Lieutenant Governor Donohue, Majority Leader Bruno, Speaker Silver, Leader Nesbitt, Leader Paterson, Attorney General Spitzer, respected members of the Legislature, and fellow New Yorkers.
Thank you for being here.
Let's get right down to business.
We all want to make our state as safe and secure as it can be, keep our health care system the best in the world, preserve our environment, provide our children with a quality education, and create hope and opportunity for all New Yorkers.
These and all our other goals depend on two important factors - the fiscal strength and integrity of our State, and an economic climate that encourages job creation, growth and investment.
Before we get to the specifics of this year's budget, please allow me to put a little perspective on it.
In 2002 and 2003, New York State suffered a decline in revenues for two years in a row - the first time that had happened since the Great Depression.
Due to the combined impact of the national recession, September 11th, and the Wall Street decline, New York suddenly faced a budget deficit of more than $11 billion.
Since then, we've worked hard to restore fiscal balance.
Our economy is coming back, and yet today we still face a deficit of $4.15 billion - significantly less than we have dealt with before, but still a formidable obstacle to future prosperity.
We are once again showing strong growth in state revenues. During periods of revenue growth the temptation is always there to spend more on worthwhile programs - but our responsibility is clear.
We must control spending and reduce the tax burden that limits economic growth so we can put these fiscal difficulties behind us just as we've done in the past.
The budget I submit to you today closes the current deficit primarily through recurring actions. It lowers next year's gap to $2.7 billion, the lowest level in five years, and puts us on the road to complete structural balance in 2007.
This budget takes decisive, sensible action - action to achieve the fiscal strength and integrity that will not only erase this year's spending gap, but close future deficits as well. It accomplishes this goal with four core principles:
Let's begin with state spending.
For the last ten years, we've held state spending growth below the national average.
The budget I present to you today will do even more.
It limits spending growth to just 2.6 percent in the General Fund and 2.4 percent in All Funds, holding both below the rate of inflation and consistent with our 10 year record of keeping it below the national average.
Another proven way to solidify the fiscal strength of our State is by building up the State's Rainy Day Fund.
Back in 1995, the Fund contained just $157 million. This year, just as we've done nine times since, we'll make the maximum contribution allowable under current law, increasing the reserve fund to over $864 million.
For the first time since its inception, the Fund is now filled to its maximum capacity.
One of the main reasons we were able to overcome the fiscal challenges of the last three years is the billions in unrestricted reserves we had set aside in addition to the Rainy Day Fund.
So, along with this budget, I'm submitting legislation that will allow us to further strengthen our State's fiscal foundation by more than doubling the size of the Rainy Day Fund.
We have an opportunity this year -- an opportunity to use the recent trend of economic growth as a springboard to long-term solvency, fiscal stability and tax relief.
Today I submit to you a responsible, forward-looking State budget that puts New York on solid financial footing and ensures a bright future for the State of New York.
New York has the finest health care system in the nation. From access to the latest medicines and life saving medical technology to the best doctors and hospitals anywhere, we truly have a health care system to be proud of.
But if we are to maintain the high quality of our health care system we must take action to address the rapidly escalating costs of Medicaid.
We all know that the cost of Medicaid is crushing taxpayers.
New York's Medicaid program is the most expensive in the nation. If left unchecked, within the next six years Medicaid costs could actually consume more than half of our entire state budget.
We cannot allow this to happen.
The budget I propose today keeps state and local Medicaid spending flat and reduces the program's burden on New York City, on our counties and their taxpayers.
It provides real, immediate relief to New York City and county governments with a beneficial fiscal impact this year of $577 million.
Beginning in 2006, the budget caps local government Medicaid payments at a maximum growth rate of 3.5 percent, and lowers that rate permanently to 3 percent by 2008.
And starting in 2008, this budget calls for a complete State administrative takeover of Medicaid.
But merely redistributing the burden is not enough. The State can no more afford to pay for the current and future costs of Medicaid than counties can.
Shifting the cost of Medicaid from the real property taxpayers in the counties to the state taxpayers without reform is nothing more than an empty promise.
Many of us have been working to address this issue for years. The recommendations in my Executive Budget take ideas from many corners including the Berger Working Group and the Senate Task Force on Medicaid Reform, led by Senators Hannon, Meier and Rath.
My budget proposes a four point plan to address this matter. It includes proposals aimed at the critical issues of: Cost Containment, Excess Capacity, Facility Infrastructure and Long-Term Care.
Real Medicaid reform is about more than cost containment - it's about restructuring the delivery of health care to make it smarter, more affordable, more efficient and higher quality.
First, we must implement a series of cost containment measures. Let me be clear, there can be no Medicaid takeover without cost containment.
While we control costs, we must modernize and strengthen our health care facilities in a way that recognizes how important they are to delivering these vital health care services.
That's why the second point of my plan addresses the issue of excess capacity. We cannot afford to invest more in underutilized facilities. My Executive Budget creates the Commission on Health Care in the 21st Century to make the difficult recommendations to right-size the health care system.
But even as we make these tough decisions, let's make sure that those facilities most in demand are up to the challenges of the 21st Century.
That's why the third point of my plan creates the new Health Care Efficiency and Affordability Law for New Yorkers (HEAL NY) -- a $250 million program this year that will fund health care facility and technology upgrades throughout the State.
Finally, we must make the system better, more accessible and more flexible to meet New Yorkers' individual needs.
The fourth element of my proposal is a package of initiatives that will dramatically improve the long-term care options available to seniors and their families. Long-term care, particularly nursing home care is one of the most expensive aspects of Medicaid.
