Gotham Gazette

The Place for New York Policy and politics



Property Tax Reform -- NOT

New York City’s government will raise about $13 billion this year from the city’s property tax. That represents about 40 percent of all city tax revenues. It’s a tax that almost all New York residents and businesses pay, either directly as property owners, or indirectly as renters whose landlords pass through to them a substantial share of their property tax. But it is a tax that is extremely complex in its details – many would say incomprehensible – and a tax considered unfair by many taxpayers and critics.

So the new study of the city’s property tax system by the Independent Budget Office is a welcome event because it unravels the tax’s complexity and identifies which properties carry the lightest and heaviest financial burdens. The study, Twenty-Five Years After S7000A: How Property Tax Burdens Have Shifted in New York City, is, however, ultimately pessimistic about chances to simplify the tax and equalize its burdens. It suggests that no one -- neither the state legislature, Mayor Bloomberg, nor the city council -- is willing to take on the “minefield” that reform of the city’s property tax system would need to cross.

Perhaps the biggest contribution of the IBO study is its description of how the technical complexity of property tax law and administration is central to understanding the fundamental inequities of the system. In order to ensure that the big winners in the system – one-, two- and three-family house owners – maintain their low tax burden, state legislators, city mayors, and city councils have for 25 years repeatedly contorted the system to shift burdens to other properties – not only to commercial properties but also to the large apartment buildings where most of the city’s renters live.

Most of those renters not only live in buildings with high property tax burdens, but their household median income is only $35,000(half make more, half less), compared to median household income of house owners of $65,000. Worse yet, a major finding of the IBO study is that since 1981 the tax-burden disparity between house owners and owners of both large rental buildings and commercial properties has widened considerably.

Among several other findings, the most positive is that heavy property tax burdens carried by many low-income, low-market-value communities in the 1970s and early 1980s have been eliminated by the 1981 law (called S7000A). Less positive is the finding that many inequities exist within property types, so that a house or co-op in one borough has a higher or lower property tax than a house or co-op with equal market value in another borough. The study also notes that commercial property taxes are higher in New York City than any other U.S. city with a population over one million.

The Political History of the Property Tax

The 1981 state law was a response to a State Court of Appeals decision in a case filed in the late 1960s (the Hellerstein case) that determined that New York City and other jurisdictions in the state were in violation of a state law that required properties to be assessed at their full market value. In practice, communities were assessing residential and commercial properties at quite different fractions of full market value.

In New York City, for example, at the time of the Hellerstein case, city house owners’ assessments were only 25 to 30 percent of full market value, whereas commercial assessments were about 80 percent of full market value. Thus, house owners in effect paid taxes much lower than the commercial owners.

The extraordinary complexity that was built into S7000A in 1981 and expanded in subsequent changes made by New York City mayors and the city council stems from a simple political imperative: minimize house owner taxes and shift property tax burdens as much as possible to commercial and large rental buildings.

The first political step in the 1981 law was to legitimize the status quo that the state appeals court had found illegal. A new classification system was set up, with four classes of property: Class 1 houses; Class 2 rentals, co-ops and condos; Class 3 utilities; and Class 4 commercial properties. The share of taxes paid by each class at that time became the legal base, preserving the low house-owner share of taxes. Any future changes in market value in each class were to be added proportionally.

But the system had complex rules that protected house owners from increases in their class share, and over the next 25 years that original system was repeatedly juggled to further protect them from the full impact of rising market values. Thus, when house values rose faster than commercial property values and threatened to make the house owner share of taxes larger, the old and new political rules minimized those increases.

The Major Inequities in the Property Tax

The IBO study has extensive data on tax burdens, and a few examples will show the scale of differences (or inequities) among classes of property. Tax burden is measured by determining an “effective tax rate,” or ETR. It’s determined by simply dividing actual taxes paid by the full market value of a property. In an example of a house with a market value of $300,000, with a $2,400 tax bill, the ETR is 0.80 ($2,400/$300,000). In terms of real money this is generally described as paying 80 cents per $100 of market value.

Using full market value for each class of property makes it possible to compare ETRs across classes. If a different type of property, say a condo, also worth $300,000, had a tax bill of $4,800, twice that of the house noted above, its ETR would be 1.60 ($4,800/$300,000), or $1.60 per $100 of market value. In other words, the tax burden for the condo owner would be twice that of the house owner.

Here are some of the major shifts that have occurred since 1984:

  • The effective tax rate for Class 4 commercial properties used to be more than three times higher than Class 1 houses. Now they are almost eight times higher. (The rate for the commercial properties is 3.56. The rate for the houses is .46)
  • Co-ops used to be lower than houses. Now they are 1.5 times higher.
  • Elevator apartment buildings (Class 2) used to be almost three times houses (Class 1). Now they are more than eight times. (The elevator apartments buildings have a rate of 3.72. The rate for houses, again, is .46)

Will Anything Be Done?

The IBO study makes no recommendations for changes in the city’s bizarre, opaque, and inequitable property tax system, but it does list alternatives to the four-class system now used. They all assume “revenue neutrality,” that is, each alternative would raise the same level of taxes as the current system.

The first alternative laid out is a single tax rate for all property types. This would mean a massive shift of burden from commercial properties to private houses. For instance, such a shift would see house owners paying over 190 percent more, or over $5,300 more per owner, on average. Office buildings would get the biggest break, $2 billion overall, with an average saving of $324,000 per building.

Condos and coops in large buildings would have tax increases, respectively, of 94.5 percent (more than $4,500 per apartment) and 95.7 percent ($2,482 per apartment). Interestingly enough, for those interested in reducing renters’ burdens, taxes on the large elevator rental buildings would fall by over $1,500 per unit, nearly a two-thirds cut. If substantially passed on to tenants, there would obviously be a big easing of renter tax burden.

A second alternative uses what is most common in other jurisdictions: a two- class system -- residential and commercial. Keeping revenue neutrality and using full residential and commercial market values for assessment purposes, there would be big shifts within the residential class.

House owners would see a 72.9 percent increase (about $2,000 on average) and condos and co-ops in large buildings much smaller increases: 15.8 percent and 16.5 percent, respectively ($751 and $428, respectively). But the savings for large rental buildings would be substantial: a 78.7 percent reduction, or over $1,850 per apartment. (Changes in commercial Class 4 would, for the most part, be minimal.)

But of course any shifts of tax burden to house owners and condo/coop owners in both of these scenarios would have to reverse the politics at the heart of the 25-year old state law. Thus the IBO report sees little likelihood of fundamental reform. It points out that Governor Eliot Spitzer’s focus on property tax in his electoral campaign (reiterated in his January 3 State of the State address was to reduce burdens, not the systematic reform that is needed to fix the city’s system. Thus the report concludes, “Without another court ruling or some other external prod, it is not a minefield many legislators in Albany, or City Hall, appear ready to brave.”

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


High Revenue, Obscure Spending

City Hall cannot be blamed for boasting about an increase in revenue to government coffers. But it is rightly criticized for obscuring information about how it spends the money -- specifically, its more than $11 billion in contracts with organizations outside of government.

Good News About The Budget

Recent city budget news promises another happy year for Mayor Michael Bloomberg, with new revenue estimates billions of dollars higher than originally forecast -- “a dramatic change,” according to Ronnie Lowenstein of the Independent Budget Office.

As part of the budget process, every November, City Hall issues an update on its proposed budget for the following fiscal year. The so-called November modification this year is in sharp contrast to the one four years ago, which included three billion dollars in new taxes in order to resolve a looming budget deficit of more than six billion dollars.


