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NY's Ports Booming, But High Costs Of Security Are Eroding Gains


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Published: August 16, 2005, NY Times
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Although the ports of New York and New Jersey have improved their productivity to handle a rising flow of imports, their increased security costs since 9/11 have eroded some of the gains, according to a study released yesterday.

The ports have been booming as they attract a larger share of the goods bound for the Northeast from China and other foreign countries.

But despite huge investments in machinery and computers to improve their efficiency, terminal operators have been hiring at an equally fast pace, according to the report, the first independent study of local port activity since 2001.

The study was commissioned by the New York Shipping Association, whose offices were in the World Trade Center and are now in Iselin, N.J.

The number of jobs at cargo terminals in the ports has increased by more than 29 percent, rising to 20,947 in 2004 from 16,232 in 2000, the report shows.

The volume of cargo flowing through the port increased 27 percent, to 99.9 million tons from 78.6 million tons in 2000.

The growth in productivity in recent years was offset partly by the hiring of additional security guards to screen cargo and workers, the report said.

Frank M. McDonough, president of the association, whose members are shipping companies, terminal operators and stevedores, said they had added about 300 security workers.

The study found that cargo movements through the ports directly supported the equivalent of 122,550 jobs in the region and were indirectly responsible for almost as many jobs in other industries, including wholesale trades, banking and insurance.

The study estimated that the direct and indirect jobs resulted in $12.6 billion in income annually and contributed $5.8 billion in taxes.

It was conducted by researchers at Rutgers University and A. Strauss-Wieder, a consulting firm in Westfield, N.J.

The biggest increases in employment have been in the warehouses and distribution facilities in northern New Jersey, Mr. McDonough said.

Those facilities, way stations for the goods unloaded off ships before they land on store shelves, have added 23,000 jobs since 2000, he said.

Mr. McDonough said the number of stevedores has declined slightly to 2,495, with average salaries of $87,000 a year. About 15 percent are women.

Security has become a big expense since 9/11 as operators like Maher Terminals have had to install radiation portals to check every outgoing cargo container for explosives.

Maher, a family-owned company, is installing a system of gates at its terminal in Elizabeth, N.J., to speed checks on each container and driver entering or leaving the waterfront, said Sam Crane, Maher's vice president for external affairs.

But it will still take at least 35 minutes and, during busy periods, more than an hour, for a truck to drop off an outgoing container and pick up an incoming one, he said.

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The Mayor's Money


“So most people look at this as a David and Goliath sort of thing,” Fernando Ferrer was saying last month, describing the mayoral race to a group of reporters. “But I do remember my Bible studies, when all the smart money was on Goliath, the guy with the shiniest armor, the biggest guy. All the Philistines were on the sidelines placing bets on their guy. And here was David. And the rest is history.”

To an outsider, it might seem strange for Ferrer to liken Mayor Michael Bloomberg to a nine foot tall Biblical giant – for one thing, the mayor is 5’7’’ (at best), three inches shorter than Ferrer. It is also hard to call Bloomberg a Philistine when he has donated so many millions of dollars of his personal wealth to the arts. But one can understand why Ferrer might feel as though he’s armed only with a slingshot. Ferrer had spent $1.4 million on his campaign at the time of the last campaign finance disclosure in mid-July. Bloomberg had spent $23 million.

If the mayor's campaign looks big and shiny to his opponents, it is for one main reason: his money. Bloomberg has spent about six times the total amount spent by the four major Democratic candidates combined. Indeed, the money he has contributed to his campaign so far is reportedly 40 percent of all the money contributed by anybody and everybody to almost all 200 or so local political campaigns this year.

His television ads alone – which started running in May -- have cost him $8.8 million; no other candidate had even run a TV commercial until Ferrer aired one last week. And if several of his opponents have stumbled lately over their campaign literature, the mayor’s glossy eight-page booklet is even more impressive than it looks: Whole pages of it are different depending on which specific neighborhoods it is being mailed to. Italian neighborhoods get testimony from Rudolph Giuliani; Latino ones get Herman Badillo.

Overall, Bloomberg is expected to spend $100 million -- two and a half times what John Kerry’s campaign spent securing the Democratic nomination for president.