Because we know a nursing home should be an option, but not the only option, I am advancing the new Access to Home Program that will help families make the structural improvements that allow elderly or disabled loved ones to continue living at home. And because more and more seniors can and want to stay in their own homes, the budget also doubles the State's investment in home services for the elderly.
These long-term care initiatives are not only the right thing to do - they are what our seniors want and they also cost less than the alternatives that exist today.
Each of these four critical elements is necessary if we are going to reduce the costs of the Medicaid system while improving care.
And as we make these major reforms to our health care system we must do more. That's why my Executive Budget reauthorizes HCRA and moves it on budget to provide for greater accountability and transparency in our health care financing.
We all recognize that there are two reasons why our Medicaid costs are too high. First, we spend too much and second our federal reimbursement rate has been too low since the inception of the Medicaid program.
As we seek additional aid from Washington our case will be strengthened only if we make these reforms and finally bring our costs under control. Let's work together to enact these reforms and also with our congressional delegation to help secure additional aid from Washington.
On behalf of real property taxpayers, New York State taxpayers, on behalf of our seniors, on behalf of the next generation of New Yorkers, I urge you to join me in reforming our Medicaid system this year.
As we cap local costs and eventually take over the Medicaid program, let's make certain that the resulting savings will mean lower property taxes for New York's families.
Toward that end, this budget builds on the highly successful STAR program with Co-STAR- a new tax reduction program that gives county governments and the City of New York an incentive to control spending and provide property taxpayers with needed relief.
To be eligible for Co-STAR, counties must keep their overall spending growth at or below the Medicaid cap rate of 3.5 percent in 2006. Taxpayers in qualifying counties will receive a property tax rebate check, directly from the State of New York. The program will begin in 2006 for seniors and farmers and expand to all taxpayers in eligible counties beginning in 2008.
Co-STAR provides a double benefit to county and New York City taxpayers - their governments will be encouraged to control spending growth and lower future property taxes, and they will get property tax relief directly from the State as well.
This year alone our Medicaid reforms will provide savings of more than half a billion dollars to New York's counties and the City of New York. But we know that many other municipalities, especially our Upstate cities, have been facing their own fiscal challenges - we need to help them, too.
As we exercise the fiscal discipline to put the State's financial challenges behind us, let's provide encouragement for local governments to do the same.
The new Aid and Incentives for Municipalities (AIM) program will provide up to $164 million in new State funding to cities, towns and villages all across the State over the next two years.
Every municipality will get at least a five percent increase. Certain fiscally distressed cities will be eligible for increases of up to 25 percent, provided that they have balanced budgets and hold their spending growth below 3.5 percent in 2006 and below 3 percent by 2008.
If they meet these standards, AIM will provide record increases of $38.5 million to Buffalo, $27 million to Yonkers, nearly $18 million to Rochester and $16 million to Syracuse over the next two years.
Next, this budget provides local governments and their taxpayers with an estimated $621 million in savings this fiscal year by making necessary reforms to the State pension system.
But we don't stop there. Once again my budget proposes a comprehensive mandate relief agenda that protects localities from the costs of top-down state policies.
The mandate relief plan repeals the Wicks Law, reforms binding arbitration practices, relieves local governments of certain litigation costs and enacts other measures to assist local governments in reducing costs and the related burden on property taxpayers.
By enacting real Medicaid reforms…launching the Co-STAR program…providing more aid to local governments…linking state aid to performance and accountability standards…making prudent pension reforms…and providing relief and protection from State mandates, this budget takes direct, decisive, and intelligent action to substantially reduce property tax bills all across New York State.
Let's make home ownership in New York more affordable.
Let's strengthen families and improve the quality of life in communities throughout the State.
Let's seize this opportunity to enact smart, meaningful property tax relief this year.
And as we work to help local governments and property taxpayers across our State, we will also work to ensure that every school gives our children the best education possible.
This requires both resources and reforms.
New Yorkers already spend more per pupil on education than any state in the nation.
But in too many school districts, parents and children are not getting the results they deserve.
This year's budget increases school aid by $526 million, the largest increase ever proposed by a Governor.
We're allocating $201 million of this increase to traditional school aid, most of which will go to our Flex Aid program. This initiative will reform our education system by providing each school district greater discretion to better meet the needs of its students.
Through Flex Aid, every district will receive at least a modest increase in aid.
The remaining $325 million will be targeted to our 5-year Sound Basic Education Aid Program, or SBE.
SBE aid will also provide every district in the State with additional funding, but the bulk of it will be targeted to high-needs districts like New York City.
These additional resources, coupled with educational reforms, comprise a comprehensive plan to complete the unfinished business I spoke of when I stood before you two weeks ago.
You and I know that we didn't need a court to tell us that the school funding formula was broken and unfair.
For years now, I've called for replacing our archaic school aid formula with a statewide solution that will provide every child with a quality education.
And as I have said, any new resources must be accompanied by top-to-bottom, fundamental reforms to ensure greater accountability and performance.
SBE is meant to achieve each and every one of these goals.
We'll target nearly 86 percent of SBE aid to 207 of our State's neediest school districts, with New York City receiving 60 percent of total SBE aid.
But SBE isn't just about investing more dollars in education.
It's about getting more education for the dollars we invest.
To that end, through SBE, we'll establish an accountability system to track student progress and performance, and assess how well our schools are spending the dollars we're providing.
We'll require school districts to develop plans to improve underperforming schools, and close those that fail to improve.
