In the same way that the state had a role in deciding whether or not Charter could buy Time Warner, or for that matter Comcast could buy Time Warner, whoever is proposed by the company will have to go through that same process,” Berkley said of PSC approval.</p> <p>A large and profitable network of infrastructure suddenly being up-for-grabs may lead to intense lobbying of the PSC for the franchise.</p> <p>“I would assume to the extent that they’re interested in stepping into the shoes of Charter that they have probably started checking in with the department or the state,” Berkley said.</p> <p>“It’s a very profitable enterprise, and there are any number of large telecom firms that would want to step forward and try to buy it. The thing which is gonna make it more difficult still is that they have to be responsible. They have to be able to run the operation.”</p> <p>A spokesperson for Altice declined to comment. Spokespeople for AT&amp;T and Verizon did not respond to requests for comment. A spokesperson for Comcast told Gotham Gazette, “at this time we aren’t commenting on this issue.”</p> <p>A spokesperson for the PSC told Gotham Gazette, “The final decision as to who succeeds Charter is up to the PSC.” The spokesperson did not respond when asked whether telecom companies had been lobbying the PSC, or whether they were expected to. Cuomo <a href="https://www.timesunion.com/business/article/Consumers-cheer-Charter-decisions-while-suitors-13116256.php" target="_blank" rel="noopener">told reporters</a> Auburn on July 27 that the PSC is “talking to a number of companies.”</p> <p>Cuomo has repeatedly publicly criticized Charter in the wake of its failure to live up to the terms of the merger deal. On July 31 in Queens, in response to a question about the Crystal Run straw donor scandal by NY1 reporter Zack Fink, Cuomo <a href="https://twitter.com/JonCampbellGAN/status/1024391131071754240" target="_blank" rel="noopener">said</a> that Charter/Spectrum had been “defrauding” the state. NY1’s future in a Spectrum-less New York is uncertain.</p> <p>“You are defrauding the people of this state,” Cuomo told Fink. “That’s a fraud.”</p> <p>A Cuomo spokesperson has insisted the governor was discussing Spectrum and has no ill-will toward Fink, a veteran reporter who has covered Cuomo for several years. Still, many noted Cuomo's response to legitimate questions about a campaign finance scandal that is being investigated by federal authorities.</p> <p>In Auburn, where Cuomo was announcing a $10 million economic development initiative, the governor said that he asked the Attorney General to investigate advertisements making potentially false claims about Charter’s adherence to the conditions.</p> <p>“They have breached their franchise agreement by being behind schedule in their build-out, even though their ads state the exact opposite, and they have not been forthright with the consumers in this state,” Cuomo said. “If you watch Spectrum-Charter, this issue has been going on for months. They haven’t even reported on it. Meanwhile, they’re running advertising that says the exact opposite. So, that’s why the PSC took that action today, and I support it.” Last Thursday, Charter <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/08/02/charter-spectrum-halts-what-ny-calls-misleading-ads-cuomo/888435002/" target="_blank" rel="noopener">halted</a> its ad campaign touting its expanded broadband network, described by Cuomo and the PSC as misleading, a month after <a href="https://www.democratandchronicle.com/story/news/politics/albany/2018/06/27/spectrum-cable-misleading-customers-why-new-york-says-its-so/738365002/" target="_blank" rel="noopener">being ordered by the PSC</a> to do so.</p> <p>Berkley is skeptical that the donations to Cuomo’s campaigns by cable companies would significantly influence the PSC’s decision. “In the end, the Public Service Commission is an independent entity,” he said, despite the fact that Cuomo has a <a href="https://www.nytimes.com/2014/07/23/nyregion/governor-andrew-cuomo-and-the-short-life-of-the-moreland-commission.html" target="_blank" rel="noopener">history of interfering in purportedly independent entities</a>. “The governor doesn’t sit on the board. Yes, he gets to pick the people who come before the Senate to be vetted and confirmed. But, you know, the Senate has the ability to say ‘no’ to people.”</p> <p>Berkley said that, rather than looking at large donations to Cuomo’s campaign coffers, the greater political influence lies in how much money companies have invested in state and local economic development initiatives. The cable infrastructure is privately owned and constructed, but built on public land, which is what makes it a public utility. Time Warner had, as a public utility, invested in local economic development initiatives such as the governor’s now-tarnished Buffalo Billion, <a href="https://www.governor.ny.gov/news/governor-cuomo-announces-time-warner-cable-build-new-facility-and-create-150-jobs-buffalo" target="_blank" rel="noopener">announcing in 2013</a> that it would build a new call center in Buffalo. The larger Buffalo Billion program was at the center of a major public corruption trial earlier this year, which resulted in the conviction of a top Cuomo economic development official as well as Cuomo donors.</p> <p>Berkley is not optimistic about the chances for municipal broadband to take hold in New York over private companies. Democratic State Senate candidate Ross Barkan has higher hopes: he thinks that the state should create a publicly owned internet company to compete with private cable companies and “break these monopolies once and for all.”</p> <p>“Many New Yorkers are stuck with expensive, slow internet, and can't even shop among companies,” Barkan said in a direct message. “A public option for the internet would force private companies to provide better service, lower their prices, and would guarantee everyone in this city and state has a right to access the internet.”</p> <p>Barkan, who is running in a competitive Brooklyn primary to try to unseat Republican Senator Marty Golden, said that if the proposal could be done through the legislative, rather than executive, process, he would be on the front lines for it.</p> <p>“Either way, we need it. If it came down to introducing and passing a bill, I would do it,” he said.</p> <p>In contrast to Cuomo and the PSC, who blame Charter, the <a href="https://www.empirecenter.org/publications/cuomos-cable-hit/" target="_blank" rel="noopener">Empire Center, a think tank, has laid blame</a> for the situation on the cozy relationship between Cuomo and the International Brotherhood of Electrical Workers Local 3, which represents Spectrum workers who have been striking for over a year. Just one day before the PSC announced Charter’s banishment, New York City <a href="http://www.nydailynews.com/new-york/ny-metro-spectrum-strike-20180726-story.html" target="_blank" rel="noopener">launched its own probe</a> into whether Spectrum was fulfilling the conditions of its franchise with the city, namely whether their “cable techs” were local union workers; the IBEW told the Daily News that Spectrum had begun utilizing out-of-state staffers. And on July 31, 23 New York City Council Members called for <a href="http://www.nydailynews.com/new-york/ny-metro-charter-20180731-story.html" target="_blank" rel="noopener">Charter</a> to not be considered for any future contracts in New York City.</p> <p>Ken Girardin, a policy analyst at the Empire Center, cited a speech by Cuomo at a rally for striking IBEW workers, where he questioned how Charter could “improve customer service without the workforce that knows how to provide customer service” in the wake of the merger and its attached conditions.</p> <p>“Cuomo’s rhetoric makes it impossible to separate the PSC’s actions from the Charter-IBEW dispute,” Girardin said. He doubted that Charter would even be kicked out of the state at all, asserting instead that the PSC would revise the merger’s conditional deadlines if Charter acquiesced to the demands of the striking workers. Charter can seek a restraining order and settlement to block the state’s actions, but has not filed motions to do so at this time.</p> <p>A spokesperson for IBEW did not respond to a request for comment from Gotham Gazette. The union and its affiliates have also donated generously to Cuomo’s campaign accounts.</p> <p>In an interview, Girardin described the PSC as a “kangaroo commission,” an institution that is operating on Cuomo’s behalf unchecked by the state Legislature, and said that if the Charter decision stands it would allow the governor to extort favorable outcomes out of companies lest they be kicked out of the state, too.</p> <p>“The governor makes no illusion about the control he exercises over the PSC,” Girardin said. “The PSC has done mental and legal backflips to implement policy on the governor’s behalf. And that ranges from inventing a way to subsidize nuclear power plants to creating a basis for expelling Charter out of the state. The PSC’s core mission is to ensure the reliability of utilities and to regulate the rates that they charge. Governors going back to Pataki have exploited the PSC’s statutory authority.”</p> <p>Girardin is also more suspicious of the cable companies’ donations to Cuomo’s campaign.</p> <p>“I can't speak to how contributions influence decision-making,” he told Gotham Gazette in an email, “but if the governor were to let the PSC operate as intended -- as an independent panel of experts focused on rates and reliability -- there would be less incentive for regulated utilities to contribute to his campaign.”</p> <p>Cuomo has been a regular target of pay-to-play allegations given the state’s porous campaign finance laws, his acceptance of campaign contributions from entities with or seeking state business, and policy decisions that have favored donors. Cuomo’s office has consistently said that government decisions are based on the merits, not influenced by campaign donations of any size.</p> <p>Nevertheless, Girardin said that, despite some seemingly political decisions such as the seizure of the Fitzpatrick Power Plant when the operator wished to close it, and bailouts for nuclear plants lacking in transparency, the banishment of Charter would be without precedent in the state.</p> <p>“Nothing that the PSC has done in the past rises to this level,” Girardin said. Girardin said that the PSC, in normal circumstances, would simply levy a fine and lay out an enforcement plan against Charter, and that it should attempt to foster competition in the market instead of simply choosing a replacement for Charter’s franchise.</p> <p>Republican gubernatorial nominee Marc Molinaro also claimed that the revocation of Charter’s franchise was politically motivated, in order to punish NY1, which is owned by Charter/Spectrum.</p> <p>Molinaro called on the state’s Inspector General to look into the decision to revoke Charter’s franchise, to determine if the Cuomo administration had “orchestrated” the action for political purposes.</p> <p>“I’ll come right out and say it: It looks to me like Andrew Cuomo is trying to send a chilling message to the news media—’don’t mess with me’—and I hope the Inspector General can prove me wrong,” Molinaro said.</p> <p>

***
by Ben Brachfeld, Gotham Gazette

Read more by this writer.

