The doom and gloom minor-key melody that has been the city, state and federal government's economic song for the past few months has a contrapuntal drum beat beneath it: the steady call for infrastructure spending as an economic spur.
Since the financial crisis began, transportation advocates and trade groups representing the construction industry have called, frequently and loudly, for increased spending on transportation infrastructure. Nobel Prize laureate Paul Krugman joined fellow New York Times columnist David Brooks to suggest that investment in transportation infrastructure is both necessary and sensible given the state of the country's roads, bridges, transit systems and railways, as well as the dire need for jobs and domestic spending.
The economic turmoil has also created a huge financial shortfall for New York City's mass transit system, which relies heavily on dedicated tax revenues to fund its day-to-day operations. While a stimulus package could provide capital money for the city's subways and trains to expand and improve, current proposals would do little to remedy the billion dollar operational deficit facing the system.
On Sept. 26, the House of Representatives passed the Job Creation and Unemployment Relief Act of 2008, a $61 billion economic stimulus package with $30 billion set aside for transportation and infrastructure programs, including $12.8 billion for highways and bridges, $4.6 billion for transit and $500 million for Amtrak. The Senate has not yet taken action on the bill, but Rep. Jerrold Nadler of New York, who sits on the House Transportation and Infrastructure Committee, said that he expects to see a $60 billion to $100 billion stimulus program, with large infrastructure allocations, signed into law during the lame-duck session this fall.
The New York Times reported that President-elect Barack Obama is already working with congressional democrats on a larger stimulus package to be passed in January, including "more jobless benefits, food stamps, aid to financially strapped states and cities, and spending for infrastructure projects that keep people at work." "Most economists I've talked to are saying between $300 and $400 billion for the larger stimulus bill" to be passed after Obama and the new Congress takes office, Nadler said.
If and when either of these bills becomes law, how much money will eventually find its way to infrastructure improvements in New York State and New York City?
This, in large part, depends on the list of "ready-to-go" projects prepared by the state and city transportation departments and regional authorities like the MTA.
For transportation infrastructure spending to work as an economic stimulus, the federal government's money needs to be put to use as quickly as possible, according to Nadler. "The point of a stimulus package is to get money spent and have it circulate, so part of an intelligent package is picking projects that can get done now: Environmental review is done. Plans are done. Shovels can go in the ground. Bricks can be laid. Workers can get paid," he said.
Projects that meet these requirements are termed "ready-to-go" and are given preference in the stimulus bill that the House passed in late September. It reads: "Priority in the use of funds shall be given to projects that can award contracts based on bids within 120 days of enactment." Similar language will almost certainly appear in any final stimulus legislation with large allocations for infrastructure spending.
According to the Metropolitan Transportation Authority, the economic impact of capital spending can be roughly estimated by assuming every $1 billion equates to 8,700 jobs, $54 million in wages, and $1.5 million in related economic activity. The House Transportation Committee staff estimates that the $30 billion set aside would create or sustain 834,000 jobs nationally.
Furthermore, because of Buy America laws, which require that steel, iron and manufactured goods used in federally funded projects be made in the United States, the benefits from these dollars will extend beyond construction companies. Parts producers, manufacturers, assembly-line laborers and every related industry, from food service to work-clothing companies, will see some of the benefit too.
Because this money may soon be available, states, cities and regional transportation authorities across the country are scrambling to put together lists of ready-to-go projects. Last January both the American Association of State Highway and Transportation Officials and the American Public Transportation Association surveyed member groups about what projects they had in the pipeline that would be eligible for this kind of federal funding.
New York City Transit listed five projects in need of a total of $742 million, including $550 million for the rehabilitation of two dozen subway stations; $30 million for replacing obsolete rails and plates; $100 million for passenger-communications infrastructure at 87 stations; and $62 million for the construction of additional pedestrian overpasses and viaduct spans. The MTA's commuter rail lines responded by listing roughly $35 million in ready-to-go projects, including $23 million for maintenance facility repairs.
In response to the American Association of State Highway and Transportation Officials survey, the New York State Transportation Department listed 40 highway and bridge projects adding up to $200 million, although as of publication, specifics were not listed on the association's website. However, in a telephone interview, Felice Farber, director of external affairs at the General Contractors Association's New York chapter pointed to a Manhattan Bridge rehabilitation project as one that could be eligible for federal stimulus funds.
Of course, both here and around the country, there will almost certainly be more projects seeking funds than money available. The lame-duck session stimulus bill that the House has passed makes clear that fund distribution will be based on existing statutory formulas with preference given to ready-to-go projects. There is no indication of how funds will be distributed in the second stimulus bill, but some area advocates hope that, because of New York State's strong presence on the House Transportation and Infrastructure Committee, as well as Obama's pro-urban inclinations, big cities might do relatively well.
Although transportation and construction advocates long involved in the fight for maintaining the country's transportation system are pleased that the federal government might soon step up and contribute large amounts of money to help the nation's ailing infrastructure, some worry about spending on capital construction at a time when agencies like the MTA are struggling to meet their day-to-day operating expenses.
On Nov. 10, the MTA held an emergency meeting of its finance committee and projected an operating budget gap of $1.2 billion for 2009, growing to upward of $2 billion by 2012. The federal legislation being considered right now would not help the MTA close these gaps but would instead focus on capital construction projects. To runs its subways, trains and buses, the MTA will have to fight for increasingly limited city and state funds, enact internal cost-cutting measures and raise fares and cut service.
"We've raised the alarm on MTA finances plenty of times before, but this is the worst the books have looked in a generation," said Wiley Norvell, communications director at Transportation Alternatives. "We're staring down the twin barrels of big fare hikes paired with big service cuts, and it isn't pretty."
The choices here are complicated.
"It creates a real question to where the money should be going," said Neysa Pranger, communications director at the Regional Plan Association. "It's vital to expand for many reasons, but what happens if fares skyrocket and tracks crumble while that's happening? I don't see that resonating well with the public."
Richard T. Anderson of the New York Building Congress disagrees. "They should cut operational spending before they cut capital," he said. "Cutting capital would be disastrous. If we cut operations it means that each office needs to economize, but if you slash the capital you're hurting the economic growth of the city when you need it most."
Judging by the legislation as it's written now, it seems likely that Anderson and other construction industry advocates will have their way, but there is a lot left to unfold. Congress must first pass a stimulus plan, the president must sign it into law, and New York City and state must be ready to go. All the while new interest groups and new constituencies will be looking for their piece of the pie. One thing is for sure, in an economy like this, it will be a scramble from start to finish.
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Not to long ago it seemed immigration would play a key role in this year's presidential campaign. But the hot-button issue has faded into the background since the economy emerged to trump everything else.
The economy also dominates news in much of the immigrant press as it does in mainstream media. Immigrants will feel the pain spreading throughout society, Larry Tung reports, but the suffering will fall particularly hard on some people who are not citizens or who work in construction or have low-levels jobs in service industries.