We'll create a new, independent Office of Educational Accountability and Efficiency to monitor performance, review improvement plans, provide better financial oversight, and promote increased efficiency.
And we'll allow our school districts to replace tenure for principals with performance-based 3-to-5-year contracts.
And just as we're providing additional aid to municipalities that operate more efficiently - and providing Co-STAR benefits to taxpayers in counties that operate more efficiently - let's do the same thing at the local school district level through STAR-Plus.
Under this budget, a new STAR-Plus school property tax credit will be provided to taxpayers living in school districts that operate efficiently and restrain their spending.
Record investments. Fair and equitable funding. Greater accountability. Higher standards of performance.
Taking these steps will further improve New York State's education system and ensure that our children reach their full potential.
In doing so, we'll be preparing our children for a higher education that opens the door to greater opportunity.
And nowhere is there clearer evidence that sweeping accountability measures and real reforms actually work than at New York's public university systems.
Higher standards… record enrollment levels… unprecedented minority enrollment… state-of-the-art academic facilities… our SUNY and CUNY systems have been transformed over the past ten years.
This year's budget will continue our strong record of support by providing a substantial increase in State operating aid, as well as new investments in SUNY and CUNY's capital program.
Clearly, there's no better investment we can make than educating young New Yorkers to meet the challenges and opportunities of the 21st century. Let's continue our unparalleled record in this vital area, while insisting on the highest standards of accountability and performance.
In order to create a bright, prosperous future for our next generation, a good education is not enough. We need to ensure that New York is a safe place for them to live, learn, and grow.
The progress we've made in reducing crime over the last ten years is nothing short of historic -- New York is currently the safest large state in America. Let's make it the safest state in America.
This budget reflects a commitment not only to that goal, but to meeting the realities of fighting the War on Terror.
It increases funding for Operation IMPACT - allowing for an enhanced presence in the original 15 IMPACT counties, and it expands IMPACT to additional communities throughout the State.
New York State Troopers are busier than ever before, not only in their traditional role patrolling our highways and neighborhoods, but also on the front lines of the War on Terror. This budget adds even more Troopers to the Long Gray Line, bringing the total strength of the force to 4,700 - an all-time high. Another 100 of these Troopers will be joining the expanded Operation IMPACT taskforces this year.
And as we look to solidify our future, let's take action to rectify an injustice of the past.
For over three decades, the forgotten victims of the horrific 1971 riots at Attica State Prison have been seeking justice. This budget will finally honor New York's moral obligation to these dedicated public servants and their families.
With an expanded Operation Impact, a record number of State Troopers, and the best homeland security office in the nation we will make New York the safest State in the nation.
The budget I present to you today builds on our progress not only in making our Empire State safer, but also by providing a cleaner and healthier environment.
This year's budget calls for a $1.4 billion total investment in our environment.
My budget provides $150 million for our Environmental Protection Fund, the highest amount ever, and six times what it was a decade ago.
This year's budget will fully fund our Superfund/Brownfields programs, providing for the clean up and remediation of hazardous waste sites across our State, and returning lands once lost to pollution to productive use.
And my Executive Budget also provides for the expansion of our first-of-its-kind tax credit for the construction of "green buildings."
Together, you and I have made the right investments to enhance the quality of life of New Yorkers in every corner of our State. This year, let's pass a budget that continues our successes, so our children will inherit a cleaner, healthier New York -- enjoying its natural treasures and passing them on to future generations.
Another area where we've made dramatic progress is in reforming welfare, moving people from dependence on government to self reliance and productivity.
There are now one million fewer New Yorkers on welfare than there were a decade ago. Child support collections have more than doubled.
Our actions have transformed lives by giving hundreds of thousands of New Yorkers the opportunity to participate in the freedoms and rewards of our great State.
And as we have helped break the cycle of dependency for so many, let's do even more to improve people's lives.
My budget builds on our record of welfare reform by providing innovative programs that strengthen families. Lets make New York a national leader again, as we take this next step in reforming welfare.
To that end, this year's budget includes a first-in-the-nation State Earned Income Tax Credit for young single fathers who are current in their child support payments. This new credit will strengthen New York's families by encouraging fathers to play a more meaningful and productive role in their children's lives.
My budget also includes an increase in the earned income disregard, which will provide those who are still on public assistance an additional incentive to move more quickly from a welfare check to a real pay check.
I ask you to join me in empowering even more New Yorkers with the chance to pursue the American Dream.
And as I have said before, for most families, the American Dream starts with a job. The ability to achieve the goals I've outlined today depends on a growing and vibrant private-sector economy.
The cornerstone of our efforts to create jobs has been cutting taxes. In fact, between 1995 and 2000 we cut taxes more than any state in the nation.
This year alone the value of the tax cuts we enacted is nearly $15 billion. That's $15 billion less in taxes and $15 billion more in the pockets of working families and seniors, farmers and home owners, single parents and small business owners.
By cutting taxes dramatically, we unleashed our economy, creating hundreds of thousands new private sector jobs. By the year 1999, New York's annual job growth exceeded the national average for the first time in two decades.
For reasons we know all too well, between 2001 and 2003 we lost almost half of the private sector jobs we had gained since 1995.
Today, we are poised to regain the jobs we've lost and to continue our progress in the months and years ahead.
Our economy is growing, but our goal must be plain. Let's once again foster an economy that creates jobs at a rate faster than the rest of the nation - on our way to creating one million more jobs by the end of this decade.
To reach this ambitious goal, we're taking decisive action.