</p> <p>Note: this story has been updated to reflect additional comments from the governor's office.</p>
State Faces Budget Deficit Ahead of Possible Gut Punch from Washington 2017-12-17T05:00:00+00:00 2017-12-17T05:00:00+00:00 http://www.gothamgazette.com/?id=7370:state-faces-budget-deficit-ahead-of-possible-gut-punch-from-washington Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/2017/reset_1/33773687321_7405b0322a_z.jpg" alt="Cuomo top aides budget" width="600" height="400" /></p> <p>Gov. Cuomo and top aides (photo: The Governor's Office)</p> <hr /> <p>With the state facing a larger than usual expected budget shortfall for its next fiscal year, Governor Andrew Cuomo has been railing against the devastating impact proposed federal tax reforms would have on New York state finances.</p> <p>The controversial reform plan that is still being negotiated in Washington, D.C. would either modify or completely eliminate the ability of New Yorkers to deduct state and local taxes from federal tax burdens and likely have deep economic impact for heavily Democratic states like New York, which typically have higher state and local taxes. As of Thursday, Republicans in the House and Senate say they have agreed on a tentative deal that would cap deductions at $10,000, <a href="https://www.nbcnews.com/politics/congress/democrats-push-stall-gop-tax-vote-so-jones-can-take-n829351" target="_blank" rel="noopener">reports NBC News</a>. While negotiations are ongoing, Congress is expected to vote on a final deal this week.</p> <p>Cuomo, a Democrat entering the final year of his second term, <a href="http://www.lohud.com/story/news/politics/politics-on-the-hudson/2017/12/05/andrew-cuomo-gop-tax-bill/108335004/" target="_blank" rel="noopener">has said</a> that the tax plan would “rape and pillage” New York at a time when the state is already faced with a $4.5 billion budget deficit -- the largest since Cuomo took office in 2011 -- and the governor has called on congressional Republicans from New York who support the tax plan to resign.</p> <p>“There is no taxpayer in this state that lives in a congressional district that won't be hurt,” said Cuomo. “Because there's only one state budget. And we start with the $4 billion deficit. You put the state at a structural disadvantage. The taxes would go up on everyone. And that's not complicated math.”</p> <p>In January, Cuomo will outline both his 2018 policy agenda in his State of the State speech as well as his executive budget proposal. The new state fiscal year begins April 1. As Cuomo and his team prepare that budget, there are troubling signs at both the state and federal levels.</p> <p>State Comptroller Tom DiNapoli has projected lower-than-expected tax revenue for the current and upcoming fiscal years. State operating funds receipts will be $1.8 billion lower than projections in the Division of Budget’s August financial plan for this fiscal year, which ends March 31, and $2.8 billion lower in 2018-19, according to a November report by DiNapoli’s office. The $4.5 billion gap may be exacerbated in the coming fiscal year by fallout from federal tax reforms.</p> <p>But, if the administration continues to adhere to Cuomo’s self-imposed 2 percent limit on annual growth in state operating spending -- and it intends to, according to a spokesperson for Cuomo’s Division of the Budget -- the deficit the state will be facing drops to $1.7 billion for next fiscal year. Federal reforms could make budget negotiations even more challenging. If New Yorkers lose most of their state and local tax deductibility, there will almost certainly be more calls for the state to cut taxes.</p> <p>Additionally, <a href="https://www.politico.com/states/new-york/albany/story/2017/12/08/feds-may-stop-paying-portion-of-states-essential-plan-139591" target="_blank" rel="noopener">Politico New York has reported</a> that another $1 billion hole may be carved into the budget if the federal government defunds a portion of the state’s Essential Plan, sometimes called the Basic Health Plan, which provides low-cost health insurance to residents earning less than twice the federal poverty level. And, in March, the state will run out funds for Children’s Health Insurance Plan (CHIP), a joint state-federal healthcare program, if it is not renewed by Congress. The state relies on $1 billion in federal CHIP funds to insure 330,000 children.</p> <p>“His problem is compounded because he'll have to go to battle over healthcare spending for the first time in history,” said E.J. McMahon, research director at the Empire Center for Public Policy, speaking of Gov. Cuomo. “It's going to be the most pressured budget since his first year in office -- easily.”</p> <p>Cuomo, who is running for reelection in 2018 and has presidential ambitions, has prided himself on passing on-time budgets and restoring fiscal order to Albany. He has <a href="http://www.nydailynews.com/news/politics/cuomo-warns-state-pols-pass-budget-time-no-pay-raise-article-1.3684667" target="_blank" rel="noopener">already said</a> he would link any pay raises for legislators, which are long overdue, to whether or not a budget deal is reached in a timely manner. This year’s $153-billion budget for fiscal year 2017-2018 <a href="http://www.gothamgazette.com/state/6862-cuomo-announces-153-billion-state-budget-deal" target="_blank" rel="noopener">was passed nine days late</a>.&nbsp;</p> <p>To address the existing budget gap, the state must either cut spending or increase taxes. Cuomo’s office is now tasked with devising a financial plan that will not cripple agencies or end needed programs, but that will also not drive out the state’s highest income earners, whose taxes provide 40 percent of New York’s operational funding.</p> <p>It is unclear to what extent the final federal tax bill -- if passed -- <a href="http://www.osc.state.ny.us/reports/budget/2017/federal-tax-framework.pdf" target="_blank" rel="noopener">will affect New York</a> and its taxpayers, but some fear it could provide additional motivation for the state’s top 1 percent to take residency elsewhere. Passage <a href="http://www.nydailynews.com/news/politics/n-y-millionaire-tax-hike-drop-trump-bill-passes-article-1.3690749" target="_blank" rel="noopener">would likely dash</a> any Democratic hopes for an expanded millionaire’s tax, such as the policy advocated by New York City Mayor Bill de Blasio.</p> <p>If millionaires and billionaires leave the state, “the burden then falls to everyone else: the middle class and the working families,” Cuomo said Wednesday in Albany at the awards ceremony for his 10 Regional Economic Development Councils.</p> <p>Federal tax policy aside, experts say the widening gap between the state’s anticipated tax revenue and receipts is unusual given what is, overall, a well-performing economy and a booming stock market. While there are certain indications that suggest state personal income tax receipts have been depressed this year by taxpayer behavior in light of possible federal tax changes, the extent of any such impact is difficult to estimate, <a href="http://www.osc.state.ny.us/reports/budget/2017/quick-start-report.pdf" target="_blank" rel="noopener">according to the comptroller’s office</a>.</p> <p>There is some debate as to how to handle the upcoming budget deficit, which Cuomo has acknowledged is likely to significantly impact education funding, which may not see the typical annual increases of recent years.</p> <p>Comptroller DiNapoli has repeatedly urged that the state take steps to eliminate projected budget gaps and achieve structural budget balance, including, for example, minimizing use of one-time resources to support recurring spending and avoiding the use of administrative or accounting actions that lower the appearance of spending but do not eliminate the state’s obligation.</p> <p>These recommendations are echoed by the fiscal watchdog group Citizens Budget Commission (CBC), which <a href="https://cbcny.org/newsroom/cbc-cuomo-uses-gimmicks-low-ball-spending-growth" target="_blank" rel="noopener">has highlighted</a> how the state has created the appearance of meeting the 2 percent cap on spending increases by shifting certain personnel expenses to the capital budget.</p> <p>"Education, Medicaid, and personnel are the three things that he could target. We certainly think a lot of the economic development spending should be curtailed, but that's a slightly smaller pot," said David Friedfel, director of state studies at CBC.</p> <p>Cuomo’s administration often touts spending restraint and disputes the CBC’s characterization of its spending patterns. A spokesperson for the Division of the Budget said that the positions in question had been categorized as capital expenses because they had been associated with capital projects.</p> <p>“Governor Cuomo has been rigorous and effective in constraining State spending growth, achieving more fiscally responsible results than those of his predecessors. The current year’s budget holds spending growth to historically low levels for the seventh consecutive year while balancing the budget and lowering taxes for all New Yorkers.” said Morris Peters, of the state’s Division of the Budget.</p> <p>Legislative leaders are divided on how to approach the budget and looming deficit. Senate Majority Leader John Flanagan, a Republican from Long Island, has opposed increasing taxes on high-income earners.</p> <p>"Senator Flanagan believes we must continue to strictly adhere to the two percent spending cap, which would cut the Governor's projected deficit in half, and review every single dollar the state spends," said Scott Reif, spokesperson for Flanagan, in a statement.</p> <p>Assembly Speaker Carl Heastie, a Bronx Democrat, did not express much concern when speaking to reporters last week, noting that when Cuomo was first elected to office the state was forced to wrestle with a $10 billion budget deficit. “But we’re New Yorkers and we’ll find our way through it,” he said.</p> <p>Cuomo’s budget director Robert Mujica is asking agencies to keep their budgets stagnant and others are questioning whether Cuomo’s signature infrastructure projects or economic development programs should see cuts, or perhaps <a href="http://www.lohud.com/story/news/politics/politics-on-the-hudson/2017/12/07/measure-would-end-nys-film-tax-credit-program/108407074/" target="_blank" rel="noopener">a controversial tax break</a> for the film and television industry that has cost the state $31 million since 2010.</p> <p>While many have praised Cuomo for keeping the deficit relatively low since taking office, according to McMahon, the state’s fiscal situation in 2010 and next year are not necessarily comparable.</p> <p>“In 2010, there was low-hanging fruit then that is not low-hanging now,” said McMahon, noting that Cuomo’s office significantly restructured state personnel. “The first place they will go is school aid. Medicaid is more complicated because there are three levels of payment and it is controlled by federal law.”</p> <p>Education advocates pushed back on the suggestion that cutting education funding was the way to address the deficit. Instead, the state should reinstate the millionaires’ and billionaires’ tax to levels they were at before Cuomo took office and end tax loopholes for hedge-fund and private-equity billionaires, according to Billy Easton, executive director for Alliance for Quality Education of New York, a teachers-union-allied nonprofit.</p> <p>“They shouldn’t say the outcome is we’re going to increase the deficit in educational opportunity for black, brown, and low-income kids,” said Easton.</p> <p>The governor, meanwhile, has vowed to continue to challenge the federal government and members of congress who support the cuts. “I will fight this economic civil war every day that I am governor of the State of New York,” he said on Wednesday.</p> <p>