This month's Citizen looks at the recession's effects on various immigrant communities and workers. We also present some last-minute stories on the presidential campaign, as well as articles on a court ruling on restaurant delivery workers, Hindu-Muslim marriages, the fate of an East Harlem market and more from the Spanish, Chinese, Russian and Polish language press, via our partner Voices that Must Be Heard.
Polish Workers Fear Job Losses Super Express
The troubled economy has taken a heavy toll on construction jobs, creating less work for many Polish New Yorkers. There are fewer jobs in the building trades, and those that remain offer fewer hours or lower pay.
Food Crisis Affects New York's Children El Diario/La Prensa
A new study documents one effect of the economic turmoil is having on low-income people in New York, particularly children.
Despite Flagging Economy, New York's Haitians Seek to Help Hurricane Victims Haitian Times
Campaign Offers Little Discussion of Immigration Caribbean Life
Because the third presidential debate focused on domestic issues and took place on Long Island, where immigration has been a controversial topic, many observers thought the candidates would finally talk about immigration. They did not. Advocates discuss why.
Churches Walk a Fine Line on the Election Carib News
Many ministers with West Indian congregations support Barack Obama for president -- but they can't come out and say so.
Court Decision on Pay Alarms Restaurant Owners World Journal
Chinese restaurant owners reacted with shock and dismay to a court's decision that Manhattan's Saigon Grill restaurant chain must pay 36 Chinese deliverymen a total of $4.6 million in back wages and damages.
What Union Membership Means to New York Latinos El Diario/La Prensa
Some 300,000 Latinos in New York belong to labor unions. A study investigates what unions mean for these workers.
Upstate Towns Seek Immigrant Doctors Novoye Russkoye Slovo
At a recent job fair, upstate communities served refreshments, touted their recreational opportunities and offered pictures of scenic landscapes -- all in an effort to convince immigrant doctors to leave the city and practice in New York's rural areas.
Some in Greenpoint Oppose Bike Lane Nowy Dziennik/Polish Daily News
Thousands of cyclists in Brooklyn are cheering the prospect of a 1.5 mile greenway that would go from Greenpoint to Sunset Park, but some community residents say the area already has enough bike lanes.
Fallout from Tainted Milk Scandal Reaches Chinatown World Journal
Since melamine was found in Chinese milk products and animal feed, New York's health inspectors have stepped up their scrutiny of Chinese products.
Plans for East Harlem Market Fade Latin Week NY
For years, residents, merchants and city officials have talked of revitalizing the La Marqueta marketplace, but now all efforts seem stalled.
Bangladeshi Community Sees Rise in Hindu-Muslim Marriages Weekly Thikana
Interfaith marriages were once a rarity in the Bangladeshi community, but in this country, where sexes and religions mix freely, they have become increasingly common.
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In the short run, local politics in the next few weeks may well have more effect on individual New Yorkers and the city's budget than November's presidential and congressional elections. Because the city must keep its budget balanced, it will have to deal almost immediately with the current financial and economic turmoil. For now, though, the mayor's push to extend term limits has obscured a full discussion of the city's tax and spending options.
Nevertheless, proposals in the U.S. Senate and House of Representative, as well as those from the McCain and Obama campaigns, make it clear that there may well be significant changes in federal tax and spending priorities that will affect New York. The most immediate revolve around short-term Democratic economic stimulus programs that could be implemented soon after the elections.
In the longer term, the McCain and Obama campaigns have spelled out, particularly on the tax side, unusually detailed descriptions of what their administrations would pursue in 2009 and beyond. They provide a rare look at - and debate about -- basic conservative and progressive policies in the 21st century. Those campaign proposals that have been analyzed recently -- and new ones come out almost daily - provide an interesting context for New York City's own fiscal choices.
The Center on Budget and Policy Priorities recently analyzed the state-by-state impact of three provisions in House and Senate economic-stimulus proposals introduced in late September: extended unemployment benefits, increased food stamp benefits and new resources for states in need of fiscal relief. These, according to the center, are "among the most highly 'stimulative' policies available to Congress, primarily because they concentrate relief on those most likely to spend the money quickly, pumping dollars into an economy that needs more demand."
Because of legislation enacted earlier this year, unemployment benefits have been extended by 13 weeks. The new proposals would extend benefits another seven weeks in all states, and in the case of states with unemployment over 6 percent, another 13 weeks, for a total of 20 additional weeks of benefits in those high-need states. The center estimates that 1.4 million unemployed Americans will lose their benefits through December 2008, including 70,426 in New York State -- unless the Congress agrees to the extensions.
A temporary increase in food stamp benefits - a program fully funded by the federal government - would help offset recent sharp increases in basic food prices for 28.6 million eligible Americans. The Senate proposal would raise benefits by 10 percent, or $5.2 billion. The House proposal would increase benefits by $2.6 billion.
The report notes that food stamp benefits, because they are spent immediately, generate economic activity, so that one additional dollar of food stamps turns into $1.73 in total economic stimulus. Thus the total economic impact would be about $10 billion for the Senate plan and $5 billion for the House proposal.
Over 2 million people in New York State would benefit from the Senate and House food stamp proposals. Food stamp funding in the state would increase by $346 million in the Senate plan and $175 million in the House plan. The estimated total economic stimulus effect of the two plans in New York would be $640 and $320 million, respectively.
A third provision of the congressional plans would temporarily increase the federal share of state Medicaid spending, thus helping states avert budget cuts or tax increases. The Senate would increase federal funding for the healthcare program for low-income people by $19.6 billion over the next 14 months, the House by $14.4 billion over the next 13 months.
New York State would be the biggest beneficiary of this idea, receiving $2.65 billion under the Senate proposal, $2.44 billion from the House version. Because the city pays a substantial share of the state's Medicaid spending, this new benefit would presumably help ease New York City's budget problems. (New York City's share of Medicaid spending is projected to exceed $5.6 billion this fiscal year.)
It will take longer for New Yorkers to feel the effects of any new federal tax policy arising out of the November elections. Whoever is elected, though, some state residents will benefit and others will lose from changes in personal income, estate, capital gains, dividends and payroll taxes.
The 2001 and 2003 Bush tax cuts, which McCain would continue, are currently scheduled to expire at the end of 2010. The Center on Budget and Policy Priorities issued a report in March that calculated the cuts will total $3.8 trillion if they are extended through 2018.
The $3.8 trillion in income and estate tax benefits go overwhelmingly to wealthy taxpayers. Seventy-four percent of the gains -- $2.8 trillion -- go to the top 20 percent of taxpayers. Thirty-one percent of the benefits -- $1.2 trillion - go to the top 1 percent of taxpayers (those with annual incomes above $450,000 in 2008). In 2012 alone, with the extended tax cuts in full effect, the top 1 percent would get cuts totaling $109 billion, almost one third of total cuts that year, or $67,000, on average, for each household.