Bloomberg’s billions have become a major campaign issue, as they were in 2001, possibly the only issue that puts the mayor firmly on one side and his challengers united on the other:

  • Anthony Weiner’s Web site keeps a running tally of the mayor’s campaign spending, a la the national debt clock. The site also has a video clip entitled “Ideas Not Money,” where Weiner stands in front of a Bloomberg ad and outlines part of his platform;
  • Gifford Miller alternately describes the mayor’s campaign spending as “obscene” and “flabbergasting”;
  • Conservative Party (and erstwhile Republican Party) mayoral candidate Thomas Ognibene was asked about the major difference between himself and the mayor at last month's mayoral forum on poverty issues (Bloomberg was invited to the forum but did not attend). "He's got $6 billion and I don't," Ognibene replied. "...I think he thinks that the Republican Party and the people of this city are for sale." [Read a transcript of the poverty forum].
  • “Bloomberg spent $74 million running for mayor in 2001. That's an enormous amount,” Ferrer said recently. “When the reporters asked him why, he said 'well, I have to get New Yorkers to get to know me.' Now he's going to spend tens of millions of dollars more even than that in an effort to get New Yorkers to forget what kind of mayor he's been in the last three and a half years.”

The incumbent is attacked for his wealth itself, such as in an email sent out by the state’s Democratic Party after it found out how much Bloomberg spent to set up his campaign office: ''Only an out-of-touch billionaire could afford to spend more than $1 million on office remodeling,” the email read. “No amount of campaign propaganda will convince New Yorkers that billionaire Mike Bloomberg understands their cares and concerns."

It's his campaign spending, though, that is generating much of the criticism. In effect, his opponents accuse Bloomberg of trying to buy his office.

But even some of his supporters (and those who keep officially neutral) worry about the long-term effect that his campaign spending might have on a program that, though just 17 years old, is considered in some quarters to be a hallowed institution -- the campaign finance program.

Last week, the city’s Campaign Finance Board sent out $13.4 million to 53 candidates in various city races -- money that many of them would surely say is the only reason they are able to run for office.

Bloomberg has not only opted out of this program; he also has questioned its value.

Gene Russianoff of the New York Public Interest Research Group is (like the city's other good-government gurus) not pleased with Bloomberg’s snub of the program. “At its worst, it certainly chips away at the campaign finance system,” he said.

"I'm not chipping away,” Bloomberg shot back when told of Russianoff’s remark. His wealth, Bloomberg said, gives him a level of independence that his predecessors have not had; he is beholden to nobody. And besides, he added, “I have a right to spend my own money.”

CAMPAIGN FINANCE IN NEW YORK

Campaign finance reform became a major issue in New York City quite suddenly one day in January 1986 when Donald Manes, then borough president of Queens, was found bleeding in his car near Shea Stadium. Manes, who had recently being caught taking bribes from companies seeking city contracts, had slit his wrists with a kitchen knife. He later died of his wounds. For the next several years, the seamier side of New York politics was exposed again and again, with more than 25 public officials indicted on corruption-related charges.

In response to such systemic corruption, Mayor Ed Koch decided to pursue a campaign finance program. While the scandals were not directly related to campaigning, the mayor hoped that tough campaign restrictions would cut down on two problems they had exposed – one, that private interests were using money to influence officials; and two, that the political system was inaccessible to outsiders, who to that point had found it difficult to run for office against well-financed political clubhouses.

“I think there is a perception ... that there's too much of a closed system in which access to government is dependent on access either to private money or the political party apparatus,” said Koch’s Corporation Counsel Peter Zimroth at the time. “I think it is incumbent upon us to look for ways to open up that system to increase the competition, to increase the number of people willing to run for office, to increase the ability of less-rich people in this city to participate in campaigns.”

The Campaign Finance Board was established in 1988. Its program works by offering to supplement the money that candidates raise with public funding if those candidates agree to limit the both what they raise and spend, and to put it all on the record. They are also required to take part in debates. The program, which is often cited as a national model for local campaign finance reform, is lauded for its rigor and its ability to adapt.

In New York, participation has become somewhat of a political imperative, said Democratic political consultant Hank Sheinkopf. The editorial boards of newspapers and good government groups “hold the campaign finance regulations sacrosanct,” he said, “and to cross them by opting out would result in not getting valuable endorsements.”

Evidence of the program’s effectiveness, say its boosters, is the way that it has held officials accountable. Mayors David Dinkins and Rudolph Giuliani were both fined by the program for inappropriate campaign spending. They each struck back – Dinkins by firing then chairman Joseph O’Hare (he was reinstated); and Giuliani by attempting to cut the program’s budget and move it to Brooklyn (he failed).