***
by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/graphics/2017/reset_1/33773687321_7405b0322a_z.jpg" alt="Cuomo top aides budget" width="600" height="400" /></p> <p>Gov. Cuomo and top aides (photo: The Governor's Office)</p> <hr /> <p>With the state facing a larger than usual expected budget shortfall for its next fiscal year, Governor Andrew Cuomo has been railing against the devastating impact proposed federal tax reforms would have on New York state finances.</p> <p>The controversial reform plan that is still being negotiated in Washington, D.C. would either modify or completely eliminate the ability of New Yorkers to deduct state and local taxes from federal tax burdens and likely have deep economic impact for heavily Democratic states like New York, which typically have higher state and local taxes. As of Thursday, Republicans in the House and Senate say they have agreed on a tentative deal that would cap deductions at $10,000, <a href="https://www.nbcnews.com/politics/congress/democrats-push-stall-gop-tax-vote-so-jones-can-take-n829351" target="_blank" rel="noopener">reports NBC News</a>. While negotiations are ongoing, Congress is expected to vote on a final deal this week.</p> <p>Cuomo, a Democrat entering the final year of his second term, <a href="http://www.lohud.com/story/news/politics/politics-on-the-hudson/2017/12/05/andrew-cuomo-gop-tax-bill/108335004/" target="_blank" rel="noopener">has said</a> that the tax plan would “rape and pillage” New York at a time when the state is already faced with a $4.5 billion budget deficit -- the largest since Cuomo took office in 2011 -- and the governor has called on congressional Republicans from New York who support the tax plan to resign.</p> <p>“There is no taxpayer in this state that lives in a congressional district that won't be hurt,” said Cuomo. “Because there's only one state budget. And we start with the $4 billion deficit. You put the state at a structural disadvantage. The taxes would go up on everyone. And that's not complicated math.”</p> <p>In January, Cuomo will outline both his 2018 policy agenda in his State of the State speech as well as his executive budget proposal. The new state fiscal year begins April 1. As Cuomo and his team prepare that budget, there are troubling signs at both the state and federal levels.</p> <p>State Comptroller Tom DiNapoli has projected lower-than-expected tax revenue for the current and upcoming fiscal years. State operating funds receipts will be $1.8 billion lower than projections in the Division of Budget’s August financial plan for this fiscal year, which ends March 31, and $2.8 billion lower in 2018-19, according to a November report by DiNapoli’s office. The $4.5 billion gap may be exacerbated in the coming fiscal year by fallout from federal tax reforms.</p> <p>But, if the administration continues to adhere to Cuomo’s self-imposed 2 percent limit on annual growth in state operating spending -- and it intends to, according to a spokesperson for Cuomo’s Division of the Budget -- the deficit the state will be facing drops to $1.7 billion for next fiscal year. Federal reforms could make budget negotiations even more challenging. If New Yorkers lose most of their state and local tax deductibility, there will almost certainly be more calls for the state to cut taxes.</p> <p>Additionally, <a href="https://www.politico.com/states/new-york/albany/story/2017/12/08/feds-may-stop-paying-portion-of-states-essential-plan-139591" target="_blank" rel="noopener">Politico New York has reported</a> that another $1 billion hole may be carved into the budget if the federal government defunds a portion of the state’s Essential Plan, sometimes called the Basic Health Plan, which provides low-cost health insurance to residents earning less than twice the federal poverty level. And, in March, the state will run out funds for Children’s Health Insurance Plan (CHIP), a joint state-federal healthcare program, if it is not renewed by Congress. The state relies on $1 billion in federal CHIP funds to insure 330,000 children.</p> <p>“His problem is compounded because he'll have to go to battle over healthcare spending for the first time in history,” said E.J. McMahon, research director at the Empire Center for Public Policy, speaking of Gov. Cuomo. “It's going to be the most pressured budget since his first year in office -- easily.”</p> <p>Cuomo, who is running for reelection in 2018 and has presidential ambitions, has prided himself on passing on-time budgets and restoring fiscal order to Albany. He has <a href="http://www.nydailynews.com/news/politics/cuomo-warns-state-pols-pass-budget-time-no-pay-raise-article-1.3684667" target="_blank" rel="noopener">already said</a> he would link any pay raises for legislators, which are long overdue, to whether or not a budget deal is reached in a timely manner. This year’s $153-billion budget for fiscal year 2017-2018 <a href="http://www.gothamgazette.com/state/6862-cuomo-announces-153-billion-state-budget-deal" target="_blank" rel="noopener">was passed nine days late</a>.&nbsp;</p> <p>To address the existing budget gap, the state must either cut spending or increase taxes. Cuomo’s office is now tasked with devising a financial plan that will not cripple agencies or end needed programs, but that will also not drive out the state’s highest income earners, whose taxes provide 40 percent of New York’s operational funding.</p> <p>It is unclear to what extent the final federal tax bill -- if passed -- <a href="http://www.osc.state.ny.us/reports/budget/2017/federal-tax-framework.pdf" target="_blank" rel="noopener">will affect New York</a> and its taxpayers, but some fear it could provide additional motivation for the state’s top 1 percent to take residency elsewhere. Passage <a href="http://www.nydailynews.com/news/politics/n-y-millionaire-tax-hike-drop-trump-bill-passes-article-1.3690749" target="_blank" rel="noopener">would likely dash</a> any Democratic hopes for an expanded millionaire’s tax, such as the policy advocated by New York City Mayor Bill de Blasio.</p> <p>If millionaires and billionaires leave the state, “the burden then falls to everyone else: the middle class and the working families,” Cuomo said Wednesday in Albany at the awards ceremony for his 10 Regional Economic Development Councils.</p> <p>Federal tax policy aside, experts say the widening gap between the state’s anticipated tax revenue and receipts is unusual given what is, overall, a well-performing economy and a booming stock market. While there are certain indications that suggest state personal income tax receipts have been depressed this year by taxpayer behavior in light of possible federal tax changes, the extent of any such impact is difficult to estimate, <a href="http://www.osc.state.ny.us/reports/budget/2017/quick-start-report.pdf" target="_blank" rel="noopener">according to the comptroller’s office</a>.</p> <p>There is some debate as to how to handle the upcoming budget deficit, which Cuomo has acknowledged is likely to significantly impact education funding, which may not see the typical annual increases of recent years.</p> <p>Comptroller DiNapoli has repeatedly urged that the state take steps to eliminate projected budget gaps and achieve structural budget balance, including, for example, minimizing use of one-time resources to support recurring spending and avoiding the use of administrative or accounting actions that lower the appearance of spending but do not eliminate the state’s obligation.</p> <p>These recommendations are echoed by the fiscal watchdog group Citizens Budget Commission (CBC), which <a href="https://cbcny.org/newsroom/cbc-cuomo-uses-gimmicks-low-ball-spending-growth" target="_blank" rel="noopener">has highlighted</a> how the state has created the appearance of meeting the 2 percent cap on spending increases by shifting certain personnel expenses to the capital budget.</p> <p>"Education, Medicaid, and personnel are the three things that he could target. We certainly think a lot of the economic development spending should be curtailed, but that's a slightly smaller pot," said David Friedfel, director of state studies at CBC.</p> <p>Cuomo’s administration often touts spending restraint and disputes the CBC’s characterization of its spending patterns. A spokesperson for the Division of the Budget said that the positions in question had been categorized as capital expenses because they had been associated with capital projects.</p> <p>“Governor Cuomo has been rigorous and effective in constraining State spending growth, achieving more fiscally responsible results than those of his predecessors. The current year’s budget holds spending growth to historically low levels for the seventh consecutive year while balancing the budget and lowering taxes for all New Yorkers.” said Morris Peters, of the state’s Division of the Budget.</p> <p>Legislative leaders are divided on how to approach the budget and looming deficit. Senate Majority Leader John Flanagan, a Republican from Long Island, has opposed increasing taxes on high-income earners.</p> <p>"Senator Flanagan believes we must continue to strictly adhere to the two percent spending cap, which would cut the Governor's projected deficit in half, and review every single dollar the state spends," said Scott Reif, spokesperson for Flanagan, in a statement.</p> <p>Assembly Speaker Carl Heastie, a Bronx Democrat, did not express much concern when speaking to reporters last week, noting that when Cuomo was first elected to office the state was forced to wrestle with a $10 billion budget deficit. “But we’re New Yorkers and we’ll find our way through it,” he said.</p> <p>Cuomo’s budget director Robert Mujica is asking agencies to keep their budgets stagnant and others are questioning whether Cuomo’s signature infrastructure projects or economic development programs should see cuts, or perhaps <a href="http://www.lohud.com/story/news/politics/politics-on-the-hudson/2017/12/07/measure-would-end-nys-film-tax-credit-program/108407074/" target="_blank" rel="noopener">a controversial tax break</a> for the film and television industry that has cost the state $31 million since 2010.</p> <p>While many have praised Cuomo for keeping the deficit relatively low since taking office, according to McMahon, the state’s fiscal situation in 2010 and next year are not necessarily comparable.</p> <p>“In 2010, there was low-hanging fruit then that is not low-hanging now,” said McMahon, noting that Cuomo’s office significantly restructured state personnel. “The first place they will go is school aid. Medicaid is more complicated because there are three levels of payment and it is controlled by federal law.”</p> <p>Education advocates pushed back on the suggestion that cutting education funding was the way to address the deficit. Instead, the state should reinstate the millionaires’ and billionaires’ tax to levels they were at before Cuomo took office and end tax loopholes for hedge-fund and private-equity billionaires, according to Billy Easton, executive director for Alliance for Quality Education of New York, a teachers-union-allied nonprofit.</p> <p>“They shouldn’t say the outcome is we’re going to increase the deficit in educational opportunity for black, brown, and low-income kids,” said Easton.</p> <p>The governor, meanwhile, has vowed to continue to challenge the federal government and members of congress who support the cuts. “I will fight this economic civil war every day that I am governor of the State of New York,” he said on Wednesday.</p> <p>

***
by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

</p>
Even Without Federal Cuts, Signs of Trouble for State Finances 2017-08-01T04:00:00+00:00 2017-08-01T04:00:00+00:00 http://www.gothamgazette.com/?id=7102:even-without-federal-cuts-signs-of-trouble-for-state-finances Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/dinapoli_phillips.jpg" alt="dinapoli phillips" width="600" height="356" /></p> <p>State Comptroller Tom DiNapoli, right (photo: @NYSComptroller)</p> <hr /> <p>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.</p> <p>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.</p> <p>The findings were compiled in the comptroller’s monthly <a href="http://www.osc.state.ny.us/finance/finreports/cash/monthly/june-2017.pdf" target="_blank" rel="noopener noreferrer">state cash report</a>, issued in late July. In an accompanying statement, DiNapoli diagnosed a potential cause of the unanticipated shortfall in state revenues.</p> <p>"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.”</p> <p>The comptroller, a few days after releasing the cash report, also released a <a href="https://www.osc.state.ny.us/reports/budget/2017/2017-18-enacted-budget-financial-plan-july.pdf" target="_blank" rel="noopener noreferrer">larger fiscal analysis</a> 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.</p> <p>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.</p> <p>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.”</p> <p>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 <a href="https://cbcny.org/research/budget-navigator" target="_blank" rel="noopener noreferrer">according to the Citizens Budget Commission</a> (CBC).</p> <p>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.</p> <p>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.”</p> <p>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.</p> <p>“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.”</p> <p>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 href="https://cbcny.org/research/when-2-percent-isnt-2-percent" target="_blank" rel="noopener noreferrer">a report</a> 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.</p> <p>“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.”</p> <p>Another nonprofit budget watchdog, Empire Center, had a similar reaction to the report.</p> <p>"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."</p> <p>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 <a href="https://www.empirecenter.org/publications/sizing-up-tax-reform/" target="_blank" rel="noopener noreferrer">McMahon, in a July blog post</a>.</p> <p>"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.”</p> <p>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.</p> <p>

***
by Ben Brachfeld, Gotham Gazette

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/graphics/dinapoli_phillips.jpg" alt="dinapoli phillips" width="600" height="356" /></p> <p>State Comptroller Tom DiNapoli, right (photo: @NYSComptroller)</p> <hr /> <p>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.</p> <p>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.</p> <p>The findings were compiled in the comptroller’s monthly <a href="http://www.osc.state.ny.us/finance/finreports/cash/monthly/june-2017.pdf" target="_blank" rel="noopener noreferrer">state cash report</a>, issued in late July. In an accompanying statement, DiNapoli diagnosed a potential cause of the unanticipated shortfall in state revenues.</p> <p>"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.”</p> <p>The comptroller, a few days after releasing the cash report, also released a <a href="https://www.osc.state.ny.us/reports/budget/2017/2017-18-enacted-budget-financial-plan-july.pdf" target="_blank" rel="noopener noreferrer">larger fiscal analysis</a> 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.</p> <p>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.</p> <p>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.”</p> <p>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 <a href="https://cbcny.org/research/budget-navigator" target="_blank" rel="noopener noreferrer">according to the Citizens Budget Commission</a> (CBC).</p> <p>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.</p> <p>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.”</p> <p>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.</p> <p>“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.”</p> <p>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 href="https://cbcny.org/research/when-2-percent-isnt-2-percent" target="_blank" rel="noopener noreferrer">a report</a> 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.</p> <p>“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.”</p> <p>Another nonprofit budget watchdog, Empire Center, had a similar reaction to the report.</p> <p>"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."</p> <p>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 <a href="https://www.empirecenter.org/publications/sizing-up-tax-reform/" target="_blank" rel="noopener noreferrer">McMahon, in a July blog post</a>.</p> <p>"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.”</p> <p>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.</p> <p>

***
by Ben Brachfeld, Gotham Gazette

Read more by this writer.