Thanks to an increase in real estate transactions and in other business activity, both of which mean higher tax revenue, city officials estimate that the current fiscal year will end in June 2007 with the city government having a surplus of nearly two billion dollars. And though they are still projecting a deficit over the following years, these are expected to be far less than the initial estimates. The estimate for the deficit in fiscal 2008 has gone down from $3.8 billion to $510 million. In 2009 and 2010, the deficits are expected to be far higher -- $4.1 billion and $3.6 billion respectively – but these are less than were projected when the initial estimates were made, back in June.

No one at the city council or city comptroller’s office is reportedly suggesting that those initial revenue estimates had been underestimated by design -- to keep the council and budget advocates from finding ways to spend the now-recognized revenues.

But City Hall is less forthcoming when it comes to issues of how it spends the money.

Obscuring News About Contracts

The annual report from the Mayor’s Office of Contract Services provides raw data about the sheer volume and scale of city purchases -- over 46,000 purchases of goods and services in 2006, worth $11.4 billion.

City Hall’s extensive use of contracts – the subject of an Issue of the Week in Gotham Gazettealmost five years ago – is little discussed, but very important. As Seth Forman explained:

Since the 1980s, fiscal conservatives have been touting the use of private contractors as a cost-saving measure, pointing to municipalities that have realized impressive savings. Liberals remain more skeptical about putting such government services as education and prison management in the hands of profit-hungry private businesses. But the issue no longer has the ideological gloss it once did. Most Democrats and Republicans, liberals and conservatives, see contracting as a routine approach to the management of government services. Former New York State Governor Mario Cuomo told the authors of Reinventing Government in 1992, "it is not government's obligation to provide services, but to see that they're provided."

Critics see the problem not with the use of contracts per se, but with the lack of monitoring of them.

The 2006 report from the Mayor’s Office of Contract Services, entitled Agency Procurement Indicators, has little to say about management performance, good or bad, and hides what others see as bad news.

Until 2002, this annual report on contracts was a part of the Mayor’s Management Report, but since then it has been published separately, and it now gets little or no attention. Yet the huge scale of the city’s purchases suggests that the report should be a central document in addressing city management issues.

What the public gets, in fact, is a lot of information but little analysis. It may be useful, for instance, to know that in 2006 there were purchases of:

  • $3.8 billion in human services
  • $1.5 billion in professional services
  • $1.1 billion in goods
  • $885 million in architecture/engineering services

It may also be useful to see the city publicize the scale of subcontracting by agency vendors – the oversight of which is a neglected second layer of city management issues: 2,500 new subcontracts in 2006 valued at almost $1.5 billion.

The report also cites methods of procurement and procedures to ensure competitiveness, and reports on new programs that broaden business opportunities for companies owned by women and minorities.

But missing is a consistent methodology to measure performance over time -– the setting of goals, performance standards, and evaluations.

Also missing is any mention, let alone performance measurement, of some $3 billion in contracting at the city’s department of education. A city council hearing on November 21 highlighted what the Daily News discovered was a “record-breaking” $121 million worth of no-bid contracts last year. The department argued that the no-bid contracts are necessary for rapid, efficient responses to its needs. The city comptroller (whose office reviews and registers other city agency contracts, but not education contracts) says he will propose state legislation to stop the current practice.

Timeliness of Contracts

City government agencies routinely delay the completion of a contract with outside organizations for as long as a year, but on average about four months. One of the reasons why these delays matter, as Susan Buttenwieser pointed out in an article in Gotham Gazette entitled Breaking The Contract With Nonprofits, is that such routine delays in payment force many non-profit agencies who have these contracts to borrow money in order to provide the promised services. These organizations then collectively pay millions of dollars in interest that will never be reimbursed.

One section of the 2006 contracting report is focused on the timeliness of the contracting process, and makes a token nod at a substantive performance measurement. But it devotes only a third of a page to processing times of competitive contracts with sealed bids (only one of many contracting methods). A table shows that in 14 agencies, the process, or “cycle time,” ranges from 58 to 339 days, averaging 125 days, and that this is an increase from an average of 118 days in 2005. The explanation for the increase is cryptic: “year-to-year fluctuations in the size and complexity of awards.”.

That’s it for analysis of processing time.

Yet last year’s report had an interesting five-page analysis of processing times for another method of contracting, requests-for-proposals (or RFPs) in human-service agencies. One of its useful findings (for year-to-year comparisons) was that cycle times for this method were longer than for contracts based on bids – 158 days compared to 118 days.

The 2005 report also admitted that “most oversight agencies lack electronic tracking systems, and none of the systems that exist are linked to one another to permit a fully transparent view into the procurement process.”

Although progress was promised for 2006, there is no update to this analysis in the 2006 report.

He Said, She Said

The other indicator of timeliness in the 2006 report is an update on retroactive contracts, long a sore point for vendors, especially human-service organizations with limited financial capacity that must carry the financial burden until their contracts are registered. But much of its good news is contradicted by the city comptroller’s reports on the same problem.

The city comptroller and the Mayor’s Office of Contract Services, using different timelines and definitions, have for years been at odds in their analyses of retroactive contracts. The comptroller has generally found the problem to be bigger and identified less progress than has the mayoral agency. The Mayor’s Office of Contract Services issues one report a year; the comptroller issues monthly as well as annual reports on retroactive contracts in client-service agencies.

A look at one city agency shows the inconsistencies between the analyses of the city comptroller and the office of contract services. The comptroller’s report identified 1,366 late contracts in 2006 at the Department of Youth and Community Development, compared to only 238 deemed late by the Mayor’s Office of Contract Services.

Percentage of late contracts?
The comptroller says 92 percent, worse than previous years.
Contract services says 73 percent, better than previous years.

Average number of days contracts were late?
The comptroller says 148 days.
Contract services says 64 days.

In its brief text, the report by the Mayor’s Office of Contract Services sees almost exclusively good news. But the bad news overall for analysts and the public is that until this mayoral agency and the city comptroller are on the same page in these analyses of contract administration -- and until education contracting is subject to the same rules as other city agencies -- there will continue to be doubts about how well the mayor is measuring management performance.

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




Stated Meeting: Electrical Code, Property Taxes

Every two weeks the New York City Council holds its "Stated Meeting" to introduce and pass legislation. As a regular feature, Gotham Gazette covers these meetings.

The City Council passed a bill making various changes to the electrical code at its most recent stated meeting on November 29, 2006. Under the bill, balconies, decks and porches would be required to have outlets, a safety measure intended to cut down on the dangerous practice of stringing extension cords from indoor outlets. The expiration of electricians' licenses would be staggered to avoid the annual backlog that starts December 31, when every single license in the city expires. Several other changes would also be made regarding the processing of applications and other documents, and the operation of emergency generators.

Council Speaker Christine Quinn made a valiant effort to add some life to an otherwise obscure, technical topic. The requirement for outlets on porches, she pointed out, will "allow for much more holiday lighting to be displayed."

The council passed the legislation unanimously, and it will become law if signed by Mayor Michael Bloomberg. But not everyone could muster up Quinn's enthusiasm.

"In my five years at the council, this was easily the most tedious topic I've sat through," said Councilmember Lew Fiddler.




The council also passed three resolutions that together shift $127 million in tax burdens from homeowners to commercial property owners this year. The move is essentially a formality, the final step in a yearly process through which the city asks the state to allow it to change tax rates.

