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Infrastructure Investment Can Restart the Economy, But Prioritize Fixing What We Have


si water hurricane

Existing infrastructure needs major investment (photo: Ed Reed/Mayoral Photography Office)


Governor Cuomo traveled to Washington on Wednesday to meet with President Trump, where he pitched the president on infrastructure investments like an expanded Second Avenue Subway and a new Penn Station. The governor is right to push for a national public works program, which would get thousands of newly unemployed Americans working again while tackling urgent infrastructure needs. 

The last time the nation embarked on a major public works program, it produced dozens of large-scale projects in New York that helped dig the city and the country out of the Great Depression—from the RFK Bridge, the Lincoln Tunnel, and LaGuardia Airport to post offices, hospitals, high schools, and swimming pools across every borough.

A bold public works program would give New York a similar boost during these devastating economic times. But New York’s infrastructure needs are different than they were during the 1930s. Today, what the city needs most is a massive campaign to upgrade and maintain the infrastructure it already has. 

For decades, New York City has fallen behind the mounting state-of-good-repair needs of its crumbling public infrastructure, with serious consequences for the city’s livability and long-term health.

For instance, while building new miles of subway is a worthy goal, the urgent need is to stabilize the current system. Fixing the city’s crumbling subways and modernizing the bus system will require at least $40 billion over the next five years, including $7 billion just to upgrade decades-old signals and cut down on delays. These investments can restore confidence in public transit in a moment of crisis—and with the system shut at night and the city on lockdown, now is the time to get to work.

New York City’s aging infrastructure needs extend far beyond public transit. The city’s beleaguered public housing—home to a disproportionate share of residents impacted by the current crisis—is waiting on more than $31 billion in urgent infrastructure repairs, including crucial fixes to moldering apartments and crumbling facades. 

The city’s average public hospital—essential to the pandemic response—is over 57 years old, and the system is staring down nearly $400 million in critical repair and maintenance costs.

The city’s public parks—especially vital now that New Yorkers have few other options for recreation and exercise—are more than 73 years old, on average, and face more than $634 million in needs, including decaying drainage systems, crumbling retaining walls, and disintegrating bulkheads. 

Parks are far from the city’s only green infrastructure challenges. Thousands of acres of concrete and asphalt need to be greened to reduce stormwater runoff. And meeting the city’s ambitious targets for reducing greenhouse gas emissions will require fast-tracked upgrades to retrofit far more public buildings. 

Many of these assets receive little notice until they fail. Over the past decade, the city has averaged 459 water main breaks annually, more than one per day. The number of fracture-critical bridges jumped from 47 in 2012 to at least 67 in 2018. 

Add to the list the stunning repair needs affecting the city’s public schools, colleges, and libraries—institutions that provide a sense of community in neighborhoods citywide, while preparing New Yorkers to participate in the economic recovery.

The Department of Education has nearly $2.5 billion in urgent, short-term capital needs, with over $100 million more at CUNY’s community colleges. And the city’s three public library systems—where the average branch library is more than 65 years old—are facing nearly $900 million in capital expenses to overhaul aging branches, replace leaky roofs, fix broken boilers, and upgrade HVAC systems. In addition, these institutions and many others need major upgrades to expand broadband access and help close the city’s persistent digital divide.

As the city at the epicenter of a national catastrophe, New York will need a historic level of federal investment to restore livelihoods and restart the country’s largest local economy, with lasting benefits for the nation and the world. Investing in infrastructure is a vital place to start. 

But in a city as old as New York, the first priority should be repairing, restoring, and modernizing the aging infrastructure that we’ve already got. There’s no shortage of shovel-ready work to do.

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Jonathan Bowles is executive director of the Center for an Urban Future, a New York–based think tank focused on expanding economic opportunity. Eli Dvorkin is CUF’s editorial and policy director. On Twitter @jbowlesnyc, @wetwax, & @nycfuture.

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City Fiscal Crisis is an Opportunity to Reimagine Failing Programs, Like Organics Recycling


financial opp

Questions about recycling abound (photo: Michael Anton/Sanitation)


The May 13 op-ed by Manhattan Borough President Gale Brewer and City Council Member Antonio Reynoso, New York City Must Keep and Expand Organics Collection, It’s an Essential Service, suffers from two major fallacies.

The authors begin their piece:

 “While is it is no secret that the city’s curbside organics collection program doesn’t pay for itself, that’s only half the story.  It is true that the program currently generates a small amount of revenue, about $50,000.  However, if properly executed, the program has the potential to generate millions of dollars in revenue for the city.”