Any such extension would of course have similar consequences in New York State. An October 2006 study by Citizens for Tax Justice estimated that in the 2001 to 2010 period the wealthiest 1 percent of New Yorkers (with an average annual income nearly $2 million) will receive 48.3 percent of the tax cuts, an average of nearly $80,000 a year. The poorest 60 percent will get only 13.7 percent of the tax cuts over 10 years, averaging only $379 a year. Income Taxes
An Oct. 16 Citizens for Tax Justice report analyzes the most recent Obama and McCain campaign tax plans. Both campaigns have proposed large cuts in the personal income tax. McCain's plan would cost $489 billion in 2012, Obama's, $348 billion.
The candidates' personal income tax plans have quite different beneficiaries. "Obama's plan would give taxpayers in the bottom 60 percent of the income distribution a larger tax cut, on average, than McCain's plan ($1,044 vs. $823 in 2012)," according to the report, while "The average benefits for the richest 1 percent of taxpayers under McCain's plan would be 43 times as large as the average benefits for this group under Obama's plan."
This arises largely from the candidates' approaches to extending the existing Bush income tax cuts, plus their different additional tax-cut packages. For example, McCain would extend the Bush cuts for 100 percent of taxpayers, and Obama would extend them for over 97 percent of taxpayers.
In the Obama plan, those 2.6 percent of taxpayers who have taxable income of more than $200,000 (singles) or $250,000 (married couples) would lose their Bush tax cut. The top income tax rate would revert from the current 35 percent rate to 39.6, the rate during the Clinton administration. Thus the Obama plan on the tax cut extensions would cost less -- $146 billion - than McCain's plan, $216 billion in 2012.
But both candidates have proposed big additional income tax cuts. McCain's largest one is a so-called "alternative simplified" tax, which Citizens for Tax Justice says will cost $98 billion in 2012, with 58 percent of the benefit going to the richest 5 percent of taxpayers.
For his part, Obama proposes what he calls the Making Work Pay Credit. This is a $500 refund of Social Security taxes for each working person ($1,000 for a working couple). This would cost $65 billion in 2012, with over half of the benefit going to the poorest 60 percent of taxpayers. Obama would also exempt seniors with taxable income below $50,000 from income taxes.
Both candidates offer proposals on cutting the estate tax that Citizens for Tax Justice describes as "costly and regressive," only benefiting "people who inherit huge amounts of money." Both candidates would raise the amount of an estate that would be exempt from taxes -- Obama to $7.5 million for a couple, McCain to $10 million. McCain's plan, which would drop the estate tax rate from 45 percent to 15 percent, is much more expensive ($60 billion in 2012) than Obama's ($29 billion in 2012), which would establish a 45 percent rate.
Taxing Business
Both candidates plan cuts in the corporate tax. McCain would lower the current corporate tax rate from 35 percent to 25 percent. Obama would keep the 35 percent rate, but would introduce several new business tax cuts.
CTJ notes that its study of corporate tax liability from 2001 to 2003 found that, after factoring in loopholes, the average effective tax rate for 275 of the largest corporations was less than half the statutory rate of 35 percent. Nearly a third of those corporations paid no tax at all in at least one of those three years.
The report notes finally, "The best that can be said for either of these tax plans is that they might not be fully implemented." Given the economic turmoil, it says, "the next president -- whoever he is - could decide to significantly cut back on the portions of his proposals that are more targeted to the wealthy."
New York City, with its own budget so dependent on tax revenues generated by Wall Street, faces a more immediate fiscal problem than the federal government does. Worrying about budget deficits doesn't seem to be a priority in Washington. In fact, any federal economic stimulus package will be funded by deficit spending. The federal government will borrow even more money to pay for it.
However, the city cannot do that. It must balance its budget despite declining tax revenues. In June, long before the financial meltdown on Wall Street and in the international financial marketplace, the city faced a deficit of $2.3 billion in fiscal 2010 (beginning July 1, 2009) and deficits averaging $5.1 billion in the next two years. Those deficits will be much bigger when the mayor proposes his modification in the city's financial plan in late October or November.
Despite the enormity of the city's problems -- and in contrast to the lively national debate about conservative vs. progressive tax and spending options -- New Yorkers heard very little public discussion about the options available to the mayor and City Council until Council Speaker Christine Quinn's comment in mid October. Absent the debate, the mayor has quietly pushed ahead with conservative actions and proposals. His initial response to the Wall Street crisis in late September was to repeat last year's mid-year modification and ask his agency heads to come up with spending cuts of 2.5 percent in the current fiscal year and 5 percent in the next fiscal year. This saved roughly $1 billion the first time.
What the mayor would do next if needed, given several comments he's made, is rescind the 7 percent property tax rate that has been in effect for two fiscal years. For the last half of this fiscal year (January 1 to June 30, 2009), this would increase property tax revenues by approximately $700 million. But that burden would hit every New York homeowner or renter (renters pay a substantial part of their landlord's property tax).
An alternative would be to increase the personal income tax rate. Mayors David Dinkins and Rudy Giuliani raised the rate on this more progressive tax in difficult times. Bloomberg did as well. In his November 2002 mid-year modification, he restored a top tax rate of 4.45 percent. That top rate is now 3.65 percent.
In a speech on Oct. 15, Quinn supported the idea of an income-tax increase. ""We'll need to look at personal income tax changes, and we need to consider other ideas," she said. So far, the mayor has not publicly taken a stand on this idea.
The elite group of 30 bankers, developers and other prominent New Yorkers who have publicly supported the mayor's rescinding of term limits would seem to be a perfect group to support the mayor and City Council in a progressive, share-the-sacrifice agenda that would balance the city's economic and budget needs with the needs of the city's residents.
Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.Â
In politics, it's all about the cash. And this year, as in most even-numbered years, New York State politics is awash in it, with candidates spending hundreds of thousands -- sometimes into the millions -- of dollars to win election to the state legislature.
Fueling a candidate's coffers, critics say, can buy the rich access to government the rest of us do not have. To remedy that, cities, states and the country have implemented varying types of campaign finance reform.
New York City has kept up with the trend. It has adopted public financing and, last year revised its law to increase public matching funds and limit contributions from those that do business with the city.
Of course, New York City has not addressed all the apparent inequities. The Supreme Court has prohibited limits on self-financing -- the justices equated spending one's own money with speech -- meaning a billionaire mayor can spend as much as he wants to win a third term. Recent reports say Mayor Michael Bloomberg could spend as much as $100 million in next year's mayoral contest, prompting some to call on him to voluntarily close his wallet.
New York State has not modified its campaign finance laws in 33 years. Individuals can give almost $56,000 to a candidate for governor, nearly $100,000 to a political party and an unlimited amount to party "housekeeping" accounts.
In an effort to address that, the State Assembly has put forth a proposal that would limit individual donations to $2,000 and include a public matching fund.
Gov. David Paterson has also proposed cutting contribution limits, though he is silent on public financing.
The State Senate, however, opposes any change.