The average annual saving to single-family homeowners will be $87. Even though the decrease will be offset by a relative tax increase for commercial property owners, the council says that commercial rates will remain lower than last year. Supporters of the bill say such a move is justified because commercial property tax rates are lower than residential rates, and because commercial real estate values have increased more rapidly than residential values in recent years.

Several council members voiced displeasure with wider issues related to the tax code. Councilmember Alan Gerson described the code as "too complex" and "too filled with inequities and unfairness," including cases where people living in similar properties pay widely divergent tax rates.

"We need to move forward with real property tax reform," he said, "and should aim to implement reform before the end of the fiscal year."

Gerson voted for the resolutions, as did several other council members who made similar statements, including Fiddler, Peter Vallone, and Michael McMahon. The three Republicans in the council, James Oddo, Andrew Lanza, and Dennis Gallagher, voted against the measure. The final vote on all three resolutions was 46 to 3.  

Hundreds Of Millions Of New Dollars To New York?

Democratic Party control of the U. S. Congress and the New York State governor’s office may well have significant impacts on New York City’s public and private finances. On the other hand, the level of financial aid and relief will be restrained by long-term federal, state, and city budget problems, economic uncertainties, and Republican Party power at the presidential and state senate level.

But here’s some of the good news. As the New York Times reported, after 12 years of minority status, “the ascendant Democrats in the House and Senate are well positioned to deliver hundreds of millions of new dollars to New York.”

In Washington – Power Perches, Tax Relief

Senator Charles Schumer’s seats on the Senate Finance and Banking Committees will put him at the center of the national economic policy-making that’s so important to the city’s financial-services economy. Senator Hillary Clinton reportedly could have key roles in the Armed Services or Environment and Public Works Committees.

In the House of Representatives, Jose Serrano will be in a strong position on the Appropriations Committee, and Jerrold Nadler may well have a chance to produce new funding for his metropolitan transportation projects.

True, the large federal deficit is likely to put a brake on much new federal spending. But there is one way that may offer the most immediate relief for New Yorkers, thanks to New York City Congressman Charles Rangel’s new chairmanship of the tax-writing House Ways and Means Committee.Rangel is likely to reform the federal alternative minimum tax, which was initially established to prevent very wealthy individuals from escaping the federal income tax, but now affects the middle class as well, according to an Independent Budget Office report.

In Albany – School Funding And Property Taxes

At the state level, any city gains are much more problematical. Incoming Democratic Governor Eliot Spitzer will tackle at least two big policy issues that will affect New York City finances and city taxpayers – settling the Campaign for Fiscal Equity school funding case and providing property tax relief across the state.

The city government, for instance, might well have to contribute a substantial share of new school costs, and it might well be shortchanged – proportionately -- by any new state property tax relief program.

For instance, the Campaign for Fiscal Equity suggests a fair settlement of school funding inadequacies would ultimately cost nearly $9 billion a year state-wide. Furthermore, many expect City Hall will have to pay a fair share of that $9 billion. Mayor Michael Bloomberg has repeatedly rejected any such city share, but with huge city budget surpluses the past two years – and a $2 billion surplus already recognized in this year’s budget – the Bloomberg administration’s position is less tenable.

Spitzer’s property tax relief program, as cited during his campaign, is based on the state’s existing STAR program, which gives tax relief to homeowners. Since only a third of city residents are homeowners, the program has disproportionately aided non-city residents. According to the Independent Budget Office’s March 2006 report, city residents in the most recent fiscal year got only 24 percent of the $3.2 billion in state benefits.

Apparently in response to this inequity, the Spitzer program (which would cost nearly $3 billion in its first year), promises the city a new $250 million benefit for all income taxpayers, a sum that does not seem to fill much of the gap between non-city vs. city benefits. In any case, with the state senate still controlled by non-city Republicans, any Spitzer proposal that aids the city will likely have a tough legislative road to travel.

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

Economic Incentives, for Council Members and Businesses; City Council Stated Meeting, Oct. 25, 2006

Every two weeks the New York City Council holds its "Stated Meeting" to introduce and pass legislation. As a regular feature, Gotham Gazette covers these meetings.

Pay Raises

The City Council took the first step toward giving itself a pay raise, with Council Speaker Christine Quinn saying she was submitting legislation that would approve the raises recently recommended by a mayoral commission. That would give council members a 25 percent salary hike, boosting their yearly base pay by $22,500, to make it $112,000.

Quinn said the council would hold hearings on the proposal to raise salaries for the mayor, public advocate, city comptroller, district attorneys and borough presidents, as well as council members, after seven years with no pay hike. She said that, for the first time, the council will hold hearings on pay increases “so that those who are enthusiastic about this legislation and those who are less enthusiastic about this legislation will be able to speak out.”

While council members did not discuss pay raises at their regular meeting, reporters questioned Quinn extensively on the matter at a press conference before the session. She refused to say whether, in light of the likely pay hike, the council would look at what Quinn called stipends and others refer to as lulus, the additional money paid council members who chair committees or hold leadership posts. While issuing no specific recommendations on the additional pay, the mayoral commission said the practice is "ripe for reform."

The stipends range from $28,500 a year for the speaker down to $4,000 for the chair of a select committee. James Oddo gets an $18,000 for heading up the Republican minority on the council – all three members, including himself – and one of those GOP members, Dennis Gallagher, receives an extra $5,000 for being minority whip. All but six City council members receive the extra payments: Tony Avella has refused to accept his and five other members have no committee posts.

Quinn said the council would first consider the recommended pay increases and could then decide to look at related issues, such as stipends. But she said, “I believe it is appropriate for a person who takes on extra responsibility to get a stipend.”

The commission also recommended the council consider officially making the job of council member a full-time position, which would bar them from making outside income beyond investments and the like. But under repeated questioning, Quinn would not support this idea either. Insisting all council members work more than 40 hours a week, she dismissed the importance of designating a job as “full time.” “What people do is what matters,” she said, “How hard people work is what matters.” And she said council was “scrupulous” about avoiding any possible conflicts of interest.

At least 17 members of the City Council earn outside income, with Dominic Recchia topping the list. In 2004, Recchia received a $90,000 City Council salary, a $10,000 stipend for chairing the arts committee, and made somewhere between $210,000 and $570,000 from his law practice and from real estate in Vermont. (For a list of council members’ outside income, click here.)

In addition to raises for council members, the commission called for increases for other officials:

$225,000 for mayor (a $30,000 raise - 15.4 percent)

$185,000 for comptroller (a $25,000 raise - 15.6 percent)

$165,000 for public advocate (a $15,000 raise – 10 percent)

$190,000 for district attorneys (a $40,000 raise - 26.7 percent)

$160,000 for borough president (a $25,000 raise - 18.5 percent)

Empire Zones

The council voted to change the boundaries of 10 of the city’s 11 Empire Zones. Under the state program, businesses in these areas receive economic incentives, such as tax breaks.

The changes were designed to bring the city in compliance with a recent state law setting requirements for the boundaries of such zones. But Quinn said the council was taking advantage of the change to expand many of the districts. The changes affect zones in all five boroughs.

In Staten Island’s West Shore Empire Zone, two lots, sites of the proposed, and controversial, NASCAR track were deleted from the Empire Zone. Council members from Staten Island had sought the change, not wanting to provide any economic boost for the project, which has not yet received approval from any city agency.

The recommended changes go to the state final approval.

Greenwich Village Business District

The City Council also unanimously approved expanding the Greenwich Village Business Improvement district. Businesses in such districts pay a tax for extra clean up, security and other measures designed to enhance commercial activity. The expanded area will include 430 additional businesses.