We're pursuing initiatives such as Worker's Compensation reform, Empire Zones and Power for Jobs.
And this budget advances three key strategies to create more opportunity for New Yorkers -- additional tax cuts, promoting job-creating investment through Operation SPUR in communities that need it the most, and continuing to attract high-tech investments through our Centers of Excellence.
Under my budget, our previously enacted tax cuts take effect this year, right on schedule, releasing a half-billion dollars back into the hands of millions of New Yorkers and their families.
But we need to do even more.
That's why my budget provides an additional $250 million in new tax cuts for New Yorkers this year. These tax cuts include accelerating the phase-out of the temporary personal income tax increase, business tax credits to spur Upstate job creation, and our STAR- plus program.
To promote private-sector investment in those Upstate communities which need it the most, my budget includes funding for Operation SPUR - the Strategic Partnership for Upstate Resurgence, our new initiative to leverage job growth and investment.
Operation SPUR is a seven-point program which will include the following:
Clearly, this creates a powerful incentive for companies from around the world to build plants in our State and to keep existing plants here as well.
In particular, this program provides a double benefit for New York companies investing in SPUR communities. New York companies that have existing operations in the State that expand in SPUR communities will receive favorable tax treatment on all of their in- state facilities.
As we target those areas having the greatest need for job and business opportunities, we'll continue building on our progress across our State through our high-tech Centers of Excellence, which have already attracted billions of dollars of private investment as well as Federal support.
This year's budget will provide $250 million for high-tech and other economic development projects that will further solidify New York's role as a world leader in high-tech research and economic development.
Tax cuts. Operation SPUR. Centers of Excellence.
These three strategies are fueling our progress and setting the stage for accelerated economic and job growth in our State.
But there is one more piece to the puzzle.
Our plans for continued economic revival and job growth must include maintaining, upgrading and modernizing our intricate network of highways, bridges, tunnels and rail lines.
To that end, my budget includes a new $36.6 billion, five-year, comprehensive statewide capital transportation plan that will keep our economy moving well into the 21st century.
That includes over $17 billion for our Department of Transportation capital programs and over $19 billion for the MTA. This builds on our record investments over the past decade and allows our State to pursue public/private partnerships to provide more resources for our transportation system.
I look forward to working with you to help strengthen and modernize our system for the benefit of our fellow New Yorkers.
The budget I propose today provides a concrete plan to solidify the fiscal integrity of our State and to set the stage for future growth and prosperity in New York.
It is not a new prescription, but a proven one.
We know that controlling state spending and stimulating the economy with tax cuts will lead to growth and opportunity - it's worked before - right here in New York.
Back in 1995, we faced a more dire economic situation than we face today - a $5 billion deficit, shrinking revenues, and job losses. But we didn't rely on the failed practice of raising taxes to plug the revenue gap - we cut taxes and curtailed state spending.
We are all familiar with the results - new jobs, new investments and new hope for the people of our State.
Today, three and a half years after the human and financial devastation of September 11th, our economy is growing again, but we still face a significant gap.
Let's build on our momentum by sticking to the proven formula of fiscal discipline and tax cuts.
This budget reflects a choice - not an easy choice, but the right choice. And when you think about it, the only choice.
The choice to take the responsible, prudent path to fiscal stability, economic growth and opportunity.
The choice to control spending and build the State's reserves, bring real reforms to Medicaid, cut taxes, including property taxes, to spur economic growth and link state aid to performance and accountability standards.
The choice to face our challenges head-on, rather than pretend they don't exist.
The choice to ensure that our children and their children will be able to live safe, healthy, fulfilling lives right here in New York.
I am confident that working together we will make the right choice.
By working together for the past decade, we've made some great advances, overcome some daunting obstacles and realized some remarkable accomplishments for the people of this State.
I'm confident that by working together again this year, we can the put our State on a path to lasting financial strength and stability…and lead our people to a future of limitless hope, opportunity and prosperity.
Thank you. God bless you, and God bless the Great State of New York.
Mayor Bloomberg's 2005 State of the City Address The mayor's challengers respond to the State of the City address: |
Remarks delivered at the New School
Introduction: A Clear Choice Ahead for the NYC Economy
Thank you for that (generous) introduction. [And let me say something I've wanted to say badly over the last few months but can only say here at the New School. Congratulations President Kerrey. You are doing a great job.]
And I'd like to thank the New School for inviting me. This school has always been a place that encourages new ideas. I hope to offer a few ideas today about our city's future and keep up a little with the school's rich tradition.
Many of us were deeply distressed by the results of this November's election. I, and many New Yorkers, believe George Bush has been bad for the national economy, our national deficit, and that he's been awful at building the international support necessary to help defeat terrorism.
But while many New Yorkers saw a clear choice in the national election, some people have argued that there aren't real issues at the local level -- that there aren't real choices this Mayor and City Council are making that concern our City and regional economy.
In his State of the City address the Mayor argued that we don't need to make any choices or changes for that matter because the economic picture is so rosy. But in fact, a lot of New Yorkers would say that things are pretty rough. Per capita income is lower, and unemployment in the outer-boroughs is higher, than at the end of 2000, while every day in New York City, one in three people on line for food relief are children. Even today's New York Times confirms that our economic situation needs attention. That we rely on promoting economic diversity more than ever and that our recovery trails the rest of the nation's.