With all of these options floating through the capitol, several experts surveyed the existing laws and how they could be changed at a forum held by Citizens Union -- the sister organization to Gotham Gazette's publisher. The following comments are adapted from the discussion at the forum.
Calculating the Shortcomings -- Blair Horner
What Reform Can Do -- Susan Lerner
How to Change New York -- Dan Cantor
Testing Different Approaches -- Michael Malbin
A Look at 'Corporate' Donations -- Adriano Espaillat
By Blair Horner
My job is to lay out the failings of the campaign finance system and the debate in Albany. To do that, I'm going to give you four numbers: 94,200; 200; less than 1 percent and -- the last is not really a number to the numerical concept -- unlimited.
One: 94,200 is the campaign contribution limit in New York law. The legal limit for our campaign contributions is $94,200 each and every year for the party of your choice. That money can be used to advance candidates under state law.
Two: 200 is the average number of fundraisers that occur in Albany during the legislative session -- 60 days a year, roughly 40 nights on average. They're not holding them for you to go up there. They're holding them for the people who write the $94,000 checks -- Albany's political elite.
Three: Less than 1 percent, that's the number of individuals in the state that write campaign contribution checks in a year. One percent of individuals whip out their checkbooks and make a campaign contribution.
Four: It's the concept of soft money. You say, "I gave $94,200, but I want to give more." Under New York state law you can give more. It's called "soft money." And just to show that lawmakers have a sense of humor, they call it the "housekeeping account." You think of somebody vacuuming or dusting, but it's really a gigantic loophole.
Those four numbers give you a flavor of how we view the campaign finance system. It's a system designed around "pay to play." It's about big donors writing big checks to lawmakers under the assumption that the favor will be returned during the legislative or regulatory process. That's at the heart of what's wrong.
To add insult to injury, New York doesn't have very good system of disclosing information about the finance system. It is riddled with loopholes so that, for example, you can create multiple limited liability corporations that can give as much money as an individual can. The last part of the insult is pathetic and riddled with loopholes. The rules are, for all intents and purposes, not enforced.
We should demand higher ethical behavior. In New York, for example, people can use campaign contributions for their own personal expenditures. If you're a legislator, you can legally use your campaign contributions to subsidize your lifestyle - lease a luxury car, pay for country club memberships, go for trips abroad. The money from interest groups goes to a legislator, who frequently has no opponent. And so that money is basically pocketed.
A more ethical system would deal with those kinds of issues, because the public needs to see not only participation, but also a confidence that the laws are fair and are being enforced.
This system has been in place for a long time, and it has profound impacts. For example, the public is denied competitive elections. Since 1982, 35 incumbents have been beaten in the general election -- that's in roughly 2,500 races. Campaign finance also has an impact on public policy because big donors don't give big money because they feel charitable. This is American capitalism, people expect something in return, and sadly I think they get it.
Blair Horner is legislative director of the New York Public Interest Research Group.
By Susan Lerner
What are we trying to achieve concerning campaign finance? Here are some of the things that people talk about. Each one -- however you order this list and what you leave off this list -- has a very important impact on what you have to choose for the campaign finance system.
One possibility is that you open the ballot to a greater pool of candidates. Reform can provide people without personal wealth or without wealthy friends or access to a lot of money the ability to compete for private office.
It can encourage broader participation in support of candidates, increase competition for office, with more people running. It could level the playing field among candidates; free candidates from constant fundraising; emphasize the role of individual voters, rather than special interests and corporate interests -- organized people, not organized money; and let more viewpoints reach the voters, because candidates have the ability to get their word out more effectively.
If you emphasize opening the ballot to a greater pool of candidates and give those without personal wealth or wealthy friends an opportunity to run an effective campaign -- if that is your primary, or perhaps, your only goal -- then you are going to be inclined toward a matching fund system like the one that we have in New York City. These are found in several other cities around the country and in just a very few states that adopted their campaign finance programs about 20 years ago, about the time New York City adopted theirs, because a matching funds system was sort of the campaign finance reform idea du jour.
Now if you are looking to increase competition for offices, free candidates from constant fundraising or lessen the impact of campaign money on public policy, then you tend to advocate what we call "clean money" or "clean elections." That's the more current fashion du jour. It is what we have in Arizona, Maine, now Connecticut, a pilot project in New Jersey and in North Carolina for judicial and for down-ticket state-wide races.
Clean money is a system where you qualify to run by collecting a set number of $5, or in some cases $10 donations -- never more than $100 -- from a certain number of people in the district in which you're running. You don't collect more, you don't collect less, and once you have sufficient money to qualify, you get a block grant. Everybody who qualifies gets the same amount of money. If you're outspent, you get what we call Fair Fight Funds, which are matching funds.
In Arizona, this is funded primarily through a surcharge on civil and criminal penalties. It comes out of a general fund in Maine, and they have a tax check-off for judicial races in North Carolina.
So we need to think about what are we are trying to achieve. What are our policy goals? We need to get some clarity on that and then work backward to help us shape what we should use for the right public funding system.
Susan Lerner is eexecutive director of Common Cause/NY
By Dan Cantor
The goal of campaign finance reform here is less about getting private money out -- I don't think that will ever happen -- than getting public money in. We want to reduce the advantage that the wealthy and the well connected have.
Let's build on the New York City system. It's not perfect but it's familiar. It's pretty good.
The introduction of the robust matching fund system has totally changed New York. Those of us who try to recruit people to run for public office can tell people who come out of a history of service to a community group or a union, "All you actually need to do is raise $17,000 and the city's going to write you a check for $90,000." If you can't raise $17,000, you probably shouldn't run for office.
The State Assembly, which has been pointed out, has a pretty good record on this. The Assembly has passed a good bill. The bill backed by Assembly Speaker Sheldon Silver is quite interesting. It's a hybrid that combines elements of New York City's "matching system" with the so-called "clean money system" that has passed in Maine and now Connecticut. The vast majority of the Senate Democrats are on record publicly in favor of that bill.
The reason we don't have public financing in New York State is because of the State Senate. It remains in Republican hands. There will be no campaign finance legislation in New York State as long as Republicans hold the State Senate.
Now once the Democrats get the State Senate that doesn't guarantee we will get it. Senate Democrats are desperate for the support of people like us, and so they're making promises now that we think we can enforce very early next year. We are trying to get them obligated to actually pass campaign finance, otherwise they will become hooked, like drug addicts, on the same finance cash that has hooked the Republicans for so many decades. The whole thing is getting it done early.
We also need some help with the governor, who despite his long-term commitment to campaign finance is singing the blues theses days: He can't do it, because public financing will cost too much.
Dan Cantor is the executive director of the Working Families Party.
By Michael Malbin
We have often heard it said that the goal of campaign finance reform should be to get big money out of politics. You cannot prevent determined rich people from spending their money to influence politics. You can regulate direct contributions, but not independent spending. As a result, I agree with the statement that you have to "forget about getting private money out of politics." But I do not agree that "the goal is (simply) to get public money in." Public money may be desirable, but it is a means. It's not an end.