The council also voted to streamline sprinkler inspections for some apartment buildings and to allow the Corrections Department to have reduced staffing levels on the overnight shift in city jails. The move is designed to bring city law in compliance with the contract recently negotiated between the city and corrections officers.

Jeers for Bush and Limbaugh

During the general discussion period Councilmember Charles Barron sharply condemned the Military Commission Act recently signed by President George W. Bush that would strip some terror suspects of the right of habeas corpus. It was not totally unexpected, given that Barron has used this forum before to condemn the war in Iraq and speak out on other issues.

More surprising was Republican Councilmember James Oddo’s attack on right wing radio talk show host Rush Limbaugh. Limbaugh had accused actor Michael J. Fox of exaggerating the effects of his Parkinson’s disease in order to boost the election prospects of Democratic candidates who support stem cell research. Saying he was a big fan of Fox’s old ”Family Ties” TV series, even though he does not always agree with the actor’s ideology,” Oddo said to Limbaugh, “Do the folks on the left a favor, more give the folks on the right a favor and go far, far away.”

The two statements gave Councilmember Bill DeBlasio the opportunity, for perhaps the first time on record, to offer a statement jointly praising the minority leader from Staten Island and the former Black Panther from East New York.

Quote of the Day:

“The metal bat lobby is coming for you. They’ve hired a lobbyist you all know...They’re going to give you 'science' that any 16-year-old who has played baseball knows isn’t true.” --Councilmember Lew Fidler on the upcoming debate over whether to ban metal baseball bats in high schools.  

Business Improvement Districts

Merchants, landlords and owners of co-ops in Fort Greene and Clinton Hill recently filled a small church in Brooklyn to hear how their community could change for the better if they would agree to a small new tax. The Pratt Area Community Council was holding the first of two public hearings about its efforts at forming a new Business Improvement District, or BID.

There are 55 such districts in neighborhoods throughout New York City, the most of any municipality in the world. What they promise merchants and property owners, in exchange for a small tax, is a revitalized area, by providing such supplemental services as increased maintenance and security, as well as marketing and promotion.

The Pratt people were beginning the long process of getting a new business improvement district along a 21-block stretch of Fulton Street, one of a dozen such districts bidding to be new BIDs. The chances are good that they will be accepted. Since the inception of New York’s business improvement districts in 1982, there has been only one unsuccessful attempt.

Indeed, the crowd in the Brooklyn church listened to a panel of community activists and public officials describe the benefits that come from BIDs. None mentioned any possible negative consequences, and if any of the interested parties were to visit the Web site of the Department of Small Business Services, the city agency that deals with BIDs, they would only be able to read about success stories.

Still, members of the audience were skeptical. Although their opinions were gut reactions, experts and past officials have indeed painted a more nuanced picture of BIDs than the official story. Indeed, at least one expert argues that they do more harm overall than good.

What is a BID?

BIDs are public-private partnerships that vary greatly depending on the neighborhood. The 180th St. BID in Queens has a budget of $53,000 a year while the Lower Manhattan Alliance, which encompasses the Wall St. area, runs on an annual budget of over $11 million.

Many fund capital improvements such as landscaping and signage. Some go full-throttle into business development: The Lower East Side BID created a business incubator called Forward that attempted to further cement the neighborhood's reputation as a fashion center by offering a retail space for selected up-and -coming designers. Each BID develops its own plan according to the needs of the district. Some BIDs have been recognized for their effectiveness and creativity. The Village Alliance widened the sidewalks on Eighth Street to make it more accommodating to pedestrians. The Pitkin Avenue BID , in the Brownsville area of Brooklyn, has been noted for its successful efforts to thwart crime.

Starting a BID is a complicated process that takes at least a year and a half, which involves not just public hearings but a slew of approvals, all the way to the mayor and the state comptroller. If any party feels that their interests will be damaged by the formation of the BID, they can seek judicial review, but must reimburse the city for legal costs if the court rules in the BID's favor. At any point, a BID can be dissolved by the City Council or by petitions from a majority of property owners.


Why Supporters Like Them

Supporters hail business improvement districts as an effective way to clean up a neighborhood, reduce crime and vacancy rates, and generally improve the community, all at no cost to the city. The Pratt Area Community Council points out that the average total monthly assessment for the Fulton BID would be less than the monthly average in fines alone that are imposed on property owners and merchants in the area for failing to clean the sidewalks for which they are responsible. Indeed, the sidewalks in business improvement districts city-wide score nearly perfect ratings in the mayor’s management report on cleanliness.

The Department of Small Business Services cites a battery of statistics and anecdotes that show other such improvements as the result of BIDs, as well as an impressive reduction in vacancy raters in some of them. Further, it points out that BIDs have brought in additional funds for the area by fulfilling this role.

Why Detractors Criticize BIDS

Detractors have called BIDs a burden on the city, unfair to workers, and even anti-democratic. Among the accusations:

1. Undemocratic: Residents in a district vote for the BID’s board of directors, but there are specific slots for local public officials, as well as representatives of property owners, business owners, and tenants, and public officials. But the system is weighted towards property owners, a fact that has inspired lawsuits. One such case occurred when residents in the Grand Central Partnership BID argued that the board violated the one person, one vote clause of the Constitution. A court ruled that such consideration does not apply to the limited function of a business improvement district – restoring and promoting business activity. Residents have recourse through their elected officials, who oversee the BID.

But the dismissal was not unanimous: District Judge Jack B. Weinstein issued a dissenting opinion , announcing that "Granting a more powerful vote to some because they own real property constitutes such a derogation from constitutional principles, such a denigration of equality of political rights, such a diminution in the practical political power of citizens, that I must respectfully dissent."

2. Unfair Treatment of Workers: Moshe Adler, a frequent critic of BIDs and senior economist at the Fiscal Policy Institute, has argued in testimony to the City Council that BIDs have contributed to a deterioration in wages and benefits for workers. He contrasts workers employed by BIDs who get paid minimum wage and no benefits with city employees who perform similar work for wages starting at $13 an hour with full health and pension benefits.

In one instance, the Grand Central Partnership was one of two BIDs embroiled in a scandal over its hiring practices. In 2000, they paid $816,000 in back wages to settle a lawsuit that alleged that they violated minimum wage laws.

Robert Walsh, the Commissioner of Small Business Services, disagrees, and points out that the BIDs directly employ over a thousand people. "These jobs provide opportunities to many workers who otherwise may not have found employment, and almost all of these jobs pay a decent wage with benefits." Walsh says.

3.Too Much Debt, Too Little Oversight: A 2002 report by Cornell University's Department of City and Regional Planning catalogs the debate surrounding BIDs and their potential pitfalls. It notes that a BID's debt counts toward the city's debt ceiling, and that BIDs' borrowing has the potential to crowd out investment in other parts of the city. It also points out that government oversight "decreases dramatically once the district is established." The formation process mandates numerous public hearings and approval by a series of public officials, but once it is approved, oversight is limited. And halting the formation of a BID requires that a majority oppose it, rather than a majority show support, and as a result, the report posits that many of them are created due to a lack of knowledge, rather than by active support.

4. Unclear Support While it has always been required that a BID take a survey to show that adequate support exists within a proposed district, the creation of the Madison Avenue BID is an example where this process failed, according to the City Council. When significant opposition to the BID's creation surfaced after the approval process, the Council conducted its own survey to see how the the BID's survey did not account for it. After using methods similar to that of the Madison Ave BID survey, and only being able to contact about 5 percent of commercial property owners in the district, they concluded that the inability to account for support "places the entire BID approval process in question." Of the small number actually contacted, half had heard about the BID only after its approval. Only one proposal for a BID has ever been denied, the Manhattan Ave. BID, in Brooklyn, where a majority of property owners opposed it.