</p>
Reviews Are In: What Watchdogs Say About The New State Budget 2017-06-15T04:00:00+00:00 2017-06-15T04:00:00+00:00 http://www.gothamgazette.com/?id=7003:reviews-are-in-what-watchdogs-say-about-new-state-budget Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/24334328716_29ac89de3e_z.jpg" alt="Cuomo budget presentation" width="600" height="399" /></p> <p>(photo: The Governor's Office)</p> <hr /> <p>A new state budget was passed in April in typical Albany fashion: with almost no time for public scrutiny of the bills or proper review by the legislators who quickly voted them through. Since the <a href="http://www.gothamgazette.com/state/6867-10-key-takeaways-for-new-york-city-from-the-new-state-budget" target="_blank" rel="noopener noreferrer">$153.1 billion budget was passed</a>, watchdogs both in and out of government have released analyses, helping to better inform citizens and increase accountability.</p> <p>The budget was adopted a little over a week into the new fiscal year, which begins April 1, after compromises were reached among legislative leaders and Governor Andrew Cuomo on contentious issues such as raising the age of adult criminal responsibility, education aid, a college tuition affordability program, the allocation of large sums of affordable housing monies, and more. The frantic and secretive nature of state budget adoption leaves a lot to digest afterward.</p> <p>Now, about two months after the budget was passed, those analyses by watchdogs can bring to light a few common themes and several other key points.</p> <p>Aside from general criticism of the process itself, there are the issues of the large lump sum appropriations, projects funded by mysterious sources, and the governor faulty marketing of his budgetary discipline.</p> <p><strong>Comptroller Tom DiNapoli</strong><br />State Comptroller Tom DiNapoli released a <a href="http://www.osc.state.ny.us/reports/budget/2017/2017-18-enacted-budget-report.pdf" target="_blank" rel="noopener noreferrer">report</a> on the state budget that includes critiques of the budgeting process and the end result. The budget continues to rely heavily on appropriations from the federal government, at almost a third of state revenue, despite the unpredictability of state aid from Washington, D.C. under President Donald Trump and the Republican Congress.</p> <p>“Although the budget came together more than a week into the fiscal year, the Legislature and Executive acted on critical budget issues that will help New York move forward,” DiNapoli said in a statement. “However, billions of dollars in spending lacks key details that would better inform the public about how their tax dollars are being spent.”</p> <p>The Comptroller’s report included a lengthy chart showing the legislature’s inaction on ethics reform, criticizing the fact that, among other things, the budget “intentionally omits” measures such as requiring advisory opinions on legislators’ outside income, closing the LLC loophole in corporate political contributions, and extending the Freedom of Information Law (FOIL) to cover the Legislature. The Comptroller was equally pointed on the state’s procurement practices, which have come under fire due to rampant corruption in the state’s contracting process, stating that the changes were needed to “ensure spending accountability and transparency” in a statement. A measure to authorize the IG to investigate criminal wrongdoing in the state’s procurements was intentionally omitted.</p> <p>The Comptroller was critical of the quickness of the process, essentially disallowing public review. Also criticized was the prevalence of lump sum appropriations, which can make state money harder to track.</p> <p>“It should concern all New Yorkers that budget decisions in Washington may force tough fiscal choices for the state and raise new questions for local governments and nonprofits that rely on state funding,” DiNapoli said. “Federal actions that could adversely affect New York, as well as economic uncertainty, are key risks to this budget.”</p> <p><strong>Citizens Budget Commission</strong><br />In a statement on the day the budget was adopted, CBC President Carol Kellermann said “achieving a fiscally sound budget is more important than an ‘on time’ budget,” referring to the emergency budget extender passed when negotiating parties couldn’t reach a deal on time. Still, CBC expressed dismay that the state budget was neither on-time nor fiscally sound.</p> <p>In a later report, CBC also <a href="https://cbcny.org/research/when-2-percent-isnt-2-percent" target="_blank" rel="noopener noreferrer">criticized</a> Governor Cuomo for misleadingly saying that the adopted budget continued his “record of holding State Operating Funds spending annual growth to no more than 2 percent.” In reality, CBC explained, spending growth is closer to 3.7%, well above the 2% benchmark that Cuomo prides himself on. The budget is able to exploit this loophole by not “adjusting for payment timing differences and accounting changes,” such as through premature debt service payments or “shifting expenditures out of state operating funds spending.”</p> <p>CBC has created a “<a href="https://cbcny.org/research/budget-navigator" target="_blank" rel="noopener noreferrer">budget navigator</a>” to allow citizens to see how city and state money is being spent.</p> <p><strong>Empire Center for Public Policy</strong><br />Empire Center, a conservative think tank based in Albany, has released a <a href="https://www.empirecenter.org/budget/">slew of criticisms</a> of the budget. Condemnations expressed on the Empire Center blog cover health care spending, certain tax breaks, and the “free” college tuition program. Empire Center is also critical of the added tax deduction for union dues, “effectively a $35 million gratuity for an already privileged caste of (mostly government) workers.”</p> <p>“The positives in New York’s FY 2018 budget make up a pretty short list—while the negatives are in some respects worse than usual,” wrote E.J. McMahon, Empire Center’s founder and research director, in a budget breakdown <a href="https://www.empirecenter.org/publications/budget-pluses-and-minuses/">post</a> on the Center’s blog.</p> <p>McMahon argues for more transparency and accountability with the Water Infrastructure Improvement Act, which he says “used to be put before voters in New York.” Now that doing so is no longer a requirement, McMahon writes, “the governor and Legislature obviously figure, why bother?”</p> <p><strong>Citizens Union</strong><br />Citizens Union identifies the budget’s large non-specific lump sum funding in its “<a href="http://www.citizensunion.org/spending_in_the_shadows__nonspecific_lump_sum_funding_in_the_fy_2018_new_york_state_enacted_budget">Spending in the Shadows</a>” report. The watchdog identified nearly $13 billion in the budget in nonspecific funding: around $3 billion “subject to decisions of one or more particular elected officials,” and nearly $10 billion “in approximately 40 different economic development and infrastructure pots listing no official with spending authority.” The group also found that there was “inadequate reporting as to how these funds are eventually spent.”</p> <p>Citizens Union calls on the governor and Legislature to publicly identify all nonspecific funding and to publicly disclose information, such as purposes and the requester, regarding these funds, especially ahead of spending, not afterward as is often the case. Further, the organization calls for amending state finance law to introduce accountability and conflict-of-interest identification to public contracting, the disclosure of grants and contracts “awarded under nonspecific lump sum appropriations and reappropriations,” and for “aging the budget bills for three days.”</p> <p><strong>Reinvent Albany</strong><br />Reinvent Albany has focused largely on procurement reform, which has become a major point of contention, particularly after the Buffalo Billion corruption scandal broke. Along with other watchdog groups, Reinvent Albany issued a <a href="http://reinventalbany.org/2017/05/budget-and-transparency-watchdogs-groups-call-on-senate-assembly-and-governor-cuomo-to-pass-clean-contracting-reforms/">release</a> in May calling for “five clean contracting reforms,” all of which failed to make it into the budget:</p> <p>1. Require competitive and transparent contracting for the award of state funds by all state agencies, authorities, and affiliates. Use existing agency procurement guidelines as a uniform minimum standard.</p> <p>2. Transfer responsibility for awarding all economic development awards to Empire State Development Corporation (ESDC) and end awards by state non-profits and SUNY.</p> <p>3. Empower the Comptroller to review and approve all state contracts over $250,000.</p> <p>4. Prohibit state authorities, state corporations, and state non-profits from doing business with their board members.</p> <p>5. Create a ‘Database of Deals’ that allows the public to see the total value of all forms of subsidies awarded to a business – as six states have done.</p> <p>The groups have continued to call for such reforms, but legislative leaders have been hesitant to challenge Cuomo, who is opposed.</p> <p><strong>New York Public Interest Research Group</strong><br />NYPIRG also criticized the opacity of the state budget process, which notorious for taking place largely behind closed doors, especially in terms of the final, major deals reached, with the infamous “Three Men in a Room” process determining what stays and what goes -- largely without public input. (There’s been a fourth man in the room of late given the addition of IDC Leader Jeff Klein along with the governor, Assembly speaker and Senate majority leader.)</p> <p>“The process by which these decisions were made was awful and arguably worse than in the recent past,” said the organization in a <a href="http://www.nypirg.org/capitolperspective/?p=1861">statement</a> shortly after the budget’s passage. “Virtually all the deliberations in developing the budget were conducted behind closed doors. There were no hearings, no open meetings, and with the three day legislative review period waived by the governor lawmakers were voting on bills that they had little time to comprehensively review.”</p> <p>***<br />by&nbsp;Ben Brachfeld &amp; Jynn Schubert<br /><a href="https://twitter.com/GothamGazette" target="_blank" rel="noopener noreferrer">@GothamGazette</a></p> <p> Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union. </p> <p><img src="http://www.gothamgazette.com/images/graphics/24334328716_29ac89de3e_z.jpg" alt="Cuomo budget presentation" width="600" height="399" /></p> <p>(photo: The Governor's Office)</p> <hr /> <p>A new state budget was passed in April in typical Albany fashion: with almost no time for public scrutiny of the bills or proper review by the legislators who quickly voted them through. Since the <a href="http://www.gothamgazette.com/state/6867-10-key-takeaways-for-new-york-city-from-the-new-state-budget" target="_blank" rel="noopener noreferrer">$153.1 billion budget was passed</a>, watchdogs both in and out of government have released analyses, helping to better inform citizens and increase accountability.</p> <p>The budget was adopted a little over a week into the new fiscal year, which begins April 1, after compromises were reached among legislative leaders and Governor Andrew Cuomo on contentious issues such as raising the age of adult criminal responsibility, education aid, a college tuition affordability program, the allocation of large sums of affordable housing monies, and more. The frantic and secretive nature of state budget adoption leaves a lot to digest afterward.</p> <p>Now, about two months after the budget was passed, those analyses by watchdogs can bring to light a few common themes and several other key points.</p> <p>Aside from general criticism of the process itself, there are the issues of the large lump sum appropriations, projects funded by mysterious sources, and the governor faulty marketing of his budgetary discipline.</p> <p><strong>Comptroller Tom DiNapoli</strong><br />State Comptroller Tom DiNapoli released a <a href="http://www.osc.state.ny.us/reports/budget/2017/2017-18-enacted-budget-report.pdf" target="_blank" rel="noopener noreferrer">report</a> on the state budget that includes critiques of the budgeting process and the end result. The budget continues to rely heavily on appropriations from the federal government, at almost a third of state revenue, despite the unpredictability of state aid from Washington, D.C. under President Donald Trump and the Republican Congress.</p> <p>“Although the budget came together more than a week into the fiscal year, the Legislature and Executive acted on critical budget issues that will help New York move forward,” DiNapoli said in a statement. “However, billions of dollars in spending lacks key details that would better inform the public about how their tax dollars are being spent.”</p> <p>The Comptroller’s report included a lengthy chart showing the legislature’s inaction on ethics reform, criticizing the fact that, among other things, the budget “intentionally omits” measures such as requiring advisory opinions on legislators’ outside income, closing the LLC loophole in corporate political contributions, and extending the Freedom of Information Law (FOIL) to cover the Legislature. The Comptroller was equally pointed on the state’s procurement practices, which have come under fire due to rampant corruption in the state’s contracting process, stating that the changes were needed to “ensure spending accountability and transparency” in a statement. A measure to authorize the IG to investigate criminal wrongdoing in the state’s procurements was intentionally omitted.</p> <p>The Comptroller was critical of the quickness of the process, essentially disallowing public review. Also criticized was the prevalence of lump sum appropriations, which can make state money harder to track.</p> <p>“It should concern all New Yorkers that budget decisions in Washington may force tough fiscal choices for the state and raise new questions for local governments and nonprofits that rely on state funding,” DiNapoli said. “Federal actions that could adversely affect New York, as well as economic uncertainty, are key risks to this budget.”</p> <p><strong>Citizens Budget Commission</strong><br />In a statement on the day the budget was adopted, CBC President Carol Kellermann said “achieving a fiscally sound budget is more important than an ‘on time’ budget,” referring to the emergency budget extender passed when negotiating parties couldn’t reach a deal on time. Still, CBC expressed dismay that the state budget was neither on-time nor fiscally sound.</p> <p>In a later report, CBC also <a href="https://cbcny.org/research/when-2-percent-isnt-2-percent" target="_blank" rel="noopener noreferrer">criticized</a> Governor Cuomo for misleadingly saying that the adopted budget continued his “record of holding State Operating Funds spending annual growth to no more than 2 percent.” In reality, CBC explained, spending growth is closer to 3.7%, well above the 2% benchmark that Cuomo prides himself on. The budget is able to exploit this loophole by not “adjusting for payment timing differences and accounting changes,” such as through premature debt service payments or “shifting expenditures out of state operating funds spending.”</p> <p>CBC has created a “<a href="https://cbcny.org/research/budget-navigator" target="_blank" rel="noopener noreferrer">budget navigator</a>” to allow citizens to see how city and state money is being spent.</p> <p><strong>Empire Center for Public Policy</strong><br />Empire Center, a conservative think tank based in Albany, has released a <a href="https://www.empirecenter.org/budget/">slew of criticisms</a> of the budget. Condemnations expressed on the Empire Center blog cover health care spending, certain tax breaks, and the “free” college tuition program. Empire Center is also critical of the added tax deduction for union dues, “effectively a $35 million gratuity for an already privileged caste of (mostly government) workers.”</p> <p>“The positives in New York’s FY 2018 budget make up a pretty short list—while the negatives are in some respects worse than usual,” wrote E.J. McMahon, Empire Center’s founder and research director, in a budget breakdown <a href="https://www.empirecenter.org/publications/budget-pluses-and-minuses/">post</a> on the Center’s blog.</p> <p>McMahon argues for more transparency and accountability with the Water Infrastructure Improvement Act, which he says “used to be put before voters in New York.” Now that doing so is no longer a requirement, McMahon writes, “the governor and Legislature obviously figure, why bother?”</p> <p><strong>Citizens Union</strong><br />Citizens Union identifies the budget’s large non-specific lump sum funding in its “<a href="http://www.citizensunion.org/spending_in_the_shadows__nonspecific_lump_sum_funding_in_the_fy_2018_new_york_state_enacted_budget">Spending in the Shadows</a>” report. The watchdog identified nearly $13 billion in the budget in nonspecific funding: around $3 billion “subject to decisions of one or more particular elected officials,” and nearly $10 billion “in approximately 40 different economic development and infrastructure pots listing no official with spending authority.” The group also found that there was “inadequate reporting as to how these funds are eventually spent.”</p> <p>Citizens Union calls on the governor and Legislature to publicly identify all nonspecific funding and to publicly disclose information, such as purposes and the requester, regarding these funds, especially ahead of spending, not afterward as is often the case. Further, the organization calls for amending state finance law to introduce accountability and conflict-of-interest identification to public contracting, the disclosure of grants and contracts “awarded under nonspecific lump sum appropriations and reappropriations,” and for “aging the budget bills for three days.”</p> <p><strong>Reinvent Albany</strong><br />Reinvent Albany has focused largely on procurement reform, which has become a major point of contention, particularly after the Buffalo Billion corruption scandal broke. Along with other watchdog groups, Reinvent Albany issued a <a href="http://reinventalbany.org/2017/05/budget-and-transparency-watchdogs-groups-call-on-senate-assembly-and-governor-cuomo-to-pass-clean-contracting-reforms/">release</a> in May calling for “five clean contracting reforms,” all of which failed to make it into the budget:</p> <p>1. Require competitive and transparent contracting for the award of state funds by all state agencies, authorities, and affiliates. Use existing agency procurement guidelines as a uniform minimum standard.</p> <p>2. Transfer responsibility for awarding all economic development awards to Empire State Development Corporation (ESDC) and end awards by state non-profits and SUNY.</p> <p>3. Empower the Comptroller to review and approve all state contracts over $250,000.</p> <p>4. Prohibit state authorities, state corporations, and state non-profits from doing business with their board members.</p> <p>5. Create a ‘Database of Deals’ that allows the public to see the total value of all forms of subsidies awarded to a business – as six states have done.</p> <p>The groups have continued to call for such reforms, but legislative leaders have been hesitant to challenge Cuomo, who is opposed.</p> <p><strong>New York Public Interest Research Group</strong><br />NYPIRG also criticized the opacity of the state budget process, which notorious for taking place largely behind closed doors, especially in terms of the final, major deals reached, with the infamous “Three Men in a Room” process determining what stays and what goes -- largely without public input. (There’s been a fourth man in the room of late given the addition of IDC Leader Jeff Klein along with the governor, Assembly speaker and Senate majority leader.)</p> <p>“The process by which these decisions were made was awful and arguably worse than in the recent past,” said the organization in a <a href="http://www.nypirg.org/capitolperspective/?p=1861">statement</a> shortly after the budget’s passage. “Virtually all the deliberations in developing the budget were conducted behind closed doors. There were no hearings, no open meetings, and with the three day legislative review period waived by the governor lawmakers were voting on bills that they had little time to comprehensively review.”</p> <p>***<br />by&nbsp;Ben Brachfeld &amp; Jynn Schubert<br /><a href="https://twitter.com/GothamGazette" target="_blank" rel="noopener noreferrer">@GothamGazette</a></p> <p> Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union. </p> Comptroller Pushes for Expansion of Tax Refund for Working New Yorkers 2017-02-08T03:29:20+00:00 2017-02-08T03:29:20+00:00 http://www.gothamgazette.com/?id=6750:comptroller-pushes-for-expansion-of-tax-refund-for-working-new-yorkers Samar Khurshid <p><img src="http://www.gothamgazette.com/images/graphics/2017/stringer_at_city_hall_rally.jpg" alt="stringer at city hall rally" width="600" height="413" /></p> <p>&nbsp;Comptroller Scott Stringer (photo: @scottmstringer)</p> <hr /> <p>In his <a href="https://www.nysenate.gov/calendar/public-hearings/january-30-2017/joint-legislative-public-hearing-2017-2018-executive-budget" target="_blank">testimony</a> before the New York State Legislature last week on the state’s proposed budget for 2018, New York City Comptroller Scott Stringer called for the expansion of a tax credit that could potentially pull thousands of New York City residents out of poverty, continuing a push he began last year when he first floated the idea.</p> <p>The centerpiece of Stringer’s proposal is to triple the city’s Earned Income Tax Credit (EITC), a refundable tax benefit aimed at working families that functions on federal, state and city levels. The credit, which incentivizes employment, grants individuals and couples who qualify anywhere between several hundred and a few thousand dollars, depending on the number of children they have. New York state matches up to 30 percent of the federal EITC and the city matches another 5 percent. Stringer’s proposal would see the city’s contribution increase to 15 percent. It would require state lawmakers to authorize the city to expand its tax credit and would need the City Council to pass legislation, and it would have to be funded in the city budget.</p> <p>“Tripling the City’s earned income tax credit puts money in the pockets of those who need it most,” said Stringer, in a statement to Gotham Gazette, noting that one-fifth of New Yorkers live below the poverty line. “It’s one of the most effective anti-poverty programs in America, and an expansion would have extraordinary benefits across the five boroughs. It would stimulate our economy, boost small businesses, and support local communities. Most importantly, it’s the right thing to do at a time when so many working families are struggling to make ends meet.”</p> <p>The <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts" target="_blank">federal EITC</a>, based on a household’s total earnings, gives up to $6,269 to a couple with three or more children making a maximum of $53,505 in a year. An individual without children making a maximum of $14,880 can receive up to $506 in a tax refund. The federal credit along with the state and city’s contribution combine for a significant benefit -- a maximum of $8,463 for qualifying New York City residents -- that can inject money back into the pockets of low- to moderate-income New Yorkers and spur spending.</p> <p>Studies <a href="http://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit" target="_blank">have found</a> that the credit is highly effective at raising employment rates for single parents and that families with children typically use the credit to pay for things like home repair, maintenance on vehicles that are used to commute to work, and in some cases, to continue their education. This success has made the tax credit popular for conservatives and liberals, alike.</p> <p>The comptroller first released his proposal, accompanied by a detailed <a href="http://comptroller.nyc.gov/wp-content/uploads/documents/EITC_Report.pdf" target="_blank">report</a>, in September last year at an Association for a Better New York breakfast event. The report projects that tripling the city’s contribution could lift 15,000 families above the poverty line. The average credit for an individual who qualifies would increase from $110 to $330, and for about 6000 New Yorkers, it would effectively nullify their city income tax burden. The proposal would cost the city between $210 to $220 million, spending which is likely to go back into the city economy. According to the comptroller’s office, roughly 950,000 New Yorkers qualified for the EITC last year, receiving about $2.8 billion in tax refunds. That translates to about 150,000 families that escaped poverty levels.</p> <p>One setback with the credit is that many New Yorkers do not realize that they qualify for it. Under Mayor Bill de Blasio, a progressive Democrat, the city has recognized the strength of the EITC program. In 2015, the Department of Consumer Affairs (DCA) launched a media blitz to promote the tax credit, including ads in the subways, on bus shelters, in print, radio and online. That ad campaign has become a staple in promoting the city’s free tax preparation program. According to estimates by Civis Analytics, a data analytics firm that helped the city with its “<a href="http://www.startbyasking.org" target="_blank">Start By Asking</a>” benefits awareness campaign, of the 1.1 million New York City residents that qualify for EITC, approximately 120,000 of them do not claim the credit, which is the city’s current concern. DCA spokesperson Abigail Lootens, in an email, said the agency is closely reviewing the comptroller’s EITC proposition. “We are also dedicated to reaching those who are currently eligible but not claiming this vital credit,” she said.</p> <p>At the state level, Stringer has found an ally in Senator Jose Serrano, a Democrat whose district includes the South Bronx and parts of East Harlem, low- and middle-income communities for which the EITC is a boon. Serrano introduced a bill in the current legislative session based on Stringer’s proposal, to allow New York City to expand its EITC contribution. The senator stressed that expanding EITC is an “organic approach” to reducing poverty. “While it does require a financial commitment by the city, a vast majority of that money goes right back into the community,” he said in a phone interview.</p> <p>Serrano’s <a href="https://www.nysenate.gov/legislation/bills/2017/S3508" target="_blank">bill</a> is currently before the Senate’s Cities Committee, where he hopes it’ll receive the necessary support. The committee is chaired by Sen. Simcha Felder, a Democrat who caucuses with the Republican majority. A spokesperson for the governor’s office said the proposal would be reviewed.</p> <p>“It is really such a timely bill,” Serrano said. “Over the last few years, the rich have gotten richer and the poor have gotten poorer. This will help bridge that gap a little and help people get above the poverty line.”</p> <p>Ron Deutsch, executive director of the nonpartisan Fiscal Policy Institute, said both the city and state should increase their EITC contributions “to help bolster low-income family earnings and help boost them out of poverty.” Aside from Serrano’s bill, there are multiple proposals before the state Legislature that enhance the EITC in some shape or form, including a bill sponsored by Assemblymember Robin Schimminger, an upstate Democrat. <a href="https://www.nysenate.gov/legislation/bills/2017/A2018" target="_blank">Schimminger’s bill</a>, which increases the state’s EITC from 30 to 35 percent of the federal EITC, has been introduced in three previous legislative sessions but has never made it beyond the Ways and Means committee. Schimminger’s office did not return a request for comment by publishing time.</p> <p>“This is one of those bipartisan issues where there’s agreement,” Deutsch said. “In terms of why it doesn’t get done, I think it’s always a matter of political will in Albany. Given how many New Yorkers are struggling to make ends meet, this would be a logical means to address that.” He believes the state should increase its contribution to 40 percent, which he said comes with a price tag of $400 million annually. “I would suggest it’s a good investment that spurs the economy,” he said.</p> <p>It’s unclear, however, whether Stringer’s or Schimminger’s proposals will find support in either the Democrat-run Assembly or the Republican-led Senate. Spokespersons for Assembly Speaker Carl Heastie, Senate Majority leader John Flanagan and for the Senate Independent Democratic Conference did not respond to requests for comment.</p> <p>E.J. McMahon, research director at the Empire Center for Public Policy, a conservative think tank, believes the cost of expanding EITC is likely the only reason it hasn’t been achieved though it has the backing of fiscal conservatives. “It’s the most effective way to incentivize and reward work,” he said, noting that it would work better if expanded at the state level. He added, “It would win broad support if we could pay for it.”</p> <p>