When political scientists describe goals, we acknowledge the negative or preventive goals stated by courts: avoiding corruption or the appearance of corruption. But we typically look also at affirmative goals: competition, expanding the pool of candidates, and greater and more equal public participation.
Much of the Campaign Finance Institute's work over the past several years has involved exploring the expansion of participation. The idea was to ask whether we could promote equality by building up the base -- the small contributors -- instead of just squeezing down on the top.
This has been a good year for small donors, largely because of the candidacies of Barack Obama and Ron Paul. From those campaigns, some have gotten the idea that the Internet would solve everything. I disagree. Technology is important, but public policy has an important role to play.
As political scientists, we can specify goals, but we are agnostic about how to achieve them. Our work at the Campaign Finance Institute has involved looking at a series of states, using extensive survey research and data analysis, to see whether public policy really does or can make a difference.
In most states, campaign contributions come from a few donors at the top.
Minnesota is unusual (See chart here). Donors who give no more than $100 account for 45 percent of the money. Minnesota has 100 percent rebates of up to $50 for donors who give to publicly financed candidates -- ones who agree to limit expenditures in exchange for public money.
The New York distribution is not unusual (See slide). Donors who gave zero to $100 donors accounted for only about 2 percent of the money raised by state candidates in 2006; donors who gave an aggregate of $1,000 or more accounted for 40 percent, and nonparty organizations another 39 percent.
But we then asked this question: Can we make states like New York look like Minnesota? In some obvious ways, no, but are the differences just a matter of political culture and background?
So we went ahead and modeled three different kinds of reforms, testing each one for its impact separately and in combination.
First, we assumed lower contribution limits, hypothesizing a $2,000 limit per candidate. Second, we assumed public matching funds -- multiple matching like New York City's (See charts here).
Finally, we asked what would happen if you also enacted policies that would get more people to play -- those small donors giving less than $100? Suppose -- either because you put in a tax credit or a rebate for small donors -- you could get the percentage of people who contributed up to 3 percent? Less than 1 percent of New York's voting age population contributed to any candidates in the 2006 state election. The number in Minnesota was 5 percent. (See Charts)
It turns out that building up the bottom like this could have a huge impact. And public policy -- including rebates, tax credits or matching grants -- can be structured to help make this happen.
The key lessons are first, that policy choices can change the situation radically and, second, that there is more than one way to reach the same goal. So it is important, when you talk about campaign finance reform, to think about what it is you're trying to get to, not just what you're trying to get away from.
I would argue that one of the key goals is to get more people involved in the process. We know that getting more small donors involved also means more volunteers. There is two-way feedback between giving and doing. Getting people involved is valuable for its own sake, so it's important when formulating campaign finance policy to think carefully about how best to encourage this goal.
Michael Malbin is executive director of the Campaign Finance Institute and professor of American politics at Rockefeller College, University at Albany
By Adriano Espaillat
I will speak to you from the perspective of a consumer, since I have benefited from public campaign financing. In 2005, I probably wouldn't have been able to run for the borough presidency without some public financing involved. I came out in the middle of about 10 candidates running. I raised about $600,000 and was able to get significant matching funds, and I think that made my candidacy a more competitive one.
I am a supporter of public financing and am a sponsor of the Assembly bill that has been passed. I hope that some day that will come to fruition at the state level as it has at the city level, where it has fostered and encouraged many folks to run for office and represent their communities.
One goal, of course, is to take soft money out of politics. Another one is to make the government more transparent and accessible to the general public. The public finance system here in New York City has accomplished some of that. If you take a look at the makeup of the City Council, it is more reflective of the composition of the city of New York. People who may not be rich or middle class are still able to raise some dollars and be competitive in a race and represent their communities.
In the effort to get hard-core money out of politics, there is a proposal to restrict campaign contributions. To most people, that means limiting contributions from pharmaceuticals and the big insurance companies and the people that have a vested interest in what happens in Albany and Washington. But what happens to the Korean fruit store who has a corporation and like many New Yorkers is not a citizen? One third of New Yorkers are foreign born. These people play by the rules, they pay taxes, they send their kids to public school, and they ride the subway. What happens to them? How do they get involved in the electoral process? How do they have an impact on who is going to represent them or the district where they have their stores?
Many of them choose to write a $500 check to a candidate. I don't see it as trouble that a Dominican bodega owner or a Jamaican beauty shop owner or a Korean fruit storeowner writes a corporate $500 check for me. I don't thing that's twisting my arm. I think it's very much part of America and that's granting access to government to people.
In all of this discussion, no one is talking about the rich people -- very rich people -- spending millions and millions of dollars to represent us. I just looked at the financial reports for congressional delegations in New York State and across the United States and the number of millionaires that represent us in Congress. Nobody has said a peep about millionaires and, in some cases billionaires spending lots and lots of money to represent us, but we may be restricting the Korean fruit storeowner, the Jamaican beauty storeowner or the Dominican bodega owner.
Adriano Espaillat, a Democrat, represents Manhattan's District 72 in the New York State Assembly. Â
As Congress debated whether to approve the$700 billion bailout last week, politician after politician stood up to speak for "Main Street not Wall Street."
That sentiment played well in much of the country. But in New York, "Main Street" and "Wall Street" are inextricably linked. The city has at least three Main Streets and no doubt some of their residents have jobs on Wall Street or work for businesses patronized by the very investment backers and brokers so derided in the current rhetoric.
In 2007, workers in the finance industry accounted for more than a third of all the income earned in the city, double its share 30 years ago. A report by the state comptroller said the current economic problems could cause the state to lose 40,000 private sector jobs and $3 billion in tax revenues over the next two years.
The turmoil in the markets is viewed as having such dire consequence here that Michael Bloomberg said last week it justifies overturning city law to allow him to serve a third term (see related story). And Gov. David Paterson said he would call legislators back to Albany after the November election so they would make more budget cuts.
As the economic dominoes continue to fall, Gotham Gazette asked a number of experts what they see as the likely immediate and long-term effects of the economic crunch on key sectors of our economy -- and what they would suggest government do to help.
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Government: Carol Kellermann, President, Citizens Budget Commission |
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Labor: Ed Ott, Executive Director, New York City Central Labor Council |
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Wall Street: Charles Geisst, Professor, Manhattan College |
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Real Estate: Steve Spinola, Chair, Real Estate Board of New York |
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Real Estate: Noah Rosenblatt, Publisher, UrbanDigs.com |
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Small Business: Carl Hum, President and CEO of the Brooklyn Chamber of Commerce |
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Human Services: Michael Stoller, executive director, Human Services Council |
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Foundations: Steven Lawrence, Senior Director of Research, The Foundation Center |
President, Citizens Budget Commission
1. What is the immediate impact on the city and state budget?
The direct consequences of the recent turmoil are likely to be revenue losses for the city and state governments. The loss of jobs and income will translate into lower income and sales tax collections, and property values in New York City will be adversely affected, causing losses in the local property tax. In addition, the reduced returns on investments for the public employee pension funds will require greater employer (read taxpayer) contributions to those funds in the coming years. In brief, we will face a budget squeeze in the short run.