So what is the record for BIDs as a whole? The only comprehensive analysis of the city's BIDs was published in 1995 by the City Council's Finance Committee. It concluded in its executive summary that while "overall, BIDs have had a positive impact on many New York neighborhoods, BIDs nevertheless require additional oversight and in some cases serious operational restructuring." Two years later, it issued a supplemental report detailing legislative proposals to begin addressing the concerns that surfaced in the two reports.

In response to that report, the Department of Business Services - the agency that dealt with the BIDs at the time - instituted some reforms. It required, for example, that renewal of a BID's contract be based on a performance evaluation and be accompanied by a survey of constituents that shows continued support. There have been 15 BIDs since then, and 12 more on the way. BIDs seem here to stay.


Using City Tax Policy To Help The Working Poor

When Mayor Michael Bloomberg’s commission on poverty issued its report in September, it made many broad recommendations, but it was only during the press conference surrounding the release of the report that the mayor suggested two specific plans he would be pursuing. One is to seek $24 million in private funds to be used, as the New York Times put it, as “cash rewards to encourage poor people to stay in school and receive preventive medical care.”

The other plan is to use $42 million of city budget funds as a refundable child care tax credit to low-income families. This means, these families would get credit against income tax due the city, or cash from the city if they don’t owe any tax.

The $42 million tax credit is the only sign thus far of any new public funding for anti-poverty programs.

But it could be just a start. There are other ways in which City Hall could change tax policy to enhance opportunities for working New Yorkers.


Both the report by the mayor’s poverty commission, and the most recent annual report on poverty by the Community Service Society, reveal the difficulties facing the working poor – some 340,000 individuals who have jobs but do not earn enough to rise above the poverty level. (For a discussion on how poverty is assessed in New York City, see The Poverty Commission: Measuring Up?)

A “massive expansion” of the service sector has meant more jobs, but with low wages and a lack of health benefits. The effect is particularly harsh on families; almost one third of all children in the city live in poverty.

The Community Service Society’s report describes a growing crisis, with “a sharp decline in annual earnings and a resultant rise in working poverty for families with children.” It also finds “a recent decline in employment and increase in poverty among single mother families.”


1. Child Care Tax Credit

Reaction to the mayor’s proposed child care tax credit was largely enthusiastic, such as in an editorial in the Daily News: “The mayor would give parents earning $25,000 to $30,000 annually up to $1,000 per year per child to cover certified day care for kids up to age 3. An estimated 50,000 families would benefit. That’s a ‘hand up, not a ‘hand out.’…Get it done.”

This is not a new idea. The City Council was quick to point out that it proposed something similar in four separate years, going back to the year 2000. In fact, in 2002 Mayor Bloomberg joined with the council in backing a child care proposal, but it didn’t pass the state legislature, which must approve such tax changes.

Still, Mayor Bloomberg’s initial attempt to use the city’s complex tax system to help at least a few of the working poor and other low-income workers could lead to a much more comprehensive and fairer tax plan.

Such a plan could consider three more tax changes that would help the working poor and near-poor:

2. Earned Income Tax Credit

More than 700,000 New Yorkers (most of whom live in households that earn less than $20,000 per year) receive Earned Income Tax Credits (EITC), which is a kind of tax refund for poor families.

The Earned Income Tax Credit is funded by the federal, state and city governments, though City Hall’s share is only five percent. Many believe that an expansion of the city’s share of this tax refund would have a much more substantial impact on working families in or near poverty than the child care tax credit. The city council proposed increasing the city’s share to ten percent. This was estimated to cost the city $62 million and would increase the benefit for individual families by as much as $430.

3. Revamping City’s Personal Income Tax

Expanding the Earned Income Tax Credit helps New Yorkers of low income at relatively low cost. It is in sharp contrast to the actual city tax breaks currently on the city books, which help high-income New Yorkers. Indeed, putting them all together, the tax relief for higher income New Yorkers adds up to over $1.5 billion a year – nearly 40 times the $42 million the mayor is proposing for a child care tax credit.

About a third of that $1.5 billion comes from a reduction in the city’s personal income tax for the wealthiest New Yorkers. In fiscal year 2006, the top rate of personal income tax for New Yorkers with the highest incomes was reduced from about 4.5 percent to 3.65 percent. This cost the city government some $550 million in lost revenue. Yet, at the low end, heads of households with net incomes of as little as $14,400 pay 2.9 percent.

The Independent Budget Office has suggested a more progressive personal income tax by reducing tax rates for lower-income households and restoring the top rates for higher-income New Yorkers.

4. Expanding Property Tax Relief To Renters

A lot of money each year is forfeited in city tax revenue in order to fund the mayor’s $400 property tax rebate to homeowners, and a property tax abatement for coop and condo owners.

The city’s Tax Expenditure Report for Fiscal Year 2005, for instance, shows the scope of property tax cuts that primarily benefit middle- and upper-income New Yorkers:

  • The $400 rebate benefited 645,436 house, condo, and co-op owners, and cost the city $256.6 million in lost revenues.
  • The co-op and condo abatement, benefited 329,322 condo and co-op owners, an average of $783 per owner, and cost the city $257.8 million.


The $400 rebate, now in its third year -- and promised for the next three years (although it needs new state approval) -- softens the 18.5 percent property tax rate increase imposed on all property taxpayers in November 2002 in order to help solve the huge budget deficit at the time.

But neither rental landlords nor renters – who pay a significant share of their landlord ’s property tax through their rent -- receive a rebate.

The abatement was, in 1997 when introduced, supposed to be a temporary tax break for co-op and condo owners, who pay a higher effective property tax rate than house owners, until a more comprehensive reform of the city’s inequitable property tax system could be devised. Ten years later, the abatement continues and neither the mayor nor council talk of a reformed property tax system.

The relevance of these large property tax benefits to the mayor’s anti-poverty plans is that they do little for lower-income New Yorkers, who are twice as likely to be renters rather than owners. According to the 2005 NYC Housing and Vacancy Survey, median income for the two million renter households in the city in 2005 was $32,000; for the one million homeowners, it was $65,000.

It would make sense to create some tax relief in the property tax system for renters as well.


It would not be enough just to institute these benefits. As it is, there are existing public benefit programs that are not reaching all the people who are eligible. Over one million New Yorkers receive federally-funded food stampsm, but that represents only 72 percent of those eligible. The more than 700,000 who receive Earned Income Tax Credits are only about 80 percent of those eligible. Public health insurance goes to 2.6 million New Yorkers, but 11 percent of those eligible don’t have it. This is why the report of the mayor’s poverty commission had another suggestion – sign up more of the poor for these programs. The mayor has promised to do so.

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

New Council Bills -- Nightlife Safety and Property Tax Breaks

At each of the City Council's stated meetings, council members introduce bills, most of which will never become laws (for the process by which bills become laws, click here). As a regular feature, Gotham Gazette discusses some of the legislation proposed at each meeting.

At its most recent stated meeting on September 27, the City Council introduced 12 bills, most addressing nightlife safety, property taxes, street vendors, and health.




City Council Speaker Christine Quinn introduced four new bills to continue the Council’s campaign on nightlife safety

Intro 440 calls for independent monitoring of clubs with multiple or serious violations of the cabaret licensing law. Violations include hiring unlicensed security guards or allowing underage drinking. Offending club owners would be required to pay for the monitors, which must be approved or selected by the police department. The monitors would also advise club owners and report to city agencies on a regular basis.