***
by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/graphics/2017/stringer_at_city_hall_rally.jpg" alt="stringer at city hall rally" width="600" height="413" /></p> <p>&nbsp;Comptroller Scott Stringer (photo: @scottmstringer)</p> <hr /> <p>In his <a href="https://www.nysenate.gov/calendar/public-hearings/january-30-2017/joint-legislative-public-hearing-2017-2018-executive-budget" target="_blank">testimony</a> before the New York State Legislature last week on the state’s proposed budget for 2018, New York City Comptroller Scott Stringer called for the expansion of a tax credit that could potentially pull thousands of New York City residents out of poverty, continuing a push he began last year when he first floated the idea.</p> <p>The centerpiece of Stringer’s proposal is to triple the city’s Earned Income Tax Credit (EITC), a refundable tax benefit aimed at working families that functions on federal, state and city levels. The credit, which incentivizes employment, grants individuals and couples who qualify anywhere between several hundred and a few thousand dollars, depending on the number of children they have. New York state matches up to 30 percent of the federal EITC and the city matches another 5 percent. Stringer’s proposal would see the city’s contribution increase to 15 percent. It would require state lawmakers to authorize the city to expand its tax credit and would need the City Council to pass legislation, and it would have to be funded in the city budget.</p> <p>“Tripling the City’s earned income tax credit puts money in the pockets of those who need it most,” said Stringer, in a statement to Gotham Gazette, noting that one-fifth of New Yorkers live below the poverty line. “It’s one of the most effective anti-poverty programs in America, and an expansion would have extraordinary benefits across the five boroughs. It would stimulate our economy, boost small businesses, and support local communities. Most importantly, it’s the right thing to do at a time when so many working families are struggling to make ends meet.”</p> <p>The <a href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eitc-income-limits-maximum-credit-amounts" target="_blank">federal EITC</a>, based on a household’s total earnings, gives up to $6,269 to a couple with three or more children making a maximum of $53,505 in a year. An individual without children making a maximum of $14,880 can receive up to $506 in a tax refund. The federal credit along with the state and city’s contribution combine for a significant benefit -- a maximum of $8,463 for qualifying New York City residents -- that can inject money back into the pockets of low- to moderate-income New Yorkers and spur spending.</p> <p>Studies <a href="http://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit" target="_blank">have found</a> that the credit is highly effective at raising employment rates for single parents and that families with children typically use the credit to pay for things like home repair, maintenance on vehicles that are used to commute to work, and in some cases, to continue their education. This success has made the tax credit popular for conservatives and liberals, alike.</p> <p>The comptroller first released his proposal, accompanied by a detailed <a href="http://comptroller.nyc.gov/wp-content/uploads/documents/EITC_Report.pdf" target="_blank">report</a>, in September last year at an Association for a Better New York breakfast event. The report projects that tripling the city’s contribution could lift 15,000 families above the poverty line. The average credit for an individual who qualifies would increase from $110 to $330, and for about 6000 New Yorkers, it would effectively nullify their city income tax burden. The proposal would cost the city between $210 to $220 million, spending which is likely to go back into the city economy. According to the comptroller’s office, roughly 950,000 New Yorkers qualified for the EITC last year, receiving about $2.8 billion in tax refunds. That translates to about 150,000 families that escaped poverty levels.</p> <p>One setback with the credit is that many New Yorkers do not realize that they qualify for it. Under Mayor Bill de Blasio, a progressive Democrat, the city has recognized the strength of the EITC program. In 2015, the Department of Consumer Affairs (DCA) launched a media blitz to promote the tax credit, including ads in the subways, on bus shelters, in print, radio and online. That ad campaign has become a staple in promoting the city’s free tax preparation program. According to estimates by Civis Analytics, a data analytics firm that helped the city with its “<a href="http://www.startbyasking.org" target="_blank">Start By Asking</a>” benefits awareness campaign, of the 1.1 million New York City residents that qualify for EITC, approximately 120,000 of them do not claim the credit, which is the city’s current concern. DCA spokesperson Abigail Lootens, in an email, said the agency is closely reviewing the comptroller’s EITC proposition. “We are also dedicated to reaching those who are currently eligible but not claiming this vital credit,” she said.</p> <p>At the state level, Stringer has found an ally in Senator Jose Serrano, a Democrat whose district includes the South Bronx and parts of East Harlem, low- and middle-income communities for which the EITC is a boon. Serrano introduced a bill in the current legislative session based on Stringer’s proposal, to allow New York City to expand its EITC contribution. The senator stressed that expanding EITC is an “organic approach” to reducing poverty. “While it does require a financial commitment by the city, a vast majority of that money goes right back into the community,” he said in a phone interview.</p> <p>Serrano’s <a href="https://www.nysenate.gov/legislation/bills/2017/S3508" target="_blank">bill</a> is currently before the Senate’s Cities Committee, where he hopes it’ll receive the necessary support. The committee is chaired by Sen. Simcha Felder, a Democrat who caucuses with the Republican majority. A spokesperson for the governor’s office said the proposal would be reviewed.</p> <p>“It is really such a timely bill,” Serrano said. “Over the last few years, the rich have gotten richer and the poor have gotten poorer. This will help bridge that gap a little and help people get above the poverty line.”</p> <p>Ron Deutsch, executive director of the nonpartisan Fiscal Policy Institute, said both the city and state should increase their EITC contributions “to help bolster low-income family earnings and help boost them out of poverty.” Aside from Serrano’s bill, there are multiple proposals before the state Legislature that enhance the EITC in some shape or form, including a bill sponsored by Assemblymember Robin Schimminger, an upstate Democrat. <a href="https://www.nysenate.gov/legislation/bills/2017/A2018" target="_blank">Schimminger’s bill</a>, which increases the state’s EITC from 30 to 35 percent of the federal EITC, has been introduced in three previous legislative sessions but has never made it beyond the Ways and Means committee. Schimminger’s office did not return a request for comment by publishing time.</p> <p>“This is one of those bipartisan issues where there’s agreement,” Deutsch said. “In terms of why it doesn’t get done, I think it’s always a matter of political will in Albany. Given how many New Yorkers are struggling to make ends meet, this would be a logical means to address that.” He believes the state should increase its contribution to 40 percent, which he said comes with a price tag of $400 million annually. “I would suggest it’s a good investment that spurs the economy,” he said.</p> <p>It’s unclear, however, whether Stringer’s or Schimminger’s proposals will find support in either the Democrat-run Assembly or the Republican-led Senate. Spokespersons for Assembly Speaker Carl Heastie, Senate Majority leader John Flanagan and for the Senate Independent Democratic Conference did not respond to requests for comment.</p> <p>E.J. McMahon, research director at the Empire Center for Public Policy, a conservative think tank, believes the cost of expanding EITC is likely the only reason it hasn’t been achieved though it has the backing of fiscal conservatives. “It’s the most effective way to incentivize and reward work,” he said, noting that it would work better if expanded at the state level. He added, “It would win broad support if we could pay for it.”</p> <p>