So I believe that New York faces some very important issues that should frame this year's mayoral election. I will be laying out an education plan for the City in the near future, as well as plans on affordable housing and controlling taxes. But today I want to describe a basic economic perspective, and some specific ideas, that I think are missing from the current debate. I believe the central question is: do we continue to invest all our capital in large projects in Manhattan or do we attempt to spread growth to all five boroughs? Put another way, is our future with big developers or small business, and is our economic plan focused on a few special interests or to helping working families?
These are not abstract things to me - I grew up in Brooklyn and I live in Queens. My mother was a public school teacher and my Dad is a neighborhood lawyer who literally hung a shingle outside the house. I went to public schools. And when we needed something from the store, my mother used to send me out to "the avenue" to run errands. My vision of a thriving neighborhood is one where the neighborhood strip of stores is a healthy center of economic activity for the community.
So I have different vision of this City than a Mayor who grew up in Massachusetts and lives on the Upper East Side. When I close my eyes and conjure an image of my city, I don't think of the glorious skyline of Manhattan. I think of the rows of stores on a street like Brighton Beach Avenue or Forest Avenue on Staten Island.
Many of you know that I am thinking of running for Mayor, and the reason is because I know the working people who live in our outer boroughs. I come from there and represent them. And I believe it makes a huge difference whether local businesses succeed, whether there are good jobs, whether working families can hold on to an apartment, or even dream of owning a house and sending their kids to college. Those are the people I represent, and frankly I think they are too often forgotten or dismissed in the corridors of City Hall.
We all have heard of the "broken windows" school of thought about crime. If you let a small sign of disorder - like a broken window - persist it sends a signal to criminals that it is ok to commit crime. I have a similar theory about the way to measure our economy. When a small business goes dark in our neighborhoods it sends a troubling signal to home buyers, investors and other businesses. We need leaders who see these signs and who are more devoted to the small business and the working person and less to the big developer.
Today, I want to lay out real choices in how we make economic plans for this City, where we invest our resources, and in what we invest. A different How, Where and What for the City's future. Together, I think this can modestly be called a common-sense plan for working people of all five boroughs.
Let me start with the economic topic that has captured people's attention. The Mayor's plan to build a multi-billion dollar stadium on the West Side of Manhattan.
The stadium is symbolic of the Mayor's approach to public investment and what he would do with the next four years. And I believe the West Side stadium project will likely become a metaphor for many of the differences New Yorkers have with the Mayor. If you like his plan, you will vote for him, if you don't, you will look elsewhere.
I believe the stadium is a mistake but it is also a useful template because it shows how the Mayor is conducting his Administration. The stadium is an example of his wrong choices and a profoundly uncreative vision for the City's future.
First, the How. We should have decisions that are transparent and accountable. But the Mayor's scheme uses a myriad of non-Democratic boards and non-public transactions to funnel at least $600 million of public money to the owners of the New York Jets. While I have substantive complaints with the stadium plan, I would be willing to lose the debate if the deal was done with public debate and accountability.
I have a chart here that details how the money is funneled to avoid public scrutiny and votes. You'll see the Rube Goldberg design. Just take a look at the ownership arrangement they have designed. The city and the state create a new, unaccountable public authority - the Local Development Corporation. It issues $600 million in bonds to pay for the platform under, and the roof over, the stadium, which the city and the state supposedly agree to repay. Then the TBTA conveys the rights to the rail yards to the MTA. The MTA leases the airspace above the Rail yards to the LDC. The LDC leases airspace to ESDC. ESDC leases the airspace to the city. The city leases the airspace back to ESDC. ESDC leases the airspace to the LDC. The LDC leases the airspace to Jets Development, and then issues another $400 million in Jets Bonds for the Jets - ultimately backed up by the taxpayer - to help build the stadium itself. Finally, the ESDC leases the platform that's built to the MTA for $1. If you understand it, you weren't supposed to.
This system is intended to avoid real debate and input. This may be the way of a privately held corporation, but it is downright offensive when it is our tax dollars and our land. We must reform these authorities so they are open and understandable to all New Yorkers.
Second, the Where. The Mayor's economic growth strategy simply does not include the outer boroughs. Again, let us use the example of the new stadium. The Mayor has argued that there is no better place than the far west side. Well I have a better place - Queens. I have proposed Willits Point on the water front near Shea Stadium.
Willits has some obvious selling points. First is that unlike Manhattan, this area of Queens has an abundance of all the infrastructure elements a stadium needs. Its sits near the LIE, the Van Wyck, the Grand Central and of course that most New York of Subway lines - the 7. It also has plenty of parking. Remember that when real New Yorkers say they want to bring the Jets home - they mean the borough they left - Queens.
It would also be an undeniably less expensive option. An internal memo by Dan Doctoroff's own organization, NYC2012, said: "construction costs [in Willets Point] would be substantially lower than on the West Side." The cost of doing the Javits Center and the West Side Stadium would be $2.8 billion dollars. The cost of doing a Willets Point Stadium and the Javits Center - assuming the facility in Queens costs roughly the average of the last five NFL stadiums - would be $1.8 billion. That represents a cost savings of almost $1 billion, or 34% percent.
But when the idea was floated to the Deputy Mayor it was dismissed out of hand - Queens, he argued, is not attractive for economic development. Tell that to airports there, tell that to the most profitable sporting event in the nation - the US Open, tell that to the tens of thousands of businesses that are thriving there. Even if this Administration had a good argument for putting the stadium in Manhattan - what does it say about the perspective of this Administration that rather than think how to make economic growth in Queens more feasible, they simply reject it out of hand and continue closed room deals to free up space in Manhattan?