Intro 441 would address the problem of underage drinking by requiring identification scanners at club entrances. This idea has raised privacy concerns. In response, the bill calls for scanners that are able to read and display information from licenses, but not retain this information.

Intro 442 would require clubs to install surveillance cameras at club entrances and exits. To ensure privacy, the bill calls for careful regulation of access to the recordings, which would be made available to authorities if an investigation is warranted.

Intro 443 would require increased training for nightclub employees to help them spot underage drinkers, know when to stop serving overly intoxicated patrons, and handle emergency situations. The law would require all new cabaret employees to complete their city-approved training course within 60 days of starting.

Quinn’s nightlife safety package is part of a broader campaign to improve security after several deaths this year near bars and clubs. In August, the Council passed a law that called for tighter enforcement on unlicensed security guards. One day after she introduced the new bills, Quinn led a nightlife summit at which city officials, club owners, and community leaders met to address these issues.




Several measures were proposed to give property tax breaks to various members of the community.

Quinn proposed two bills that would ease the burden on disabled and senior citizen property owners who are on fixed incomes. Currently, the maximum income a disabled homeowner can have to qualify for a 50 percent exemption is $24,000. Intro 444-A would gradually raise this limit to $29,000 by 2009. Intro 445 would do the same for senior citizen homeowners.

Councilmember Diana Reyna proposed Resolution 529, which asks the state to pass legislation that would provide tax credits to those who own and improve city-designated historic landmarks. Resolution 531, by Councilmember David Weprin, asks the state for legislation that would make it easier for not-for-profit organizations to get tax exemptions on newly acquired property.




Councilmember Tony Avella introduced two bills related to food vendors.

A 1995 law sets a limit of one food-vending permit per individual, corporation, business partnership, or other entity. It was originally aimed at stopping the illegal and overpriced leasing of multiple permits. Avella says that this limit hurts small business owners who obtain and distribute these licenses and who manufacture pushcarts.

Intro 446 would restore multiple vending permits to small distributors and manufacturers who were in business prior to Dec. 31, 1995. The law would also regulate against illegal leasing of permits for exorbitant prices.

The second bill addresses a restriction on the number of disabled veterans who wish to operate food carts. Intro 447 would remove the city-mandated limit. Avella points to a state law that allows those harmed while in service to vend in certain areas that are otherwise closed by law or regulation.




Councilmember James Oddo continued his long-running campaign to equip public places with devices that deliver an electric shock to counter irregular heartbeats, or automated external defibrillators. Intro 451 would require the city’s Department of Health and Mental Hygiene to make these devices available to primary, intermediate, and high schools that don’t already have them.


How the Estate Tax Helps New York

As a state senator, I represent the district on the East Side of Manhattan that has traditionally been labeled the “Silk Stocking District” -- a reference to the affluence of many of my constituents. Thus it might surprise some that I oppose federal proposals to do away with the Estate Tax, the tax that collects money on estate whose worth exceeds $2 million. Ending this tax would be very bad not just for the country as a whole, but for New York City and for my own district.

New York City is home both to some of the greatest cultural, medical and charitable institutions in the world, as well as some of these institutions’ most generous philanthropic benefactors. My district alone is home to many of these institutions, including Baruch and Hunter Colleges, Marymount Manhattan, the Metropolitan Museum of Art, Guggenheim Museum, Central Park, NYU Medical Center, Mount Sinai and Sloan-Kettering. Without the estate tax, and the effects of the tax code on the wealthiest New Yorkers, nonprofit facilities in our city will not only find governmental funding cut, but charitable donations from the wealthiest donors also.

And some of the programs that could be affected by repeal of the tax helped people amass their wealth. Martin Rothenberg, who was raised in Brooklyn and who opposes the repeal of the tax despite his fortune, likes to point out that he grew up using the city’s public library, went to school on the GI Bill, received a government fellowship, and went on to build a $30 million software company using publicly funded research and publicly educated employees. He said, "I hope the taxes on my estate will help fund the kind of programs that benefited me and others from humble backgrounds."

The "Death Tax"?

Proponents of repealing the estate tax have effectively managed to nickname a nearly 100-year-old policy. They call it the "death tax" and they say it forces people to sell their small businesses and family farms instead of being able to pass it on to their heirs. They say this costs jobs. But saying it does not make it so.

The number of small business and family farms affected is tiny—about 2 percent of all eligible estates, of which there is just 8,300 in total.

Anti-estate tax lobbyists have implemented a strategy to mislead the public on who is affected, how much is collected, and what the loss of revenue would mean. Proponents of repealing the estate tax not only mislead the public, they also purposefully ignore what the tax does. For instance, it is expected to generate nearly $1 trillion in the next decade alone—a huge sum of money that helps sustain vital programs that serve many low and moderate income Americans, and senior citizens. Repeal proponents want to remove $1 trillion from public funds with no plan or strategy for how the government can recoup that loss without significant cuts to these vital programs.

But the effect of the cuts would go beyond the $1 trillion because eliminating the estate tax would also do away with incentives in the tax code that only the wealthiest are eligible for, which encourage them to make large charitable donations for their own financial benefit.

A Decrease in Donations

These tax code incentives benefit encourage the wealthiest to give money to a nonprofit (where they can select the sort of program they are helping) instead of letting the government take the money in the form of taxes and put it into general funds.

The Congressional Budget Office said in 2004, "In essence, lowering tax rates increases the price of donations, reducing the incentive to donate." The office reported that, had the estate tax not existed in 2000, charitable giving would have been 16 to 18 percent lower that year alone.

A more recent study by the Brookings Institution projected that repeal of the estate tax would result in a $10 billion reduction in annual charitable donations in life and in bequests at death. As a result, every year, the nonprofit sector would lose resources equivalent to all the grants currently made by the largest 110 foundations in the United States.

Research confirms that the estate tax encourages many of the most wealthy to donate more than they otherwise would, since they can reduce their estate tax liability by making donations while they are alive and in bequest.

The Drive for Repeal

While so far, each attempt to completely repeal the estate tax has failed, if history has been any indicator, the most recent attempt will not be the last. A recent Bloomberg News Service article titled "Estate-Tax Repeal Keeps Charities Silent, Deferring to Donors” describes efforts to repeal the estate tax as a "dilemma facing charities, universities, museums and other organizations that rely on donations as Senate Republicans consider another vote…as early as next week."

Nearly six in ten Americans favor preserving the estate tax and the significant economic benefits it provides, yet at this moment attempts are being made in Washington and in states like Virginia to repeal the estate tax by combining the legislation that would do away with it with more popular measures that many elected officials feel compelled to vote for.

Unwilling to accept defeat, the repeal movement will continue to intensify as it has been funded by just 18 of the richest families in the country, who have already spent in excess of $200 million on political campaigns and lobbyists. These 18 families have financed an anti-estate-tax coalition whose mission is to mislead the public, and manipulate virtues like American’s entrepreneurial spirit, for their personal gain.

Support for the Tax

But many of the national’s wealthiest people, like Martin Rothenberg, support the estate tax. They have formed an organization called Responsible Wealth.

"It is a very equitable tax," declared Warren Buffet. "It's in keeping with the idea of equality of opportunity in this country – not giving incredible head starts to certain people who were very selective about the womb from which they emerged."

Buffet made these comments shortly after donating $30.7 billion to charity, and he is right (though it is important to recognize that even with the estate tax, the size of inheritance to those who descend from the richest 8,300 American families remains a rather incredible head start).