***
by Samar Khurshid, City government reporter, Gotham Gazette
     

Read more by this writer.

</p>
Calling for Efficiency, Cuomo Pushes Latest Municipal Consolidation Contest 2016-12-19T05:00:00+00:00 2016-12-19T05:00:00+00:00 http://www.gothamgazette.com/?id=6677:calling-for-efficiency-cuomo-pushes-latest-municipal-consolidation-contest Ben Max <p><img src="http://www.gothamgazette.com/images/25367847889_f7e4387e7b_z.jpg" alt="Cuomo red screen podium " width="600" height="400" /></p> <p>Gov. Cuomo (photo: Governor's Office on flickr)</p> <hr /> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>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.</p> <p>"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 <a href="http://www.osc.state.ny.us/press/releases/july16/071816.htm" target="_blank">his announcement</a> 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.”</p> <p>In response, a growing number of localities are voting to override the tax cap, with 26 percent opting out <a href="http://www.democratandchronicle.com/story/news/local/2016/01/22/new-york-state-tax-cap-limit-local-governments/79194468/" target="_blank">in 2016</a>. 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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>“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.</p> <p>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.</p> <p>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.</p> <p>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. (<a href="https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF" target="_blank">The 2012 U.S. Census of Governments</a> 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.)</p> <p>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.</p> <p>Full consolidation of services or government entities tends to elicit resistance, so functional consolidation is often the most politically expedient solution for overlapping services.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>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 <a href="http://www.governor.ny.gov/sites/governor.ny.gov/files/archive/assets/documents/2013Annual%20Report.pdf" target="_blank">in December 2013</a>. But while rising local school costs are offset by huge amounts of state funding -- <a href="https://mcdonaldhopkins.com/Insights/Blog/Tax-and-Benefits-Challenges/2016/05/04/New-York-Governor-signs-2016-2017-budget-bill" target="_blank">in the 2016-2017 budget</a>, 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.</p> <p>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.”</p> <p><img src="http://www.gothamgazette.com/images/nassau_special_service_districts_map.jpg" alt="nassau special service districts map" width="300" height="389" style="margin: 0px 0px 0px 8px; float: right;" />In 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 href="http://www.zillow.com/blog/property-taxes-2015-173854/" target="_blank">a Zillow report</a>), 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, <a href="http://www.longislandindexmaps.org/?zoom=1&amp;x=1264935.42&amp;y=229421.25&amp;tab=tabServiceProviders&amp;satellite=false&amp;landuse=false&amp;landuseopacity=0.8&amp;mainlayers=Sewer_boundary%2CSchool_boundary_basemap%2CPolice_boundary%2CParks_boundary%2CFire_boundary%2CWater_boundary%2CLibrary_boundary%2CGarbage_boundary%2CParking_boundary%2CAmbulance_boundary%2CTownsCities&amp;labellayers=Water_boundary%2CSewer_boundary%2CSchool_boundary_basemap%2CPolice_boundary%2CParks_boundary%2CFire_boundary%2CLibrary_boundary%2CGarbage_boundary%2CAmbulance_boundary%2CTownsCities&amp;serviceproviderlayers=" target="_blank">via the Long Island Index</a>)</p> <p>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 <a href="https://www.health.ny.gov/health_care/medicaid/redesign/" target="_blank">Medicaid reform efforts</a> 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).</p> <p>“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.”</p> <p>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 <a href="https://www.cgr.org/consensuscny/docs/The_Future_of_Government_Consolidation_in_Upstate_NY.pdf" target="_blank">say that</a> 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.</p> <p>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.</p> <p>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.</p> <p>Not that taxpayer savings should be the primary, or only, motivation for large-scale municipal consolidation.</p> <p>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 <a href="https://www.cgr.org/consensuscny/docs/The_Future_of_Government_Consolidation_in_Upstate_NY.pdf" target="_blank">the consolidation</a> could dilute their quality of service.</p> <p>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.</p> <p>Cuomo has enthusiastically supported the Syracuse merger, but <a href="http://www.politico.com/states/new-york/albany/story/2016/11/the-great-er-syracuse-experiment-106762" target="_blank">as Politico reported</a>, 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.</p> <p>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.</p> <p><img src="http://www.gothamgazette.com/images/village-dissolutions-nys.jpg" alt="village dissolutions nys" width="450" height="242" style="display: block; margin-left: auto; margin-right: auto;" /></p> <p>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.</p> <p>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.’”</p> <p>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 <a href="http://www.tompkinscountyny.gov/tccog/health-consortium" target="_blank">healthcare consortium</a> that has saved taxpayers millions of dollars.</p> <p>Other examples of residents electing to pay a higher price tag for uniquely responsive municipal services <a href="http://www.nytimes.com/1996/10/27/nyregion/where-the-rich-live-and-live-well.html" target="_blank">can be found</a> 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, <a href="http://www.zillow.com/blog/property-taxes-2015-173854/" target="_blank">according to Zillow</a>). The bloated bill is <a href="http://www.westchestermagazine.com/Westchester-Magazine/June-2010/Why-Are-Our-Taxes-So-High/" target="_blank">often justified</a> 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.</p> <p>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.</p> <p>“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.”</p> <p>

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

</p>
<p><img src="http://www.gothamgazette.com/images/25367847889_f7e4387e7b_z.jpg" alt="Cuomo red screen podium " width="600" height="400" /></p> <p>Gov. Cuomo (photo: Governor's Office on flickr)</p> <hr /> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>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.</p> <p>"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 <a href="http://www.osc.state.ny.us/press/releases/july16/071816.htm" target="_blank">his announcement</a> 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.”</p> <p>In response, a growing number of localities are voting to override the tax cap, with 26 percent opting out <a href="http://www.democratandchronicle.com/story/news/local/2016/01/22/new-york-state-tax-cap-limit-local-governments/79194468/" target="_blank">in 2016</a>. 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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>“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.</p> <p>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.</p> <p>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.</p> <p>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. (<a href="https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF" target="_blank">The 2012 U.S. Census of Governments</a> 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.)</p> <p>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.</p> <p>Full consolidation of services or government entities tends to elicit resistance, so functional consolidation is often the most politically expedient solution for overlapping services.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>“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.”</p> <p>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.</p> <p>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 <a href="http://www.governor.ny.gov/sites/governor.ny.gov/files/archive/assets/documents/2013Annual%20Report.pdf" target="_blank">in December 2013</a>. But while rising local school costs are offset by huge amounts of state funding -- <a href="https://mcdonaldhopkins.com/Insights/Blog/Tax-and-Benefits-Challenges/2016/05/04/New-York-Governor-signs-2016-2017-budget-bill" target="_blank">in the 2016-2017 budget</a>, 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.</p> <p>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.”</p> <p><img src="http://www.gothamgazette.com/images/nassau_special_service_districts_map.jpg" alt="nassau special service districts map" width="300" height="389" style="margin: 0px 0px 0px 8px; float: right;" />In 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 href="http://www.zillow.com/blog/property-taxes-2015-173854/" target="_blank">a Zillow report</a>), 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, <a href="http://www.longislandindexmaps.org/?zoom=1&amp;x=1264935.42&amp;y=229421.25&amp;tab=tabServiceProviders&amp;satellite=false&amp;landuse=false&amp;landuseopacity=0.8&amp;mainlayers=Sewer_boundary%2CSchool_boundary_basemap%2CPolice_boundary%2CParks_boundary%2CFire_boundary%2CWater_boundary%2CLibrary_boundary%2CGarbage_boundary%2CParking_boundary%2CAmbulance_boundary%2CTownsCities&amp;labellayers=Water_boundary%2CSewer_boundary%2CSchool_boundary_basemap%2CPolice_boundary%2CParks_boundary%2CFire_boundary%2CLibrary_boundary%2CGarbage_boundary%2CAmbulance_boundary%2CTownsCities&amp;serviceproviderlayers=" target="_blank">via the Long Island Index</a>)</p> <p>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 <a href="https://www.health.ny.gov/health_care/medicaid/redesign/" target="_blank">Medicaid reform efforts</a> 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).</p> <p>“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.”</p> <p>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 <a href="https://www.cgr.org/consensuscny/docs/The_Future_of_Government_Consolidation_in_Upstate_NY.pdf" target="_blank">say that</a> 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.</p> <p>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.</p> <p>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.</p> <p>Not that taxpayer savings should be the primary, or only, motivation for large-scale municipal consolidation.</p> <p>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 <a href="https://www.cgr.org/consensuscny/docs/The_Future_of_Government_Consolidation_in_Upstate_NY.pdf" target="_blank">the consolidation</a> could dilute their quality of service.</p> <p>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.</p> <p>Cuomo has enthusiastically supported the Syracuse merger, but <a href="http://www.politico.com/states/new-york/albany/story/2016/11/the-great-er-syracuse-experiment-106762" target="_blank">as Politico reported</a>, 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.</p> <p>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.</p> <p><img src="http://www.gothamgazette.com/images/village-dissolutions-nys.jpg" alt="village dissolutions nys" width="450" height="242" style="display: block; margin-left: auto; margin-right: auto;" /></p> <p>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.</p> <p>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.’”</p> <p>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 <a href="http://www.tompkinscountyny.gov/tccog/health-consortium" target="_blank">healthcare consortium</a> that has saved taxpayers millions of dollars.</p> <p>Other examples of residents electing to pay a higher price tag for uniquely responsive municipal services <a href="http://www.nytimes.com/1996/10/27/nyregion/where-the-rich-live-and-live-well.html" target="_blank">can be found</a> 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, <a href="http://www.zillow.com/blog/property-taxes-2015-173854/" target="_blank">according to Zillow</a>). The bloated bill is <a href="http://www.westchestermagazine.com/Westchester-Magazine/June-2010/Why-Are-Our-Taxes-So-High/" target="_blank">often justified</a> 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.</p> <p>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.</p> <p>“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.”</p> <p>