New York City is better prepared for this squeeze than the State of New York. The city has a surplus from previous years that it can use for operating expenses this year and, to some extent, next year. The state is in worse condition, in part because without a property tax, it relies more on income tax receipts. Since the state government adopted the budget last spring, it already has had to make further cuts to reflect the economic realities; more may be necessary before its current fiscal year ends on March 31, 2009.
Both the city and state face large budget gaps for their 2009-'10 fiscal years. We will have a clearer picture of how large those gaps are when Mayor Michael Bloomberg releases his modified budget in November -- if not earlier -- and when the state releases its mid-year report later this month. In both cases, it is not likely to be a pretty picture.
2. What is the long-term impact?
In the long run, the key question is how the shake-up in financial services will affect the future of that industry in New York. The financial services sector and the professional business services, such as law and accounting, that are tied to financial transactions, are a critical part of the New York economy. The high paying jobs in these areas account for a disproportionately large share of tax revenues, and the spending by the people making these salaries creates jobs in local service industries such as restaurants and personal services. The financial sector and related fields also sustain high property values by creating demand for office space and housing.
Two types of longer-run developments could hurt the city, if they became realities. First, the financial services sector could contract and so become less important in the national and world economies. If financial service firms do not bounce back by once again creating new products of value to customers, then New York will suffer in the long run. We have a stake in the general health of the financial services industry.
Second, however large it might become on a global scale, the financial services industry could become more decentralized, with less activity concentrated in New York. New York faces competition for financial service jobs from London, Tokyo and other global centers; it also faces a threat as financial activities become more decentralized, with more regional centers around the globe taking on roles now performed at offices in New York and London. The future geographic distribution of this industry could change and that change could very well not be in New York's favor.
3. What should/can the state and city do to ensure stability?
The things that will keep New York competitive for high paying jobs are the things that make the city attractive to talented people. We need to be a place where the best and brightest want to be. That means being safe and having good schools, but it also means offering amenities like world-class cultural institutions and restaurants. It also requires being multi-cultural, welcoming a diverse population and valuing people for their talents.
Fortunately, New York now stacks up well on these critical competitive features, and short-run budget problems should not have long-run impacts on these great attributes. State and local policies should concentrate on protecting our strengths, but doing so in more efficient and innovative ways. One disadvantage of New York is high taxes, and this will continue to be an aspect of living or doing business in of New York. But we can mitigate the negatives of high taxes by making the most of what they buy. We should not lower taxes by cutting services; we should make sure we get the most out of our taxes in the form of valuable public services, delivered efficiently by a hard-working and well managed corps of public servants.
4. What is your biggest fear regarding the turmoil on Wall Street?
The failure of the initial rescue proposal in Congress revealed the biggest danger of recent events - the risk of a revival of hostility from people outside the city toward New York. The anger directed at "rich New Yorkers" and "Wall Street parasites" voiced by some in the American heartland could lead to national policies that could harm the city and ultimately the nation. Our fellow Americans need to be convinced that the city plays a vital and constructive role in the economy and that all of us are well served by a healthy New York economy.
Executive Director, New York City Central Labor Council
1. What is the immediate impact on New York City labor and the average NYC worker?
We have seen tens of thousands of people lose their jobs in almost every sector. It's not just union jobs, but also executives walking out of their office buildings carrying cardboard boxes. Workers are fearful and stressed about losing their jobs and finding new ones, as well as about the diminishing returns and values of their retirement accounts and 401K plans, and the home foreclosure and credit crisis. In essence, workers are paying a very high price for a party to which they were never invited. Workers are the perpetual victims of an economic system that rewards the wealthiest and discounts working people.
2. What is the long-term impact?
Ripple effect is a better word for what is going to happen. Each job eliminated on Wall Street could cause two others to be lost elsewhere in the city, meaning the hurt will be felt everywhere from retail and restaurants to education and construction.
3. What should/can the state and city do to ensure stability?
The federal government has to do what is right first, and every national leader must be aware of the pain that working people are feeling. Passing the economic bailout plan with conditions is a start to putting the American economy back on track. The best thing the city and state can do is keep their economic development plans strong and viable. Spending must be closely examined. Every dime counts. Most importantly, our leaders must find ways to give the nation's working people -- the true creators of national wealth -- a real voice in the economy and our future.
4. What is your biggest fear regarding the turmoil on Wall Street?
Obviously, our biggest fear is that government and Wall Street will not take effective measures quickly enough and our city and nation could then enter into a deep recession or long depression that will include massive unemployment and devastating effects. This is a good time to remember that it was the everyday workers during the Great Depression who got our country back on its feet and re-established the strong character and productivity of our nation.
Professor of Finance, Manhattan College
1. What is the immediate impact on New York's role as a financial center?
The immediate impact on the Street is fewer investment banks, larger commercial bank-holding companies and less employment. The new, larger entities, especially the merged ones, will need fewer employers and will necessarily be cost conscious. Historically, this change is unprecedented because of its size.
2. What is the likely long-term impact?
The long-term impact is that Wall Street's portion of city output, employment and taxes collected will shrink. This has not happened since Great Depression.
3. What should/can the state and city do to ensure stability and protect New York's prominence in this area?
The city should try to diversify away slightly from the Street, perhaps encourage other service industries at expense of finance.
4. What is your biggest fear regarding the turmoil on Wall Street?
My greatest fear is a prolonged slump a la the depression of 1932-'39. This could happen if the securities sold by investment banks and other financial institutions do not recover despite federal assistance. It does not necessarily follow that just because Congress allocates $700 billion the securities will recover in the end and be sold for a profit.
Chair, Real Estate Board of New York
1. What is the turmoil on Wall Street's immediate impact on NYC real estate and development?
The immediate impact has been the near absence of credit for new development, renovation projects and normal business activity. The lack of credit will affect tenants moving into new space or upgrading existing space. There will be a similar impact on retailers who will face the added difficulty of maintaining an adequate inventory to operate successfully. Where credit is available, the amounts are generally small and more costly than in the past. The problem is affecting private sector real estate activity and will impact financing for public sector projects as well. In general, the turmoil has frozen a wide range of new business and real estate activity.
2. What is the long-term impact?
The current inactivity in lending cannot go on indefinitely. Banks and other financial institutions must lend to make money. The passage of the rescue bill in the Senate and in the House will provide a foundation upon which financial institutions can restore credit to the market and other businesses can plan their future. I think the presidential election will provide an additional element of stability that is unavoidably missing during a political campaign. These actions, we can hope, will provide the guidance and direction necessary for businesses to resume their regular activity.