This thinking is a metaphor for the Mayor's approach to New York economics. In the past five years, the Economic Development Corporation reported that it dedicated twice as much funding to Manhattan in incentives as the other four boroughs combined. More than 75% of the population of New York lives outside of Manhattan - it's not enough to rely on one borough for job growth. Indeed, this lack of investment is having real impacts on Bronx, Brooklyn, Staten Island, and Queens. Point Two of a real economic plan for New York includes a guarantee that all four boroughs receive some fair share of EDC funds - I suggest at least 25% of EDC funds be distributed on an equitable basis to each borough.
A couple of last, quick points about the stadium. If the mayor truly believes this is the best use of the site and that the marketplace demands a $1.4 billion dollar stadium - put it out to bid. See what other proposals come in. See if - as I suspect and experts like Dick Ravitch have predicted - a developer of housing or commercial or parks might not pay us for the right to build something better. Four directional unobstructed views on the West Side of Manhattan - and we are paying someone to develop it?
Finally on the impact on Manhattan. Even the fiercest advocate of the stadium would concede that the quality of life impact on the businesses and residents during the construction and during game days would be stifling. But the questions about the economic impact on other parts of the borough have not been fully thought through. Shelly Silver has pointed out that the proposal involves New Yorkers deciding to essentially bid against ourselves. At the same time that lower Manhattan will be bringing 2 million sq. ft of commercial and office space on line, is it really wise to create huge new spaces at the same time on the far west side?
As I said earlier, this speech is not only about the stadium.
Any one considering our plan for all five boroughs of New York has to consider what we have done right, and then dream bigger. Just as we created a subway system to help our whole city grow, we now need a comprehensive ferry system. Neighborhoods like Long Island City, Sheepshead Bay, Marine Park, Coney Island, Bayside and the areas around LaGuardia and JFK airports could all benefit.
I will be discussing my plans to improve transportation in our city in a separate speech, but I'll give you a preview because is many ways transit and business are interwoven.
We should install ferry landings along the coasts of New York. The City or State already owns the bulkheads in dozens of neighborhoods, all we need are relatively inexpensive ferry landings. I've led the fight to fund the building of one in Rockaway. We should do more. The city should purchase a fleet of small high speed ferries and begin to help commuters from and customers to these neighborhoods.
I'm ready to work with this Mayor to get started on creating a ferry service as part of the integrated transportation network that our city is famous for. As a member of the Transportation Committee I am committed to delivering the federal funds to purchase the first ferries for a new, fast fleet. I am prepared to secure $15 million for three high speed ferries that could begin service to Rockaway and maybe even the elusive half hour service to Staten Island residents. If the Mayor would just say "Yes" this is a good idea, I can guarantee the federal funds.
Better transit is the only thing holding back job creation and neighborhood growth in places like Red Hook. And easing stifling gridlock is good for commerce in all corners of our city - not to mention that is good environmental policy.
And there are other opportunities for improved travel in the City. For example, we can take the concepts of light rail and apply it to buses through a transportation system called "Bus Rapid Transit," already in use in many cities throughout the world. Bus Rapid Transit lines create bus-only lanes on the major streets just like we do on the highways during rush hour. Bus Rapid Transit systems in other cities have increased ridership by 15-150% and speed up times by 40%.
The third economic choice New York has is the What. What is our focus? And what is the concrete modern agenda to create jobs and foster business. First let me make it clear that I am committed to making sure that FIRE continues to burn bright in New York. Finance, Insurance and Real Estate are part of the DNA of New York and I will continue to be a fighter for those industries and the jobs they bring.
We need to continue to support these industries, but we must also create a hot house of other new businesses to promote more diverse growth.
Health care. The Arts. Nightlife. And of course education. While we have been winning fewer financial services jobs, these new areas of growth have spurred activity and dollars in all five boroughs.
And then there is the giant of our economic machine - the more than 200,000 small businesses in New York City, representing 98% of all businesses. They dominate many industries and are the majority of businesses in every borough. Small businesses account for 50% of all New York City private-sector jobs and generate $4.5 billion in annual city tax revenues. Yet the way we treat small business in this town runs from benign neglect to outright contempt.
Let me give you an example. Spend an afternoon at 66 John Street. That is the address of an agency that most New Yorkers don't even know but small businesses fear - the Environmental Control Board. They hold hearings for summonses on a wide range of violations. Sit at 66 John and watch as shopkeepers are herded like cattle before a hearing officer who doesn't see an employer in front of them, but more likely sees a dollar sign or a hash mark in their quota book.
More so than any time in recent memory, the city's policy is to use the ticket book as the tax roll. In the past year alone, the city reported a 33% increase in the number of summonses for "quality-of-life offenses," to 708,349. Parking tickets were up 20% to almost 10 million in one year. The repercussions of the ticket blitz are clear: in a recent survey of business owners, the Brooklyn Chamber of Commerce cited ticket violations as one of the top obstacles to business growth. And when you have a top ticket of $180, with a couple of violations the average New Yorker is paying more in tickets than they do in income taxes. $180 for a parking ticket? $1,000 for an oversize awning? It isn't a deterrent, it's a backdoor tax.
It is this hostile attitude that's driving jobs to the suburbs.
Wal-Mart: A Fight for the Soul of the NYC Economy
Speaking of which, a word about the plan to grant an exception from the zoning laws to allow a Wal-Mart in Rego Park, Queens. As you may have read, the Mayor has shrugged that this is simply more "competition." I have led the fight to stop this plan and I want to tell you why. And what this fight says about the future of our city.