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by Rachel Silberstein, State government reporter, Gotham Gazette
     

Read more by this writer.

</p>
Cuomo Seeks to Undermine Comptroller’s Check on His Power 2016-08-18T04:00:00+00:00 2016-08-18T04:00:00+00:00 http://www.gothamgazette.com/?id=6485:cuomo-seeks-to-undermine-comptroller-s-check-on-his-power Ben Max <p><img src="http://www.gothamgazette.com/images/graphics/2014/03/6637183655_d9a3047ea6_z.jpg" alt="cuomo dinapoli flags state of the state" width="600" height="399" /></p> <p>Cuomo, left, and DiNapoli, middle, in 2012 (photo: The Governor's Office)</p> <hr /> <p>Gov. Andrew Cuomo&rsquo;s recent assertion that Comptroller Tom DiNapoli should &ldquo;educate himself&rdquo; and that the comptroller&rsquo;s audits on state economic development projects are &ldquo;dead wrong&rdquo; and &ldquo;opinion&rdquo; drew a lot of attention. Many Albany observers took it as a sign of Cuomo&rsquo;s growing sensitivity to criticism about his signature projects.</p> <p>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&rsquo;s attacks on DiNapoli are part of a long-running pattern of Cuomo trying to weaken the comptroller&rsquo;s oversight of the executive branch.</p> <p>&ldquo;The governor hates oversight and the governor actively works to undermine and weaken anyone who is keeping an eye on him,&rdquo; 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. &ldquo;The governor has been undermining the comptroller from his first budget,&rdquo; said Kaehny of Cuomo, who took office in January 2011.</p> <p>A recent DiNapoli audit of the Empire State Development Corporation&rsquo;s Excelsior Jobs Program, which gives businesses refundable tax credits for creating jobs in certain areas of the state, <a href="http://www.timesunion.com/local/article/DiNapoli-chastises-ESDC-over-Excelsior-Jobs-8347107.php" target="_blank">found</a> that there wasn&rsquo;t proper oversight to make sure companies were providing the jobs they pledged to create and that they weren&rsquo;t simply relocating jobs from elsewhere in the state. Further, the audit found ESDC didn&rsquo;t obtain the proper paperwork to justify handing out tax breaks to some organizations. Cuomo told reporters that DiNapoli&rsquo;s audits on his economic development programs are invalid partly because DiNapoli is a former member of the state Assembly.</p> <p>&ldquo;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,&rdquo; Cuomo explained. &ldquo;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?&rdquo;</p> <p>When asked by a reporter <a href="http://observer.com/2016/08/andrew-cuomo-comptrollers-audits-only-count-when-i-say-they-do/" target="_blank">from The Observer</a> why he then put DiNapoli in charge of auditing New York&rsquo;s homeless shelters, Cuomo responded: &ldquo;You get in some audits the person&rsquo;s opinion, right? &lsquo;I think this about economic development.&rsquo; Some audits are pure quantifications: count how many people are in a homeless shelter. Go &lsquo;one, two, three.&rsquo;&rdquo;</p> <p>The combination of comments appeared aimed at undermining DiNapoli&rsquo;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.</p> <p>Empire State Development issued a detailed rebuttal to DiNapoli&rsquo;s Excelsior audit that challenged some of its more damning assertions. ESD claimed DiNapoli&rsquo;s staff failed to grasp how the program actually works and the mandate of certain statutes. DiNapoli&rsquo;s office responded that ESD staff had not been cooperative.</p> <p>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."</p> <p>The comptroller also recently released audits of Cuomo&rsquo;s Charge NY program and of Medicaid. DiNapoli&rsquo;s Medicaid audit <a href="http://www.timesunion.com/local/article/DiNapoli-audit-finds-Medicaid-payments-for-the-9132993.php" target="_blank">found</a> dead people were still receiving benefits.</p> <p>Cuomo&rsquo;s dismissal of the comptroller&rsquo;s audits seems to discount the fact that the comptroller oversees an army of professional auditors that base their reports on figures and facts.</p> <p>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 &ldquo;ad hominem denunciation&rdquo; over &ldquo;the substantive argument,&rdquo; is feuding with someone charged with monitoring him. Yet accounting for those points, McMahon said there is still something surprising about Cuomo&rsquo;s animosity toward DiNapoli.</p> <p>&ldquo;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&rsquo;s office. He&rsquo;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..&rdquo;</p> <p>Representatives from Cuomo&rsquo;s office repeatedly pointed to press releases of critical audits by DiNapoli&rsquo;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&rsquo;s audit failed to provide detailed rebuttals, only indicating they did not agree with the audits.</p> <p>Cuomo spokesperson Dani Lever said in a statement, &ldquo;When someone makes false or misleading attacks, our administration aggressively defends and corrects the record and we make no apologies for doing so.&rdquo; She did not offer comment to the assertion that Cuomo has worked to undermine the comptroller&rsquo;s office. She also did not respond to a request to elaborate on what might have been &ldquo;false&rdquo; in DiNapoli&rsquo;s audits.</p> <p>In a statement, DiNapoli reiterated his role: "As state Comptroller, my office provides checks &amp; 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.&rdquo;</p> <p>Cuomo and DiNapoli are both Democrats.</p> <p>In October, as news about Bharara&rsquo;s investigation broke, DiNapoli faced questions about why his office wasn&rsquo;t more involved in providing oversight into how two SUNY nonprofits were awarding million-dollar contracts. He <a href="http://www.wcny.org/oct-6-2015-comptroller-dinapoli-save-burden-lake-dr-clifton-wharton-jonathan-gradess/" target="_blank">told Susan Arbetter of The Capitol Pressroom</a> that Cuomo and the Legislature had taken away his ability to review contracts before they were issued by SUNY and CUNY.</p> <p>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. &ldquo;The governor has worked methodically to undermine and resist the comptroller&rsquo;s oversight. His first budget stripped the comptroller&rsquo;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,&rdquo; said Kaehny.</p> <p>Just as McMahon said, many watchdogs see Cuomo&rsquo;s reaction to DiNapoli&rsquo;s audits as concerning because they don&rsquo;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.</p> <p>At the same time they see DiNapoli as standing mostly alone as a check on Cuomo&rsquo;s economic development spending given the Legislature has been relatively absent. &ldquo;There is no question Tom DiNapoli has been standing alone on this,&rdquo; said Ron Deutsch of the Fiscal Policy Institute, a liberal think tank. &ldquo;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.&rdquo;</p> <p>Kenneth Giardin of The Empire Center agreed, &ldquo;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.&rdquo;</p> <p>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 &lsquo;opinion.&rsquo; Nor has de Blasio called Stringer&rsquo;s work politically motivated, even though Stringer is thought to be a potential 2017 challenger to de Blasio.</p> <p>Asked about the conflict between Cuomo and DiNapoli on Thursday, de Blasio said that he wasn&rsquo;t familiar with all the specifics, but that the comptroller was asking &ldquo;valid&rdquo; questions about the efficacy of economic development programs and that he&rsquo;s known DiNapoli to be a &ldquo;a very serious public servant.&rdquo; &ldquo;And obviously the state Comptroller should be respected,&rdquo; de Blasio added.</p> <p>&ldquo;The city comptroller does much, much broader audits,&rdquo; said Kaehny. &ldquo;When the state comptroller does an audit that looks at how the executive branch spends money they don&rsquo;t pull back and ask questions about the bigger picture of nonprofits cutting million-dollar checks to campaign donors.&rdquo;</p> <p>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&rsquo;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.</p> <p>The New York Post recently reported rumors that DiNapoli could challenge Cuomo in a 2018 primary and capitalize on Cuomo&rsquo;s weakness with liberal voters. DiNapoli dismissed the notion in <a href="http://www.politico.com/states/new-york/albany/story/2016/08/cuomo-thunders-and-dinapoli-shrugs-104713" target="_blank">an interview with Politico New York</a> and said he plans to run for re-election as Comptroller.</p> <p>

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

Read more by this writer.