3. What should/can the state and city do to ensure stability?
City and state leaders must continue to provide strong leadership and embody the determination and the confidence to solve these problems. Also, they must lead by example. Government must do more with less and should not look to raise taxes. Imposing such an economic burden on businesses and property owners who face these unprecedented challenges will only make recovery more difficult. Instead, government needs to provide the financial support necessary to those important projects that are vital to our city and our economy.
4. What is your biggest fear regarding the turmoil on Wall Street and how it could affect NYC real estate and development?
The most immediate concern is the effect that the loss of Wall Street bonuses will have on the housing market and municipal tax revenue. Another concern is that the turmoil is not quickly quelled, that businesses contract as a result and the demand for commercial space diminishes. This would impact the real estate market and the city as the reduction of activity would lower employment and tax revenue. Nevertheless, I am confident that we will address our problems promptly and that over the next six to nine months the market will rebound and we will be moving in a positive direction.
Publisher, UrbanDigs.com
1. What is the immediate impact on NYC real estate and development?
The immediate impact will be seen in the confidence level on both sides of the transactions. On the sell side, it will make desperate or struggling sellers much more eager to lower their price or entertain a low-ball bid. On the buy side, I would expect more caution across the board. Some buyers will wait, some will price in the risk of downturn in their bids, some will consider walking away from their deposits, some will try to renegotiate done deals and some will simply put up a hard bargain due to the uncertainty.
In my opinion, it is all about the buyers, so when buyer confidence gets hits hard, you will see sales volume slow noticeably. That puts severe pressure on those sellers without a unique product who have to sell relatively quickly.
2. What is the long-term impact?
Longer term, we get into quality of life concerns, budget issues, survival of our local businesses, city tax collections without Wall Street's big revenues, etc., and a possible psychological shift on how the city in general is viewed as a place to live. This revolves around how this city will adjust from the aftereffects of a decimated Wall Street and the most severe credit crisis since the Great Depression. New York is a resilient city, so I am hoping we adapt to this challenging environment and come out of it somewhat unscathed.
3. What should/can the state and city do to ensure stability?
On a local level, it's very hard to say. We need to manage our budget wisely as we deal with this crisis. This is a Wall Street city facing a Wall Street Crisis. We don't need a math professor to do the equations here. Maintaining quality of life, social life, and survival of local businesses without affecting individual property taxes too much would be the ultimate goal. In terms of credit stability, I am afraid it is out of our local governments hands and up to the credit markets to get through this challenge.
4. What is your biggest fear regarding the turmoil on Wall Street?
My biggest fear is seeing a change in crime, cleanliness, drugs, homelessness, etc. to this great city. Everything that Rudy Giuliani did to clean this city up, I fear may be undone by this Wall Street centered crisis. The worst-case scenario for Manhattan is if crime increases and quality of life deteriorates as the local economy and individuals hurt from this deep slowdown. If the perception of Manhattan as a "great place to live" is psychologically altered, that combined with the negative macroeconomic forces can put downward pressure on real estate values for many years to come. This will likely not be a V shaped cycle, instead, it is more likely that any correction in real estate prices will resemble an L shape, with prices reverting back to their historic means where incomes and affordability get back in line.
President, Brooklyn Chamber of Commerce
1. What is the immediate impact on the city's small businesses?
The financial downturn affects anyone who has a 401K, investments in mutual funds or even a savings account. As a result, people will be a lot more mindful about how they spend their money. This could mean a lot of different things for our small business community. The postponement of buying big-ticket or luxury items may affect some retailers while the increase in food purchases for at-home meal preparation could be a boost to others. For the most part, however, it is the access to credit that will affect most businesses.
2. What is the long-term impact?
The financial downturn has already affected many businesses' access to credit. With tightening credit lines and/or increased interest rates, simple things like paying your vendors within 60 days could become complicated. I believe the long-term effect is how businesses will approach credit. Some firms will need to revise plans for expanding their businesses or introducing new product lines depending on their access to credit.
3. What should/can the state and city do to ensure stability?
The federal government is in the best position to affect stability in the market. However, the city and state should do as much as possible to ensure that credit is available and that businesses are able to operate. This could include establishing a credit fund that could help small businesses meet expenses and keep their operations afloat while receivables come in, or having the city or state guarantee loans to small businesses.
4. What is your biggest fear regarding the turmoil on Wall Street?
The biggest fear is that we lose faith in our financial infrastructure. The market provides capital for our entrepreneurial class to invent, innovate and improve our lives. Without it, our progress as a society could be hampered.
Executive Director, Human Services Council
1. What is the immediate impact on the human services/nonprofit sector in New York City?
The immediate impact is similar to that in the general population: fear and anxiety about exactly how bad this is and how much worse it is going to get. Some smaller agencies have already closed their doors. Government funding is constricting.
2. What is the long-term impact?
The long-term impact, if things do not improve, is dire. Government funding will shrink radically, as will funding from philanthropic and corporate foundations and from (now less-wealthy) individuals. This will dramatically reduce the services nonprofit social service agencies can provide. At the same time, the need will be greater, as more people lose their jobs and fall through the frayed safety net.
3. What should/can the state and city do to ensure stability?
Imagine if the New York City social service sector got one seven-hundredth of the amount the federal government is spending to bail out the reckless Wall Street firms. One billion dollars would go a long way to care for the poor, the elderly, the kids, the immigrants, the mentally and physically ill -- in other words, our clientele.
The state and city need to look at progressive revenue-raising options and not just at service cuts. They need to streamline their procedures so contracts with social service providers are executed -- and paid for -- quickly and fairly, with sufficient funding for necessary administrative overhead. They need to include the social services sector in the decisions on which programs to cut and not just do an across-the-board percentage cut in all agencies. They need to work with HSC and others to advocate for our needs with the federal government.
4. What is your biggest fear regarding the turmoil on Wall Street?
My biggest fear is that the rich will be saved from the consequences of their recklessness and greed, and the poor will be screwed.
Senior Director of Research, The Foundation Center
1. What is the immediate impact of the turmoil on Wall Street on the city's foundations and/or nonprofit sector?
We are unlikely to see much of an impact from the financial crisis on overall area foundation giving this year. Most of the larger endowed New York City foundations have professional asset managers and diversified portfolios, so it's unlikely that their assets will fare any worse that those of other investors. Some area foundations will also benefit from new gifts to foundations from donors and via bequests. In terms of giving, many foundations determine their grants budgets early in the year, so their 2008 giving is less likely to be affected by the current economic volatility. At the same time, area foundations that are directly tied to financial services firms, or that were heavily invested in those firms, may have to begin cutting back on giving this year.
2. What is the long-term impact?
A great deal of how foundations fare in New York City and nationally depends on how the market reacts to the financial sector bailout and to the results of the 2008 presidential election. But even if the economic situation remains bleak at year's end, the larger, endowed foundations will strive to maintain levels of giving that are as stable as possible. Some do this by determining their grants budgets each year based on an average of their asset values over the preceding two to five years, thus mediating the impact of the bad years with the good.