The increased concentration of wealth, and disparity between the vast majority of Americans and the very wealthiest will have dire effects on economic viability of New York and the country. It was New York's own, President Teddy Roosevelt, who introduced the estate tax, saying "Inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of a generation which established our government."

The economic implications of permanent repeal of the estate tax are far-reaching, and potentially devastating to the health of our great nonprofit institutions, as well as the already neglected infrastructures of New York City, State, and the country as a whole.

Liz Krueger, a Democrat, represents Manhattan’s East Side in the State Senate.


Bringing the Money Back from Albany

New York State Senate-District 13:

The Candidates

• John D. Sabini, New York Sate Senate

• Hiram Monserrate, New York City Councilman, 21st District, Queens

Other Races

• New York State Assembly- District 21: Ethnic Politics in Changing Flushing
• New York State Assembly- District 57: Succeeding Green in Fort Greene – and Beyond

• New York State Senate-District 20: Debating Health, Education, Reform and, Yes, Atlantic Yards, in Central Brooklyn

• New York State Senate-District 24: Democrats Move in on Staten Island's Republican South Shore

The 13th Senate District in Queens was drawn after the 2000 census to create a Latino majority seat, but the first person elected to represent the district was John Sabini, a man of Italian descent.

“Some people tell you that it’s a Latino district, and we should have a Latino legislator. I believe it’s a diverse district, and people should be given an opportunity to choose who they want.”

Sabini is facing a strong challenger in Hiram Monserrate, Queen's first Latino city council member, a rare test of an incumbent in Albany.

Some have pointed Monserrate's Latino background as a particular strength in the diverse district encompassing Corona, Jackson Heights, and East Elmhurst, with a population that is slightly over half Latino. He has raised $177,000 through the end of July, outpacing Sabini, who has raised $143,000.

Monserrate acknowledged that historically New Yorkers have tended to vote along racial lines, but insists that that is not why he is running. Nor does he have major philosophical difference with Sabini.

“We have one of the most underserved communities," said Monserrate. "We need more resources, and we need someone who is going to go to Albany and bring those resources back. [Sabini] hasn’t done that.”

Sabini, however, maintains that he has delivered a solid performance as State Senator. “We gave a record we are proud of, and we are eager to get it out,” he said.


Both candidates agree that health care is one of the major challenges that their district faces, as the district has a large immigrant population and particularly high incidences of diabetes, tuberculosis, and HIV. As State Senator, Sabini has provided free testing and free referrals for cancer, Alzheimer’s disease, hearing loss, and a number of other health conditions. In addition to expanding existing programs, he intends to provide community education programs about healthy living.

Monserrate, however, feels that Sabini is not securing enough funding from Albany for health care. As City Councilman, Monserrate has increased healthcare funding, providing funds for a new emergency room for Elmhurst Hospital, $1 million for a preventive infectious disease clinic, and $600,000 for a mobile mammography unit. Monserrate brought experts from Albany to explain recent changes to Medicare in different languages. He stresses the need to provide community education about the importance of healthy eating, annual checkups, and preventive care.


Sabini, who is on the education committee in the Senate, has voted against every piece of the state education budget this year, because he believes that it does not provide adequate funding for underperforming schools, as required by the Campaign for Fiscal Equity. As State Senator, Sabini has obtained funds for 10,000 new school seats in the area, and has also led in the creation of a law that prohibits required state high stakes testing on religious holidays.

Monserrate believes that closing the digital divide is one of the most important areas of education reform. He plans to continue investing millions of dollars to continue upgrading the technology of local schools and to create computer labs throughout the district. He also stresses the importance of parental involvement in student education, a feat that is particularly difficult for parents who do not speak English. To increase facilitate such involvement, he fought for changes in Department of Education regulations to provide translation services for parents in the top eight languages, other than English, in New York City.


The Queens district is home to many small businesses and many entrepreneurs, and both candidates emphasize the need to provide support for small business owners. Sabini is focusing on expanding opportunities for women and minorities in business. He also is fighting to assist the restaurant and hospitality industry, which he argues have been hurt by the city's indoor smoking ban, and to support businesses in Woodside affected by the 2006 blackout, through low or no interest loans and restitution from Con Edison.

Monserrate emphasizes the need to promote “an atmosphere that doesn’t just benefit major corporate entities, but also small businesses.” For example, he challenged the New York Mets stadium proposal, which he felt originally did not provide adequate benefits or promise of employment to the community. The deal was then modified to include increased community benefits, jobs for Queens residents, and opportunities for women and minority owned businesses.


In regard to transportation, both candidates agreed in the need for a restructuring of the MTA, which has been challenged for illegal financial practices in recent years. Sabini felt such problems should be remedied by increased fiscal accountability on behalf of the MTA and other authorities, such as the Dormitory Authority and the Empire State Development Authority. Monserrate emphasized the need to increase local control of the MTA, so that more subway decisions could be made by the people who use the subway on a daily basis.


Sabini has emphasized the need to “fight for change in the structure of the way Albany has done business." He believes that party loyalty and a failure of the Assembly and the Senate to work together leads to inefficiency. He believes that the main change needed is increased oversight of committees, through adoption of a system similar to that of the New York City Council. He also advocates restrictions on the governor’s power to evoke messages of necessity, which allow the governor to bring a bill to immediate vote, forgoing the usual three day minimum waiting period. Some say this allows bills to avoid public scrutiny and be used as a part of the “gamesmanship” of last-minute deal-making.

Also believing the State Senate needs reform, Monserrate emphasizes the need to eliminate the Senate Majority Leader’s power to “star” a bill, thus unilaterally blocking floor action on it.

In addition, Monserrate advocates reform in the way the Senate disperses funds, which he believes is “at the detriment of New York [City], and is “unacceptable and illegal.” He felt that Sabini had failed to adequately address the issue of the distribution of funds, and that district residents have suffered as a result.

Both candidates criticize the current system of campaign fundraising and would like to see it replaced with public funding of elections. Monserrate said that New York City has a very good campaign financing system that could serve as a model for the state. Sabini concurred, saying “the influence of money in politics should be minimized.”


Summer Jobs

Growing up in Brooklyn, Jason DePont had what seemed like a modest goal.

“I just wanted a job. I always wanted to work,” said the native of Spring Creek Gardens, a public housing project in East New York. “I thought it was the coolest thing.”

DePont’s first job came in the summer when he was just 14, working as a camp counselor nearby. The next year, he held a clerical position at a local non-profit group. This year DePont, now 18, is a paid summer intern at advertising company Mediaedge:CIA. All of these summer jobs came through the city’s Summer Youth Employment Program, which this year found positions for 42,000 New Yorkers between the ages of 14 and 21. [For a look at other ways New York's teenagers are making productive use of the summers see our related article: Teen Activists]

The youth employment program cannot keep pace with demand, however – 30,000 applicants were turned away this summer because the city couldn't afford to accommodate them. Many New York teenagers were probably not able to find work independently, say labor market experts. This is not just about what kids do this summer, say advocates, but whether they learn to be successful in the world of work. Many argue that programs that find summer jobs for teenagers should be seen as part of a larger anti-poverty strategy. The city may be particularly receptive to such arguments now, as Mayor Michael Bloomberg has appointed a commission on poverty which he says will draft such a comprehensive policy, releasing policy recommendations next month.