But if some candidates have bristled at the board’s aggressiveness, increasing numbers have found that the program’s benefits outweigh its burdens. The number of participants rose from 57 in its first year to a high of 353 in 2001 when the program – along with term limits that left an unprecedented number of city offices to open competition – led to a full-scale changing of the guard in city government. This year, 188 candidates are participating; 50 are on the ballot without taking part in the program.

But in 2001 and again this year, there has been much attention dedicated to a certain elephant in the room -- the billionaire who won't participate.

BLOOMBERG: A NEW CHALLENGE

When Michael Bloomberg ran for mayor in 2001, he became the first major candidate to do so without participating in the campaign finance program since its inception. Instead of accepting public funds, Bloomberg spent $74 million out of his own pocket. He edged out Democrat Mark Green, who spent $16 million, about $4.5 million of which came from the campaign finance program.

Because he opted out of the program, Bloomberg could have also chosen not to take part in the Campaign Finance Board’s debates, required of those who take public funds. But Bloomberg did debate Mark Green in 2001, and he says he will debate his Democratic opponent this fall.

Green's campaign complained that it was outgunned in the weeks running up to the 2001 election, and Bloomberg's self-financed campaign caused concern among advocates of campaign finance reform who saw his private wealth as a new challenge to the program’s relevance. “But,” said Rachel Leon of Common Cause, “I believe it is a challenge that the program survived virtually unscathed.”

In assessing whether the program works, said Nicole Gordon, executive director of the Campaign Finance Board, “the question is whether all serious candidates have the opportunity to get their message out.” Paul Ryan of Campaign Legal Center, and author of Statute of Liberty: How New York City’s Campaign Finance Law is Changing the Face of Local Elections, said that in 2001 the program did this: “There were few voters who didn’t know who Mark Green was.”

Still, concerns remained, and, late last year, the City Council made an attempt to address the problem of Bloomberg’s money. They tread carefully. The United States Supreme Court has ruled that mandatory limits on how much a candidate can spend violate the first amendment of the Constitution. The campaign finance program can put such limits only on candidates who receive public money. If someone with access to their own resources rejects public financing, there is little the city can do.




Page 4 of Bloomberg's 8-page glossy brochure -- in Sunset Park, above; in Carroll Gardens, below.

Over the mayor’s veto, the City Council decided to give participants in the program a higher matching fund if they face high-spending candidates. Bloomberg ’s Democratic opponent in the general election will get $6 in public funding for every $1 he or she raises. The council's law also lifted the expenditure limits for candidates facing a non-participating opponent who spends over a certain threshold, which Bloomberg has already surpassed.

For the first time, all candidates have to disclose their contributions and expenditures, whether they get public financing or not. Information about Bloomberg’s contributors contain no great revelations – a search on the Campaign Finance Board Web site shows ten contributions, all from a city employee named “Bloomberg, Michael R”. But as opposed to 2001, when Bloomberg did not have to disclose what he was spending, the fact that his campaign has spent $412,100 on polling expenses and $53,600 on buttons and stickers this year is now a matter of public knowledge.

There was also a special category created for Bloomberg, who said he didn’t want to take the public’s money: the “limited non-participant.” The council hoped to entice the mayor into accepting spending caps by setting up a program that would give his opponents less money if he did so.

But Bloomberg decided against participating at all, which makes him the first sitting mayor to opt out of the program.

REAL CAMPAIGN REFORM?

When critics attack Bloomberg for his wealth, his spokesman William Cunningham replies with calculated digs at his political opponents: “They are jealous. He made that money, he doesn't take it from any special interests, he doesn't take it from landlords, he doesn't take it from people who have contracts with the city.”

When he is attacked for his campaign spending, Bloomberg questions whether the system is achieving its purposes.

“New York likes to consider itself a national leader in campaign finance reform,” he said in a speech at the Fund for Modern Courts. “But I think it's fair to say that on the most basic criteria, restricting the influence of special interests, we have fallen behind many other jurisdictions.”

Far from opening up elections to outsiders, Bloomberg says, the current electoral process in New York “is an inside baseball game. This is the party bosses, they pick the people in every place.” Real reform, he says, will come with the institution of non-partisan elections – which he pushed for in 2003, unsuccessfully. “Short of that, I don't care how much matching funds [you give someone].

Late last year, Bloomberg took up the cause of restricting funding from city contractors. Regulating so-called pay-to-play has been on the campaign finance board’s list of things to do since 1998, when city voters called for such regulation in a referendum. To date, however, the board has not managed to form a real response.