</p> <p>Note: this article has been updated to include ESD rebuttal to the Comptroller's Excelsior audit.</p>
<p><img src="http://www.gothamgazette.com/images/graphics/2014/03/6637183655_d9a3047ea6_z.jpg" alt="cuomo dinapoli flags state of the state" width="600" height="399" /></p> <p>Cuomo, left, and DiNapoli, middle, in 2012 (photo: The Governor's Office)</p> <hr /> <p>Gov. Andrew Cuomo&rsquo;s recent assertion that Comptroller Tom DiNapoli should &ldquo;educate himself&rdquo; and that the comptroller&rsquo;s audits on state economic development projects are &ldquo;dead wrong&rdquo; and &ldquo;opinion&rdquo; drew a lot of attention. Many Albany observers took it as a sign of Cuomo&rsquo;s growing sensitivity to criticism about his signature projects.</p> <p>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&rsquo;s attacks on DiNapoli are part of a long-running pattern of Cuomo trying to weaken the comptroller&rsquo;s oversight of the executive branch.</p> <p>&ldquo;The governor hates oversight and the governor actively works to undermine and weaken anyone who is keeping an eye on him,&rdquo; 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. &ldquo;The governor has been undermining the comptroller from his first budget,&rdquo; said Kaehny of Cuomo, who took office in January 2011.</p> <p>A recent DiNapoli audit of the Empire State Development Corporation&rsquo;s Excelsior Jobs Program, which gives businesses refundable tax credits for creating jobs in certain areas of the state, <a href="http://www.timesunion.com/local/article/DiNapoli-chastises-ESDC-over-Excelsior-Jobs-8347107.php" target="_blank">found</a> that there wasn&rsquo;t proper oversight to make sure companies were providing the jobs they pledged to create and that they weren&rsquo;t simply relocating jobs from elsewhere in the state. Further, the audit found ESDC didn&rsquo;t obtain the proper paperwork to justify handing out tax breaks to some organizations. Cuomo told reporters that DiNapoli&rsquo;s audits on his economic development programs are invalid partly because DiNapoli is a former member of the state Assembly.</p> <p>&ldquo;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,&rdquo; Cuomo explained. &ldquo;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?&rdquo;</p> <p>When asked by a reporter <a href="http://observer.com/2016/08/andrew-cuomo-comptrollers-audits-only-count-when-i-say-they-do/" target="_blank">from The Observer</a> why he then put DiNapoli in charge of auditing New York&rsquo;s homeless shelters, Cuomo responded: &ldquo;You get in some audits the person&rsquo;s opinion, right? &lsquo;I think this about economic development.&rsquo; Some audits are pure quantifications: count how many people are in a homeless shelter. Go &lsquo;one, two, three.&rsquo;&rdquo;</p> <p>The combination of comments appeared aimed at undermining DiNapoli&rsquo;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.</p> <p>Empire State Development issued a detailed rebuttal to DiNapoli&rsquo;s Excelsior audit that challenged some of its more damning assertions. ESD claimed DiNapoli&rsquo;s staff failed to grasp how the program actually works and the mandate of certain statutes. DiNapoli&rsquo;s office responded that ESD staff had not been cooperative.</p> <p>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."</p> <p>The comptroller also recently released audits of Cuomo&rsquo;s Charge NY program and of Medicaid. DiNapoli&rsquo;s Medicaid audit <a href="http://www.timesunion.com/local/article/DiNapoli-audit-finds-Medicaid-payments-for-the-9132993.php" target="_blank">found</a> dead people were still receiving benefits.</p> <p>Cuomo&rsquo;s dismissal of the comptroller&rsquo;s audits seems to discount the fact that the comptroller oversees an army of professional auditors that base their reports on figures and facts.</p> <p>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 &ldquo;ad hominem denunciation&rdquo; over &ldquo;the substantive argument,&rdquo; is feuding with someone charged with monitoring him. Yet accounting for those points, McMahon said there is still something surprising about Cuomo&rsquo;s animosity toward DiNapoli.</p> <p>&ldquo;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&rsquo;s office. He&rsquo;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..&rdquo;</p> <p>Representatives from Cuomo&rsquo;s office repeatedly pointed to press releases of critical audits by DiNapoli&rsquo;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&rsquo;s audit failed to provide detailed rebuttals, only indicating they did not agree with the audits.</p> <p>Cuomo spokesperson Dani Lever said in a statement, &ldquo;When someone makes false or misleading attacks, our administration aggressively defends and corrects the record and we make no apologies for doing so.&rdquo; She did not offer comment to the assertion that Cuomo has worked to undermine the comptroller&rsquo;s office. She also did not respond to a request to elaborate on what might have been &ldquo;false&rdquo; in DiNapoli&rsquo;s audits.</p> <p>In a statement, DiNapoli reiterated his role: "As state Comptroller, my office provides checks &amp; 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.&rdquo;</p> <p>Cuomo and DiNapoli are both Democrats.</p> <p>In October, as news about Bharara&rsquo;s investigation broke, DiNapoli faced questions about why his office wasn&rsquo;t more involved in providing oversight into how two SUNY nonprofits were awarding million-dollar contracts. He <a href="http://www.wcny.org/oct-6-2015-comptroller-dinapoli-save-burden-lake-dr-clifton-wharton-jonathan-gradess/" target="_blank">told Susan Arbetter of The Capitol Pressroom</a> that Cuomo and the Legislature had taken away his ability to review contracts before they were issued by SUNY and CUNY.</p> <p>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. &ldquo;The governor has worked methodically to undermine and resist the comptroller&rsquo;s oversight. His first budget stripped the comptroller&rsquo;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,&rdquo; said Kaehny.</p> <p>Just as McMahon said, many watchdogs see Cuomo&rsquo;s reaction to DiNapoli&rsquo;s audits as concerning because they don&rsquo;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.</p> <p>At the same time they see DiNapoli as standing mostly alone as a check on Cuomo&rsquo;s economic development spending given the Legislature has been relatively absent. &ldquo;There is no question Tom DiNapoli has been standing alone on this,&rdquo; said Ron Deutsch of the Fiscal Policy Institute, a liberal think tank. &ldquo;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.&rdquo;</p> <p>Kenneth Giardin of The Empire Center agreed, &ldquo;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.&rdquo;</p> <p>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 &lsquo;opinion.&rsquo; Nor has de Blasio called Stringer&rsquo;s work politically motivated, even though Stringer is thought to be a potential 2017 challenger to de Blasio.</p> <p>Asked about the conflict between Cuomo and DiNapoli on Thursday, de Blasio said that he wasn&rsquo;t familiar with all the specifics, but that the comptroller was asking &ldquo;valid&rdquo; questions about the efficacy of economic development programs and that he&rsquo;s known DiNapoli to be a &ldquo;a very serious public servant.&rdquo; &ldquo;And obviously the state Comptroller should be respected,&rdquo; de Blasio added.</p> <p>&ldquo;The city comptroller does much, much broader audits,&rdquo; said Kaehny. &ldquo;When the state comptroller does an audit that looks at how the executive branch spends money they don&rsquo;t pull back and ask questions about the bigger picture of nonprofits cutting million-dollar checks to campaign donors.&rdquo;</p> <p>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&rsquo;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.</p> <p>The New York Post recently reported rumors that DiNapoli could challenge Cuomo in a 2018 primary and capitalize on Cuomo&rsquo;s weakness with liberal voters. DiNapoli dismissed the notion in <a href="http://www.politico.com/states/new-york/albany/story/2016/08/cuomo-thunders-and-dinapoli-shrugs-104713" target="_blank">an interview with Politico New York</a> and said he plans to run for re-election as Comptroller.</p> <p>

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

Read more by this writer.

</p> <p>Note: this article has been updated to include ESD rebuttal to the Comptroller's Excelsior audit.</p>
Several Significant Questions About The Governor's Budget 2016-03-02T22:16:00+00:00 2016-03-02T22:16:00+00:00 http://www.gothamgazette.com/?id=6203:several-significant-questions-about-the-governors-budget kfan <p><img src="http://www.gothamgazette.com/images/graphics/2016/23994415209_01555788be_z.jpg" alt="Cuomo built to lead sots" width="600" height="400" /></p> <p>Gov. Cuomo at his State of the State (via The Governor's Office)</p> <hr /> <p>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."</p> <p>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.</p> <p>Only one month remains until the April 1 start of the new fiscal year and budget negotiations have been muted. State of Politics <a href="http://www.nystateofpolitics.com/2016/03/cuomo-meets-with-legislative-leaders/" target="_blank">reports</a> 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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p><strong>The City's Burden</strong><br />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.</p> <p>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."</p> <p>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).</p> <p>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.</p> <p>Cuomo, in <a href="http://www.ny1.com/nyc/all-boroughs/politics/2016/01/14/ny1-online--cuomo-discusses-state-budget-and-how-it-affects-city.html" target="_blank">a NY1 interview</a>, 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."</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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."</p> <p>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.</p> <p>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."</p> <p>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 <a href="http://www.gothamgazette.com/index.php/government/6158-heastie-takes-to-twitter-to-respond-to-cuomo-on-tax-plan" target="_blank">has fired back</a>. 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.</p> <p>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."</p> <p><a href="http://www.gothamgazette.com/index.php/government/6202-at-first-council-budget-hearing-concerns-over-city-savings-and-state-cuts" target="_blank">During City Council budget testimony on Tuesday</a>, 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.</p> <p>"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."</p> <p><strong>Construction &amp; Housing Takeovers</strong><br />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.</p> <p>"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 <a href="https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/2016StateoftheStateBook.pdf" target="_blank">policy book</a>.</p> <p>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.</p> <p>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."</p> <p>"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."</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>"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.</p> <p>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 <a href="http://www.nytimes.com/2016/02/29/nyregion/cuomo-de-blasio-feud-threatens-new-york-citys-plans-for-affordable-housing.html" target="_blank">is considering</a> 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."</p> <p><strong>MTA Financing<br /></strong>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.</p> <p>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.</p> <p>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."</p> <p>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."</p> <p>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.</p> <p>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, <a href="http://www.capitalnewyork.com/article/albany/2016/02/8591986/state-legislators-bewildered-cuomos-mta-plan" target="_blank">according to</a> Politico New York.</p> <p>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 <a href="http://publications.budget.ny.gov/eBudget1617/fy1617artVIIbills/TEDArticleVII.pdf" target="_blank">budget legislation</a> that he said would cement the state's commitment to funding the MTA "in law."</p> <p><strong>Infrastructure Spending</strong><br />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.</p> <p>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.</p> <p>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.</p> <p>"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?'"</p> <p>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."</p> <p><strong>Cash Stash</strong><br />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 href="http://www.citizensunion.org/www/cu/site/hosting/Reports/FINAL%20CU%20Spending%20in%20the%20Shadows%20Report%20FY17%20Executive%20Budget%20-%202%2029%2016.pdf" target="_blank">a new report</a>.</p> <p>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.</p> <p>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</p> <p>"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."</p> <p><strong>Policy Questions</strong><br />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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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."</p> <p>"There's not a lot of continuity between $15 minimum wage and ethics," <a href="http://blog.timesunion.com/capitol/archives/246460/cuomo-were-going-to-see-if-ethics-reforms-stay-in-budget/" target="_blank">he said</a>. "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."</p> <p>

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by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

</p> <p>Note: this article has been changed to reflect the report of the initial budget meeting between Cuomo and legislative leaders.</p>
<p><img src="http://www.gothamgazette.com/images/graphics/2016/23994415209_01555788be_z.jpg" alt="Cuomo built to lead sots" width="600" height="400" /></p> <p>Gov. Cuomo at his State of the State (via The Governor's Office)</p> <hr /> <p>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."</p> <p>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.</p> <p>Only one month remains until the April 1 start of the new fiscal year and budget negotiations have been muted. State of Politics <a href="http://www.nystateofpolitics.com/2016/03/cuomo-meets-with-legislative-leaders/" target="_blank">reports</a> 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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p><strong>The City's Burden</strong><br />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.</p> <p>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."</p> <p>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).</p> <p>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.</p> <p>Cuomo, in <a href="http://www.ny1.com/nyc/all-boroughs/politics/2016/01/14/ny1-online--cuomo-discusses-state-budget-and-how-it-affects-city.html" target="_blank">a NY1 interview</a>, 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."</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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."</p> <p>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.</p> <p>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."</p> <p>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 <a href="http://www.gothamgazette.com/index.php/government/6158-heastie-takes-to-twitter-to-respond-to-cuomo-on-tax-plan" target="_blank">has fired back</a>. 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.</p> <p>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."</p> <p><a href="http://www.gothamgazette.com/index.php/government/6202-at-first-council-budget-hearing-concerns-over-city-savings-and-state-cuts" target="_blank">During City Council budget testimony on Tuesday</a>, 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.</p> <p>"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."</p> <p><strong>Construction &amp; Housing Takeovers</strong><br />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.</p> <p>"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 <a href="https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/2016StateoftheStateBook.pdf" target="_blank">policy book</a>.</p> <p>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.</p> <p>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."</p> <p>"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."</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>"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.</p> <p>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 <a href="http://www.nytimes.com/2016/02/29/nyregion/cuomo-de-blasio-feud-threatens-new-york-citys-plans-for-affordable-housing.html" target="_blank">is considering</a> 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."</p> <p><strong>MTA Financing<br /></strong>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.</p> <p>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.</p> <p>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."</p> <p>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."</p> <p>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.</p> <p>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, <a href="http://www.capitalnewyork.com/article/albany/2016/02/8591986/state-legislators-bewildered-cuomos-mta-plan" target="_blank">according to</a> Politico New York.</p> <p>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 <a href="http://publications.budget.ny.gov/eBudget1617/fy1617artVIIbills/TEDArticleVII.pdf" target="_blank">budget legislation</a> that he said would cement the state's commitment to funding the MTA "in law."</p> <p><strong>Infrastructure Spending</strong><br />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.</p> <p>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.</p> <p>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.</p> <p>"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?'"</p> <p>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."</p> <p><strong>Cash Stash</strong><br />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 href="http://www.citizensunion.org/www/cu/site/hosting/Reports/FINAL%20CU%20Spending%20in%20the%20Shadows%20Report%20FY17%20Executive%20Budget%20-%202%2029%2016.pdf" target="_blank">a new report</a>.</p> <p>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.</p> <p>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</p> <p>"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."</p> <p><strong>Policy Questions</strong><br />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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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.</p> <p>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."</p> <p>"There's not a lot of continuity between $15 minimum wage and ethics," <a href="http://blog.timesunion.com/capitol/archives/246460/cuomo-were-going-to-see-if-ethics-reforms-stay-in-budget/" target="_blank">he said</a>. "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."</p> <p>

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by David King, Albany editor, Gotham Gazette
     

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