Subsidized summer programs have been on shaky ground since 1998, when the federal government decided to cut drastically the money it gave to summer jobs programs, opting instead to fund year-round jobs programs that it believed would yield better results. New York City is one of a few places where local officials have tried to fill the gap. In the last several years, the city has been working to provide a more stable stream of money to the program and to address concerns that many of the jobs are simply “make work” positions – cash assistance by another name.

“We don’t want them to always be dependent on a public jobs program,” said Jeanne Mullgrav, commissioner of the Department of Youth and Community Development, which runs the program. “We want them to have the skills to take their resume, market [themselves], and be employable.”

DePont, whose East New York neighborhood is known for high levels of unemployment – and the poverty and crime that come with it – believes he is on his way. He is not sure to where, of course. In the course of a half hour, he says he would like to be a cook, an actor, and a social worker. He wants to work in an office, but never be “stuck” there, and he wants a job that never makes him wake up early. His real goal, though, is to get away from a place where he feels that most of his peers are “beyond help.” He says the answer will be some sort of job.

“That actually does exist out there,” he said. “I’d like to find it.”


When Katherine Newman went to study teenaged employees of fast food restaurants in Harlem, she expected to profile kids who were forced to choose between work and school.

But "school and work weren't antithetical to one another," said Newman, whose book No Shame in My Game documents her findings. "Young people who were working were doing better in school than the young people who weren’t, because the discipline that they learned on the job and the oversight the business owners and mangers exercised over them was having a positive effect on their school performance."

The benefits of working while in high school extend beyond graduation, according to Andy Sum of the Center for Labor Market Studies at Northeastern University.

“Your earnings in your mid 20s are very much influenced by how much work you did all the way from the time you were 16,” he said. “The effects are even stronger for kids who don’t go on to a four year college.”

For many teenagers, though, the problem is finding a job. In recent years the percentage of teenagers who are working has dropped to a 50-year low. Teenagers in big cities are more likely to have to compete with older workers or immigrants who, to employers, seem like more stable prospects. The prospects are the worst for teenagers from low-income families, who have access to only the weakest labor markets.

The stakes are quite high, said Mark Levitan of the Community Service Society, author of a report on the 170,000 "disconnected youth", 6 to 24 year old New Yorkers who are no longer in school but have not found jobs.


Since its inception as part of Lyndon Johnson’s War on Poverty, the Summer Youth Employment Program has been seen as a way to help teenagers find jobs, acknowledging that many would be unable to do so on their own. In New York, the city signs contracts with agencies that locate employment opportunities for participating teenagers. Most jobs are with non-profit groups, but there are also opportunities with government agencies or with private employers. The program pays participants the minimum wage with public money, and guarantees them employment. The employers get free labor, and 42,000 teenagers get jobs.

Montefiore Community Center in the Bronx is one of the biggest agencies in the program, placing 2,100 kids with various employers. Participants work with hospitals, local retailers, and other employers. They also serve as counselors at after school programs for younger children enrolled in summer school that would be unavailable otherwise and staff the community center itself.

“Their help is definitely needed,” said Debra Fort, who supervises 50 summer youth employees who serve meals to senior citizens, help with maintenance work, and generally assist those running the community center in the northern Bronx.

Fort acknowledges that not all of the kids she supervises are learning skills that could be applied directly to another job. But they are, she said, learning about the world of work. For many, this is their first experience at a place with a dress code – the center is full of kids wearing bright white Summer Youth Employment Program t-shirts – and the first time they have to show up to a job site each day. Fort also teaches them how to fill out resumes and applications.

Some critics have questioned the value of such programs, though. Summer jobs programs have been described as simply creating “make-work” positions that won't serve to transition kids into regular jobs as they get older. This was the rationale given when the federal government essentially stopped funding summer programs as part of the Workforce Investment Act of 1998, favoring year round programs that it believed would be more effective – but would serve fewer kids – instead.

In the first year the law was in place, federal funding for New York’s program fell from $44 million to $15 million, forcing the city to eliminate almost 10,000 jobs. It now gets about $5 million. Other places, faced with the loss of federal funding, began to scale back their summer jobs program – or eliminate them entirely. But New York officials tried to protect the program from cuts, while also continuing to address concerns about the value of the jobs themselves.

Backers of the program do say that make-work jobs are a concern, but also argue that many menial-seeming jobs often give teenagers experiences that help them move towards more fulfilling work later in life.

There has never been a study of how participants of the program fare over the long-term, but many of its strongest advocates had their first experience with the program as participants. Commissioner Mullgrav worked at the Arsenal in Central Park when she was a teenager, and four of six members of the council’s youth services committee also participated in the program, including its chair, Lew Fidler. When advocates traveled to Albany for a lobbying day, former participant Andre Harrell, the former CEO of Motown records, went along.

Since the city’s Department of Youth and Community Development took over the program in 2003, it has added an educational component to the jobs program, ensuring that every participant receives lessons on how taxes work, how resumes are written, and other such skills throughout the summer.

The city has also tried to place teenagers in jobs where they will be able to build connections that might land them regular jobs. The proportion of summer jobs in the private sector has increased from 10 percent in 2004 to 18 percent now. Some employers, including JP Morgan Chase and the Staten Island Yankees, have opted to keep participants to stay on beyond the end of the program in late August. Some employers, like the Door, a community center in lower Manhattan, have created career placement centers, which moves kids that work on its radio programs in the summer into internships with media companies in the fall, or landing teenagers who work in the kitchen jobs at fancy restaurants.

This year, the city also created a program called CAPITAL, where private companies agree to hire participants recommended by agencies who have already worked with them. The companies pay the salaries of CAPITAL participants themselves. – giving a small amount of relief to a program that has long been faced with having more people who want to participate than money it has to pay them.


With the city and state committed to continuing to provide summer jobs, there is little debate over the value of its program – the issue going forward has to do with its price.

In order to continue the program at its current levels, city and state officials have been left to fill a large gap left by the federal government. In 1999, Washington provided 80 percent of the funding; city tax dollars now make up more than half of the program’s budget. Meanwhile, the cost of each job is rising with the minimum wage.

New York has almost tripled the amount of money it puts into the summer jobs program, from $10 million in 1999 to $27 million today. But while it has been given a steadily larger allotment of city tax dollars, the program has also been subjected to the vagaries of the “budget dance,” where the mayor proposes cutting programs in order to have bargaining chips in budget negotiations with the City Council. Because planning for the jobs program starts before the budget is settled, this practice has proved burdensome for those running it.

Last year, though, Mayor Michael Bloomberg provided the program with over $17 million in permanent funding – a process called baselining. This year, the city added another $9 million, bringing the total to about $26 million. Council Speaker Christine Quinn, who has made ending the budget dance a major issue, counted the additional baselining as one of her primary budget victories.

Agencies that work with the city agree that the permanent funding is a significant achievement.

“It’s very hard for a contactor to organize when they’re not really sure about the numbers,” said Bob Altman of the Montefiore Community Center. “This way, now we know that a lot of the money will be there, so we can plan ahead.”

In Albany, however, the program is still regularly excluded from the governor’s budget, only to be restored by the legislature. While funding has been restored each year, the dance can prove harmful. In 2004 the budget was passed so late that money that had been approved couldn’t be used, costing $6 million and some 3,00 0 jobs.

Advocates and city officials hope that the new governor will bring reform – and stability.

“Any time you have programs which are in part funded by the city and in part funded by the state or the feds, it’s a tenuous situation,” said Speaker Quinn on a recent visit to a summer job work site. “I think we’re certainly going to be seeing changes in how things happen in Albany come next year, and I anticipate that those will be extraordinarily helpful.”


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