The mayor recently proposed a plan that would make candidates responsible for disclosing contributions they get from those doing business with the city, and would cap such contributions at $250. The city has moved forward on creating a computer system that would track city contracts of over $100,000. This would not affect the self-financed mayor, but it would be a burden on his opponents.

Civic groups have been receptive to the general idea of the mayor’s proposal, if not the specifics, and the campaign finance board has lauded his administration’s work on establishing a computer database as a good first step.

Investigative journalist Wayne Barrett called the proposal the best opportunity for reform in the program’s history – even if the mayor is pushing it for self-serving reasons.

“To Bloomberg, this proposition offers the added advantage of distracting attention from his own wholesale disregard of decent campaign finance,” he wrote in the Village Voice. “As impure as his plausible motive might be, and as flawed as the versions of his initial plan are, Bloomberg is again reaching outside the box for a transformation of city politics that will, if tried, be appreciated long after he is back to being a billionaire."

Despite a hearing earlier this year, however, the proposal has gained no momentum in the City Council. The campaign finance board doesn’t believe the database of city contractors is ready yet, and has not even formed a solid definition of “doing business with the city.” The mayor’s proposal has been shelved until after the election.

THE FUTURE?

Some say that Bloomberg’s fortune has not undermined the campaign finance system where it really counts. “The fact that the campaign finance program may not be working in an ideal fashion in the mayoral race doesn’t indict the effectiveness of the whole system,” said Paul Ryan. “It’s working for the people who need it most” – the races at the level of City Council.

Others are not as sure: “The question New Yorkers have to ask themselves is do we only want candidates who are independently wealthy, or do we want a system that actually encourages grassroots campaigns?” said Leon of Common Cause.

There are plenty of signs that finding a way to help candidates of modest means compete with self-financed opponents may become a big issue in the future. The United States Senate has long been referred to as a “millionaires club”, where personal wealth is almost a prerequisite for membership. Across the Hudson, two multimillionaires are currently competing for the governor’s seat in New Jersey. And as the Republican Party begins looking for a successor to Governor Pataki, the personal wealth of the potential candidates is being taken into account.

The party is considering grooming billionaire Tom Golisano for a gubernatorial run “if for no other reason than the man is rich," state GOP chair Steven Minarik told reporters late last year. “I would be willing to consider anyone who could bring $100 million to the table."

Related Article

Pushing Papers and Principles (May, 2001 article on the Campaign Finance Board)  

$50 Billion Budget -- A Shortsighted Use Of Surpluses


The New York City Council and Mayor Michael Bloomberg agreed on a $50.2 billion budget for the 2006 budget a few hours before the fiscal year began on July 1, and, though it is an election year and Speaker Gifford Miller is running against Bloomberg for mayor, they were cordial to each other around the new budget -- some would say too cordial.

In the several weeks before the budget agreement, the good news had turned even better. The surplus for the 2005 fiscal year grew by yet another $300 million, for a total of $3.6 billion.

Such a large surplus offered an opportunity to the mayor and the council to tackle the city's long-term budget problems in a variety of ways:

They could have paid off a good hunk of the city’s capital debt, for example, which would have reduced the debt-service costs (the interest due each year on the money the city has borrowed); similarly, they could have paid in cash for capital projects, such as new affordable housing projects, which would have avoided long-term borrowing costs. Or they could have used some of the surplus to make major improvements, such as buying adequate textbooks for the city's public schools.

Instead, they were each content to take credit for a few minor new programs and some tax cuts. The adopted budget simply postpones any solution to the fiscal problems that the city is going to face very soon: The budget for fiscal year 2007 (which begins next July) is expected to show a deficit of $4.5 billion.

As this year's short-sighted budget was being settled, however, the mayor’s charter revision commission was thinking over the long term, with several proposals for the November ballot.

The Council’s Budget Contribution

Mayor Bloomberg has successfully followed the political and fiscal strategy of former Mayor Rudy Giuliani: putting the council on the defensive by refusing to make many of the council’s favorite programs part of the city’s four-year financial plan. Instead of being “base-lined” in the four-year plan, they become one-year programs, so that each year the council has to start from scratch to restore them. Thus much of the council’s time, energy,and political vision is trapped in this annual political ritual.