A creative vision for the City's future economy would create level playing fields in the outer boroughs so huge stores like Wal-Mart meet New York standards for worker protection and pay. I know the Mayor says it's good if Wal-Mart moves in-- but the reality is Wal-Mart has real negative consequences for New York's economies. The company offers lower wages, no health care, attacks unions, and crushes small local stores. That is not good news for the City.
Wal-Mart's business model is well known. Undercut every business in the area. Underpay and underinsure its workers - thus pushing many to require aid from the city for health care and basic needs - and then when competition is gone they increase prices to above the level they were to begin with.
Never mind the high minded macro economic theory of globalization and competition. The fight against Wal-Mart is a fight for the soul of New York's economy - the small outer borough business. If you think I'm being too dramatic, look at the numbers. On average a town that gets a Wal-Mart loses three supermarkets and every hardware store. If, as I suggested earlier, the empty store is to our economy what a broken glass is to crime Wal-Mart would be devastating.
Be an Ally, Not an Enemy, of Small Businesses
We have to make things easier for small business. First, we need to invest in them. I've discussed the need to set aside larger proportions of our resources for these outer borough businesses. Second, let's adjust the fines downward as the city issues more of them. To ensure that an increase of tickets isn't seen as a way to balance the books, take away the incentive. Here is how it would work. The city expects to gain $17 million in revenue from a new, computerized, system to increase the reliability of its ticketing. This newfound revenue should be exclusively dedicated to cut fines for small businesses, specifically for those that businesses cite as most onerous. This would reduce the incentive to try to use shopkeepers as a cash cow.
Third, it is not enough for the Mayor to tell businesses that if you have a beef you should call 311. I think that the Department of Business Services should have a team of ombudsmen on duty at 66 John to help keep the shop keepers from losing their minds and keep New Yorkers from losing their jobs.
For businesses that do manage to make it in the outer boroughs - the underdogs of the city's economy -- we need to expand the new innovative programs that work. One new approach that deserves expansion is the Business Improvement District program. If you poll shoppers of Queens about what they'd like to see on Astoria Boulevard or Nostrand Avenue they say some common things. They want less trash. Better lighting. Graffiti removed. And of course some help with parking.
Thanks to the BID program, businesses can self assess a fee and hire clean teams, design streetscapes and even help with the parking problem. A BID in Brooklyn even hired a guy with a bag of quarters to engage in a game of quick draw with ticket agents on behalf of shoppers. Yes. I know. It's illegal to feed the meters. I'm sure the Mayor will be setting up stings to add to their ticket take.
The bottom line is that right now, BID creation is too difficult and complicated - there are 17 different steps you need to take towards approval. Even the most eager business owners often can't get a BID started without practically shutting down their own stores. Finding absent landlords, organizing planning meetings and filing paperwork requires a full time staff - and that's before the BID is even approved. Unlike the mega BIDs of Manhattan, the shopping strips can't hire a grant writer or an organizer. The city should do this work for them
Jumpstarting Innovation
What is so urgently needed is more creativity and energy devoted to thinking how we can help small businesses grow.
I propose we kick start investment in innovation. One good idea is dedicate a small fund, say $10 million, to provide "seed" capital micro-loans to innovative businesses identified by private sector venture capitalists with a commitment to New York City. These loans could be as little as $10,000 or in the range of $100,000-$200,000 and would go to emerging businesses that do not yet qualify for large venture capital investments or private loans but are identified as unusually promising. If they prove successful, the private sector would pick up the funding, contingent on the businesses staying in the New York. It's not a government venture to pick winners and losers, rather it's a way for the city to leverage capital to give an incentive to the financial sector to invest here in the city, rather than across the globe.
The city should also create a "ShopNYC.com" initiative to help small businesses use the internet to better market their goods and services. If New Yorkers want to show their pride in the Big Apple or simply shop in cyberspace from a company they can reach in real space, we should help make shopping for New York goods easier. We could even enlist some of the HTML geniuses in our local high schools to do the design work.
I've talked a lot about the How, What, and Where of a new economic plan for the City - but I want to conclude by talking a little bit about the Why.
As I mentioned earlier, I grew up in Brooklyn, and have spent my 13 years in elected office representing Brooklyn and Queens. My view of New York has been molded by the families I have met in the diverse communities that have elected me. From Park Slope to Forest Hills. From Sheepshead Bay to Bayside.
As I travel the city I realize that my New York experience is like that of so many of the working families of New York.
My parents gave our family and me a great life here. But the work that produced the gift of our opportunity began before them, before even my grandparents, when my great grandfather moved here and worked in a little business on the Lower East Side.
Like so many New Yorkers, their generation came, worked hard, built something up and left a stronger foundation for the next generation. And so on in turn.
The families from Ireland, Italy, Russia, the Dominican Republic, from South Asia, from Haiti, they all understand that -just as my great grandfather did. We live and succeed today because of their hard work. Because they fought for a better life for themselves, and for their children.
So I want us to fight for a better life too, and I want a Mayor who will fight for more opportunity for everyone.
You have to fight Albany, you have to struggle to get a fair share from Washington. It is not enough to say the Republican President is our friend and take what we get.
It's not right or fair to close down fire houses and raise property taxes. It's not right or fair to give phony tiny tax cuts for working people and huge subsidies for the richest special interests.
New York values are fighting for the whole City, for all five boroughs, for small businesses not just large ones.
That is New York values. We need a new plan for economic growth based on those values, for this whole City.
Thank you.