The first fallacy once again raises the belief that a recycling-related program can one day generate sufficient revenues to significantly offset or eliminate the cost of its operation. Second, and perhaps more significant, is the belief that the organics collection program as currently conceived and executed should be further expanded.

To justify the above speculations the authors quote from an “analysis” performed by the Independent Budget Office estimating $22.5 million in possible future revenues from composting. This analysis is based upon an If, Then series of hypotheses untethered from current programmatic realities. The authors go on to further speculate that “realizing the increased revenue from organics recycling is dependent upon expansion.” 

In the midst of a pandemic and the resulting financial crisis, it is irresponsible for elected officials to call for the expansion of a program that is clearly not working. Successful recycling collection programs are evaluated on a number of factors. In the case of an organics collection program, these most critical factors are: 1) A program design that overcomes participants’ inherent revulsion to decaying organic waste; 2) Maintaining sustained and consistent levels of participation by the generator (container set-out). Without robust participation by all parties targeted by the program, neither collection nor processing can be efficient and sustainable; 3) The three basic means by which to drive participation: regular public education, tangible enforcement, and differential charging for refuse versus recycling services. The latter two options for increasing participation have typically been strongly opposed by most local elected officials and to date there has been very limited investment in the first option.

In recycling programs, participation drives all of the other operational factors like collection efficiency and the successful processing of what is ultimately collected.   There are many other challenges that can contribute to the success or failure of collection and processing but without sustained and adequate participation, organics programs fail. Based solely on the participation levels of the current organics program it is unsustainable and expansion is unjustified.

The authors next invoke the historical decision in 2002, following the recession brought about by the events of 9/11, to temporarily suspend the collection of plastics and glass as justification for why organics should not now be suspended. They argue that once restored in stages over the next two years following 2002, the recycling program never regained the same participation rates it experienced prior to this suspension. While it is true that the gross diversion rates of recyclables did not go back to the exact same levels as prior to 2002, there are a number of reasons for this change in diversion that are related to the suspension but unrelated to the speculations of the authors.

Chief among those was that post-suspension sanitation workers were better trained to no longer pick up what was essentially garbage in a recycling can or bag, but instead leave it for garbage collections.  The recycling diversion rate (simply the weight of what was formerly trash, diverted to collection by recycling trucks) was in fact higher prior to suspension but so was the post-collection residue rate -- the rate of what the processors had to throw out as non-recyclables (garbage) received along with recyclables.

What the recession following 9/11 allowed was for a suspension of business-as-usual thinking, both political and operational, which then provided an opportunity to redesign the metal, glass, and plastics collection and processing program.   

A little more history
Going back to the 1990s and the recession during the Dinkins administration, the city had decided to abandon investment in recycling processing infrastructure and to instead rely solely upon the private sector for the processing of recyclables. City contracts were based upon the lowest bid or lowest net cost to the Department of Sanitation for the processing of those recyclables; contracts that ultimately placed the entire risk of post-consumer commodity market price fluctuation upon the contractors.

While this arrangement worked for well over a decade, following 9/11 and the experience all New York City-contracted recyclers had shipping recyclables out of the Port of Newark for many months, those same recyclers decided it was time to assume far less of the risk associated with processing and marketing the city’s recyclables. In addition, when Sanitation released its rebid of the same processing in contracts in mid-2002 it decided in an unstable marketplace to reduce the risks to its contractors by assuming the market risk instead of the contractor, rather than sharing revenues the sanitation department would be the recipient of most of the revenues, both good and bad, and the contractor would bid a straight processing fee per ton, which would include the contractor’s overhead and profit.  

The market instability plus the new contract structure resulted in what appeared to many as far higher prices, when in fact the prices after revenue offsets would have likely been similar. However, in the rush for cost-cutting following 9/11, one of the proposed cuts by the then-commissioner was to eliminate the entire metal, glass, and plastics collection program.

After much back-and-forth between the administration and the City Council leading up to the 2002 fiscal year budget, a compromise was made to temporarily suspend the collection of plastics and glass while continuing to collect just metal under a straightforward revenue-only contract the recycling bureau had in place. The former metal, glass, and plastics collection program was then scheduled through political compromise, and memorialized into law, for full restoration approximately two years later. 

The previous history is invoked solely to illustrate the fact that the recession combined with the decision to temporarily suspend the metal, glass, and plastics collection program brought about an opportunity to rethink how to design the future processing and marketing of the metal, glass, and plastics recycling stream in New York City.

At the time the city already had long-term, 20-plus-year revenue contracts with private firms for the acceptance and processing of paper but lacked anything similar with metal, glass, and plastics. Because of the limited revenue-generating potential of the metal, glass, and plastics recycling stream, combined with the added cost of processing the same complex heterogeneous stream, unlike with paper, it was incumbent upon the city to make the needed investment to ensure the proper infrastructure to accept, process, and market the materials collected.