The council reportedly wound up adding about $230 million to the mayor’s May budget proposal, which is less than one-half of one percent of the total budget -- most of it to restore funding the mayor had cut from existing council-supported programs. A 65-page council “Adjustments Summary” lists the restorations, initiatives, and enhancements. In an election year when most council members are running for re-election it is no surprise that the new money begins with the council members themselves.

There was, for instance, a $13 million increase in council discretionary spending for youth and senior services in their districts. Each council member got nearly $109,000 for senior services, some 83 percent more than in 2005, and each got nearly $152,000 for youth services, up 48 percent over last year. Among the larger changes:

  • An infant mortality reduction program saw a $2.8 million restoration and a $2 million enhancement (the infant mortality rate went up for the first time since 2000).
  • An HIV/AIDS prevention and education program got a$2.4 million restoration and a $1 million enhancement.
  • A summer youth program received a $6.9 million enhancement.
  • An immigration initiative that provides English-language training and legal services got a $1 million restoration and $6.3 million in new money.
  • A workforce development program run through the City University saw a $10 million restoration and an $8 million enhancement.
  • The council’s tribute to its former speaker, the Peter Vallone scholarships at CUNY – eliminated by the mayor – received $4.4 million in new and $7 million in restored dollars.

The pattern here is clear. Council members identify specific problems in specific neighborhoods and support relatively low-cost programs to help solve them. That makes sense. But citywide, expensive council proposals – such as hiring 1,000 police officers and lowering business taxes – fell by the wayside, perhaps in part by concern about costs of future wage settlements with city workers.

City Revenue Base

As the council and mayor negotiated over hundreds of small programs, the city’s revenue future was ignored. The Independent Budget Office’s May analysis of the executive budget points out that over the next four years total city expenditures are expected to rise by two percent each year -- which seems modest, except that, by contrast, City Hall's total revenues will rise by only half of one percent per year. Thus we have ahead of us multi-billion dollar deficits.

The mayor’s most brilliant tactic in four years of budget-making remains the 18.5 percent property tax increase he pushed through the council in November 2002. (It does not even seem to have harmed him politically.) That rate increase, coupled with a hot real estate economy that has raised property assessments, has produced a surge in revenues. The Independent Budget Office predicts $12.4 billion in property tax revenue for fiscal year 2006, billions more than previously expected.

The budget office expects such revenue to continue to increase through 2009. However, revenue from other taxes -- with the exception of the small-revenue hotel tax -- will increase very little, or actually lose ground. The personal income tax -- the most progressive tax in the city’s control (higher income households pay a higher tax rate) -– averages only a 1.3 percent increase annually over the next four years, in large part because the two higher rates for wealthier households expire at the end of this calendar year.

The combined effect of the surging property tax revenues and flatness in the other taxes, particularly the personal income tax, means a shift in burden from higher-income taxpayers to the rest of the city’s taxpayers.

In spite of the bleak forecast for future revenue, the mayor and council have adopted a budget that in its homeowner tax cuts, sales tax exemptions for clothing under $110, and expiring income tax rates will cost the city well over a billion dollars a year from now on. This reality dwarfs the modest good news in the adopted budget.

Long-Term Thinking From Charter Revision Commission

If the adopted budget does not reflect much long-term rational planning, the mayor’s charter revision commission shows the mayor thinking way ahead. In a July 5 meeting, the commission voted unanimously to place on the November ballot a proposition that would add to the city charter certain budget reporting provisions required now by the state Financial Emergency Act (prompted by the city’s near-bankruptcy in the mid-1970s), requirements that expire in 2008.

The city’s record of more than 20 years of balanced budgets under state oversight is admirable, but some fiscal monitors worry that the absence of any formal state oversight will make city budgeting less open and therefore less accountable. Of particular concern is access to all essential budget information, access that is currently required through the state Financial Control Board.

In testimony before the commission on June 27, Independent Budget Office director Ronnie Lowenstein said that the commission proposal would make available “just a fraction of the routine flow of information IBO, [the state and city comptrollers and the general public] rely on to monitor the city’s fiscal condition.” The IBO stresses that “the city’s ability to manage its own fiscal affairs without state oversight would depend on continued strong local oversight.”

Lowenstein urged the commission to recommend a mechanism -– preferably in the charter –- that would maintain a “seamless flow of the information needed to monitor the city’s finances.” However, a few days later, after the July 5 vote, commission chair Ester Fuchs, a special adviser to the mayor, said, “We could not re-create [the Financial Control Board] in the city charter.”

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 



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