"Our economy - which was written off three years ago - is back, and it's back in a big way," Mayor Michael Bloomberg announced in his third State of the City address. The truth is, that at the very moment he was making his speech, midway through the city's fiscal year, the news is actually far more mixed.
The city's immediate budget prospects have brightened a bit, and the city's economy looks a little more upbeat. The latest reports from several fiscal monitors suggest that the city will end its current fiscal year (in June) with a substantial and unexpected surplus -- as much as a billion dollars.
But long-term budget deficits continue to worry the city's fiscal monitors. And one big cause of those deficits - increasing city debt service - is news again, highlighted in the city comptroller's new report on total city debt and dramatized in the mayor's West Side financing plans.
DUBIOUS DEFICIT REDUCTION PLAN
The mayor's preliminary deficit-reduction plan for next year has several risks, according to City Comptroller William Thompson's latest report (In PDF Format) on the city economy and finances:
The most troublesome may be the city's assumption that federal and state aid will increase by $950 million.
The mayor's decision to eliminate his plan to pay cash (pay-as-you-go) for capital projects will save money in the short run, the comptroller says, but may add long-term debt-service costs.
Labor costs and overtime costs may be underestimated.
The city's financial plan still contains no city funding at all in the Campaign for Fiscal Equity case - even though estimates of the city's likely share (23 percent) would add $330 million to next year's budget alone.
The comptroller's report on the economy lists several long-term worries for the nation and the city: higher oil prices, the war in Iraq, a weak job recovery, and higher interest rates. There is also a half-trillion-dollar national trade deficit and a federal budget deficit approaching the same number. All of this threatens city tax revenues as well as federal and state aid.
HIGHEST DEBT PER CAPITA
The city is far and away the nation's biggest capital spender on a per capita basis, according to another report(In PDF format) by the comptroller, on the capital debt. By June 2004, the city owed approximately $50 billion for the schools, bridges, hospitals, etc. that it has financed and built. That is over $6,200 per New Yorker. Chicago, the closest to the city in spending, owed $3,920 per person (in 2003). In a sample of selected cities, New York's spending is almost double that of the other cities, on average.
The capital debt report also shows how elected officials use all kinds of mechanisms to get around limits to conventional borrowing (that is, borrowing through the city's capital budget process, where the city council gets a vote). For instance, the $50 billion does not include the $13.4 billion that the Water Finance Authority owes (for water-main and sewer construction) or the nearly $20 billion that the Metropolitan Transportation Authority owes, even though regular New Yorkers pay both debt services - the Water Finance Authority's debt through fees and charges to city property owners, the MTA debt through transit fares.
WEST SIDE PLAN
The financing for all three parts of the mayor's West Side plan - the Javits convention center expansion, the Hudson Yards residential/commercial plan, and the Jets Stadium -- was designed to by-pass the city's capital budget process.
But the January 10 city council vote on the Hudson Yards re-zoning and financing plan by its land use committee (full vote of the council is scheduled for January 19) marked a significant change.
The council insisted on the city's paying for the up-front costs of the Hudson Yards plan over the first ten years through the city's capital budget. The mayor had proposed that short-term borrowing pay the initial debt service costs of the long-term bonds necessary for the #7 subway extension and other infrastructure costs. This would have added $1.3 billion in extra costs, according to the Independent Budget Office.
Left out of the new agreement between the mayor and the city council over the financing of the West Side plan was the question of the Jets stadium. Here, big political, legal, and fiscal questions remain, as discussed in an earlier Finance topic page update. The fiscal questions are especially important. On the construction side, the actual cost of the stadium is in dispute. The mayor's estimate -- $300 million for a platform and roof for the stadium - has been disputed by, among others, Public Advocate Betsy Gotbaum, who argues that the project's costs could exceed $2 billion, payable by city taxpayers.
On the financing side, a crucial question remains: how much revenue is the city giving up by ignoring alternative uses of the site and simply giving control to the site - and its property tax revenues -- to the privately owned Jets.
The Regional Plan Association's December 2004 alternative plan(In PDF Format) for the site, for instance, shows how a residential/commercial project, similar to the adjoining Hudson Yards plan, would generate hundreds of millions -- perhaps more than a billion dollars -- of city and state property, income, sales, and other tax dollars over a 30-year period. These revenues could be split among the city, state, and Metropolitan Transportation Authority (which owns, and will continue to own, the stadium site).
The potential tax-benefit bonanza of a new Manhattan riverside mixed-use development is illustrated by Battery Park City, where the commercial part, the World Financial Center, sits on another Hudson River site, similar in size to the stadium site. One projection, by the consulting firm CB Richard Ellis, estimates that the World Financial Center will generate property taxes for the city over the next 30 years of more than $2 billion.
The City Council's deal with the mayor to revise the Hudson Yards financing plan shows how the democratic process is supposed to work. Recognizing the mayor's strategy to blur the connections between the stadium and Hudson Yards plans, council members insisted that the Hudson Yards financing be distinct from the stadium's. Councilmember Christine Quinn said in the December 11 New York Sun, the deal "very clearly states not a penny of the financial resources, not one dollar generated by this rezoning can be used west of 11th Avenue."
Whether the Jets stadium proposal, especially its financing scheme, gets an equally open and democratic airing remains to be seen. The plan is scheduled to more or less disappear from public view, with planned votes by the Empire State Development Corporation and the obscure New York State Public Authorities Control Board. The plan could be delayed by two state court suitsfiled last month against the stadium on environmental grounds.
Glenn Pasanen, former associate director of City Project, teaches political science at Lehman College of the City University.