The political and operational rethinking provided by this opportunity resulted in the release by the recycling office of a request-for-proposals for a public-private partnership to process the city’s metal, glass, and plastics for the next 20-40 years on a piece of land provided by the city.

Without this opportunity, it is likely that the metal, glass, and plastics collection program, if it still existed, would have experienced many more ups and downs between 2004 and now, as it had since its inception. Instead of looking to expand an organics program that is currently purely voluntary and with a participation rate that dooms it to failure, it would be far better to use this opportunity to suspend the program and rethink all aspects of it to ensure that if and when it is restored, it is designed to succeed rather than fail.

Presently the organics program relies almost entirely upon a private-sector jury-rigged infrastructure for receiving, processing, and marketing the organics it collects.  An infrastructure like that used for originally processing the metal, glass, and plastics stream, designed for another purpose and a wholly different quality stream but modified to a limited degree to answer the current call and secure a contract.  

Times of crisis provide opportunities, if seized, to abandon conventional thinking and instead be creative. Rather than elected officials attempting to satisfy politically powerful constituencies such as the Natural Resources Defense Council by calling for restitution of a failing program, they should use the present crisis as an opportunity to call for the redesign of the program for operational success rather than political success. 

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Robert Lange was the prime architect of New York City’s recycling program and the director of the Department of Sanitation’s recycling program for 20 years. He was a 2010 Alfred P. Sloan Public Service Award recipient, and retired from Sanitation in 2016.

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With No Relief from Washington in Sight and Billions in Budget Cuts Looming, What Can New York State Do?


gov cuomo outlinesfy

Gov. Cuomo delivers a budget address (photo: Darren McGee/Governor's Office)


Despite pleas from New York Governor Andrew Cuomo and state and local government leaders across the nation for major new federal help for budgets devastated by the COVID-19 recession, there is still no clear path to Washington acting quickly to provide financial relief. 

Although on May 15 the House of Representatives, with its Democratic majority, passed a $3 trillion aid bill for the country that included $1 trillion for state and local governments, President Trump announced he would veto the bill if passed in both houses of Congress and many Republican senators, who hold the majority in that chamber, were quick to announce the House bill dead on arrival. When serious negotiations on a new relief package will occur, or when an aid package might ultimately get passed, is not clear.

State Cutbacks are Coming, No Doubt
It’s been seven weeks since New York leaders adopted the state budget on April 2. That budget anticipated implementing $10 billion in spending cutbacks from what had been the original $105 billion budget submitted by the governor in January for the 2020-21 fiscal year. 

The state has yet to act on those massive cuts despite reaching a benchmark set in the budget that would trigger them, holding out hope for federal action.

Where New York is Now: Tax Receipts Plunge by 70%, 2 Million File for Unemployment
The state’s first benchmark was made public on May 15 by State Comptroller Tom DiNapoli and it is ugly.

STATE COMPTROLLER APRIL CASH REPORT

STATE FUNDS Executive Budget
April Estimate
April
Actual
Drop from 
Estimate
% Drop from 
Estimate
TOTAL TAX RECEIPTS
TOTAL
$11,746.0  $3,583.9  -8,162.10 30.5%
DISBURSEMENTS $7,479.0  $4,373.0  -3,106.00 58.5%

This benchmark, presented in the table above, involved comparing New York’s actual tax receipts in April 2020 to an estimate constructed in the governor's Executive Budget for that month. The table shows the Comptroller’s cash report for April 2020 compared to the Executive Budget estimates. The Division of the Budget was authorized to begin implementing spending reductions if receipts were less than 99% of estimates. The receipts were 30% of estimates, according to the Comptroller’s May 15 report.

Tax receipts plunged about 70%, more than $8 billion, compared to the adopted budget projection, which used April 2019 as a normal baseline. 

The problem is two-fold. The economic downturn in New York is massive; more than 2 million New Yorkers have filed for unemployment in the last 8-eight weeks, about 20% of the state’s workforce. And the ordinary April 15 deadline for filing returns for both federal and state income taxes was extended to July 15, leaving New York bereft of normal tax revenues for months. The state is borrowing money for the short-term, but that won’t offset the overall plunge in revenue associated with the economic downturn.

New York State Faces Unprecedented Financial Challenges
New York state government now faces unprecedented challenges in attempting to manage a risky, uncertain set of dynamics that include:

1. Not knowing how much federal aid may come to the rescue, or when, or how deep New York’s own problems may be.

2.Not knowing how to use much of the federal aid already provided by Congress in the initial rescue packages because the U.S. Treasury’s guidelines for use of the funds has been unclear.

An analysis by the State Comptroller indicated that although New York State can utilize some funds provided by Congress for education and Medicaid, $5 billion allocated to New York in the first plan sits in limbo while New York awaits use guidelines. But with so many new expenses associated with the virus in health care and emergency response, much of that money could be unavailable for general budget relief.

3. The possibility that the job losses will drive up enrollment in the Medicaid program, increasing health care costs far more than currently anticipated and increasing the size of the state budget deficit.

The governor and Division of the Budget are undoubtedly still holding off because they know immediate implementation of cuts would be devastating. The governor’s daily press briefings display warnings of cuts to schools, hospitals, and local governments in the 20% range, meaning very large job losses for teachers, health care workers, transit workers, cops, firefighters, and other front-line government personnel. They are holding off despite realizing that too long a delay in making the cuts could make the situation worse for the providers of services that might be affected if little federal aid is forthcoming. Anyone getting a cut in their budget is better off knowing sooner rather than later so they can make plans to cope.

New York’s Current Plan to Mitigate Budget Cuts (short-term)
The state’s Financial Plan, issued April 25, showed that the state had backloaded about 40% of its $10 billion in spending cuts to next year, the final quarter of the state’s fiscal year, from January 2021 to the end of March 2021. 

Congress also permitted the state to defer payment of Social Security and other payroll taxes for its own workforce to save $1 billion or more, providing additional cash flow relief. 

The state’s Financial Plan indicates an effort to borrow $4.5 billion in May and June to cover initial revenue losses due to the tax filing extension and the recession. However, the adopted budget permits the state to borrow up to $11 billion short-term during the fiscal year (ending March 2021), and even permits the state to convert the short-term borrowing to long-term bonding. That means the state is permitted to borrow to cover operating deficits.

The State Comptroller’s analysis of the adopted state budget indicated the state could also re-evaluate its capital budget to defer nonessential projects to save cash and re-allocate financial settlement funds not yet spent for economic development projects. This could hurt recovery efforts in the future, however.

New York Can’t Count on Federal Help
A May 19 hearing in the United States Senate featured competing views on rescuing the economy. Federal Reserve Board Chair Jerome Powell said failing to help state and local governments could result in hundreds of thousands of layoffs and further damage to the economy. Steve Mnuchin, the Treasury Secretary, claimed the best way to help the economy was for the states to ‘reopen’ by easing social distancing restrictions and let people go back to work. It was also reported that President Trump met with Senate Republicans to strategize about new federal legislation, but remained circumspect about what he would support. The House returns to work after Memorial Day, from May 27-29, but many Senate Republicans want to wait longer than that.

Many states dominated by the Republican Party are already reeling from state and local government financial problems. The Center for Budget and Policy Priorities is tracking state fiscal problems and has produced an analysis showing major problems in Louisiana, Kansas, Arizona, Missouri, Kentucky, Wisconsin, and Oklahoma. An update to the Center’s report says Georgia has just announced across-the-board state budget cuts of 14%, and Texas announced state agency budget cuts of 5%.

One hopes additional federal aid will arrive soon, but it seems unlikely to be anywhere near as generous as the House bill provides.

Should New York State Borrow Money to Cover Operating Expenses? Yes
The state budget permits New York to convert up to $11 billion in short-term borrowing, envisioned to deal with the extension of filing tax returns to July 15, or possibly longer if the Federal government grants another extension, to long-term bonding. In other words, the state could sell bonds for 5 years, 10 years, 20 years, or 30 years, to pay for its operating deficits this year. This, of course, would avoid some or even a large part of the spending cuts.

Bond raters, budget watchdogs, fiscal experts, ordinary people, and even I agree that borrowing long-term to cover your operating expenses is ordinarily a mistake. However, the alternative — eliminating tens of thousands of jobs including hospital workers, teachers, cops, transit workers, and emergency responders as the pandemic continues, has severe consequences for both those workers and the tens of millions of New Yorkers who depend on them.

New York should make a firm decision it will borrow some of the money it needs to sustain public services in a pandemic-induced near-depression if it can’t get covered by the federal government.

Governor Cuomo, at one of his press conferences, said if the state had to make cuts and later received federal aid, he would restore the cuts. New York could still make modest cutbacks and hope ultimately the Democrats in Washington will be successful with a new round of assistance for the American people, in part through state and local governments. But if needed New York should borrow a large portion of the money to cover its operating expenses this year while addressing the long-term problems created by COVID-19.

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Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.

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