Nonetheless, the vast majority of area foundations are "family foundations," with support coming from individual donors or donor families. Given the disproportionate role of the financial sector in generating New York City's wealth, any downturn in the that sector will likely have a disproportionate impact on smaller area foundations, which also tend to be local funders.
3. What should/can the state and city do to ensure stability?
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4. What is your biggest fear regarding the turmoil on Wall Street?
Because foundations can hold charitable endowments, their giving overall tends to be less affected by economic downturns than corporations and individuals. But they certainly are not immune to economic cycles. The biggest impact of an extended downturn would be that foundations may need to focus more on providing core support for long-time grantees and programs and have fewer resources to support new organizations and projects.
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Mayor Michael Bloomberg's disclosure bill went pretty much unnoticed when it was introduced in June.
A measure meant to ease financial reporting requirements for citizens who volunteer on city-affiliated nonprofits, the legislation was supposed to move smoothly from committee hearing to City Council approval so those volunteers would no longer have to fill out a weighty 32-page form.
That scenario shifted quickly last week, when good government groups lashed out against elements of the legislation that they argued weakened disclosure requirements for public officials.
Now, some involved say, their best hope is for a compromise on the less controversial elements of the bill. Others question whether the legislation will come back to the City Council at all.
The bill had been on the agenda of the Conflicts of Interest Board, the regulatory body overseeing financial disclosure -- outside of campaign finance-- in the city for more than a decade.
Unlike other municipalities and cities in New York State, New York City has not been able to come up with its own disclosure forms since 1990. Because of this, about 8,000 public officials are subject to a 32-page state document, which requires individuals reveal investment holdings, real estate, ranges of outside income and gifts.
Earlier this year, the state legislature passed legislation requiring those who serve with city-affiliated nonprofits to also disclose some of their financial interests.
As a result, the city was given the go-ahead to create a three-tiered disclosure system, requiring an extensive form for public officials and employees; another form for those who sit on influential boards and commissions, like the Landmarks Preservation Commission; and a final one for unpaid volunteers at city-affiliated nonprofits, such as the Gracie Mansion Conservancy. The amount of information a filer would need would depend on his or her influence in city government.
The Conflicts of Interest Board drafted a bill and sent it to the City Council. Some officials, including Mayor Michael Bloomberg, expressed support for the bill, saying it would help the nonprofits attract more skilled volunteers, who might have previously declined because of the financial disclosure requirements.
"I had people that I tried to get to be on different committees and boards, and they didn’t want to fill out the paperwork," said Councilmember Leroy Comrie, one of the sponsors of the bill in the City Council. "They felt like it was too intrusive."
Most agree it is unfair for unpaid members of commissions or city nonprofits to disclose the same information as the speaker of the City Council.
"If we rule out every potential conflict, then we are going to keep the best and the brightest out of government and not get their services," Bloomberg said at a seminar at New York Law School earlier this year. "So it’s finding that right balance."
Balance, according to some good government groups, was not reached.
Part of the legislation -- say groups like Citizens Union, the sister organization to Gotham Gazette’s publisher -- rolls back financial disclosure requirements for public officials. Under the bill, councilmembers would no longer have to disclose property they had outside of the city or the range of income they make outside of City Hall (being on the council is a part-time job, and many members make outside income).
After these groups voiced their opposition , a public hearing on the legislation was canceled and reports emerged that the administration was taking a second look at the proposal.
A spokesman for the administration said revisions to the bill are not a response to criticism from good government groups.
Mark Davies, the executive director of the Conflicts of Interest Board, says the bill is meant to identify what really is a conflict of interest. It is far more important to know the connections than to know how much money someone made at another job, he says.
Many of the amounts currently required for disclosure have been deleted in the new bill. For instance, an official would not have to disclose the value of investments, just the names of the holdings.
"The categories or amounts, they tell you nothing," said Davies. "The connections are the critical thing for the Conflicts of Interest Board."
That is why, he added, the board added family disclosure in the bill. The legislation, as currently drafted, would require filers to identify the employers of siblings, parents and adult children in addition to their spouses.
Others argue, when it comes to an elected official, the public has a right to know how much he or she made as an attorney in Brooklyn outside of his or her district office or how the market treated him or her.
If legislation is not approved by the City Council, those civic volunteers will have to reveal far more than their name and address. They would be held to the same scrutiny elected officials currently have under the state law.
Because of that, some think the council will vote on a bill sometime soon. How far reaching that legislation will be has not yet been determined.
"My hope is that they do pass a comprehensive bill, but I wouldn’t be shocked in the current climate if they settled in with dealing with the unpaid boards and commissions," said Gene Russianoff of the New York Public Interest Research Group . "There is a general agreement that people that are uncompensated should have disclosure, but not have anywhere near the 32-page form."
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Living in a neighborhood plagued by pollution and poverty, South Bronx residents would like to see more green in their midst – namely, trees, open space and money. Mayor Michael Bloomberg's PlaNYC2030 would seem to provide it. The plan calls for a million new trees in neighborhoods across the city, with special focus on underserved neighborhoods like East Harlem and the South Bronx. Recently, the city also announced a new training program that will provide horticultural jobs for 30 New Yorkers.
Despite those lofty goals, Sustainable South Bronx (SSBx), a long-standing local environmental justice group, finds that PlaNYC 2030 falls short and even undercuts its own efforts to ensure a sustainable future for the South Bronx. "From our perspective, [the plan's creators] really missed the ball on the issue of what sustainability means," says Miquela Craytor, SSBx's executive director.
As an example, she cites the administration's tree planting efforts. Craytor points out that new street trees slated for the Bronx do not compensate for the green space lost to development projects like the new Yankee Stadium. Moreover, only 50 percent of new street trees survive, mainly due to lack of maintenance. This means that, unless the city provides money to care for the new trees, they could die and leave the neighborhood no greener than it is now.
The city is addressing maintenance through the training program, which launches this November and its Summer Youth Tree Steward program. This year, its first, that program employed approximately 35 youths from the metropolitan area for six weeks. Some experts wonder these initiatives will provide sufficient staff and funds to maintain one million trees. Staffers at SSBx, which has operated its own highly successful tree stewardship program for the past five years, also wonder why the city created a new program instead of working with their organization's initiative.
These are just two of the million questions SSBx is asking about the sustainability of PlaNYC 2030 and how it will address the very real problems of their community.
Approximately 40 percent of South Bronx residents currently live at or below the poverty level. Not coincidentally, the neighborhood houses 15 waste transfer stations and four power plants, and 60,000 trucks travel through it each week. In 2001, long-time South Bronx resident, Majora Carter began SSBx in order to create more green space in her neighborhood and advocate for neighborhood improvements. To assess residents' biggest concerns, SSBx's fledgling staff held a series of public meetings. The response was clear – in addition to cleaner air and more parks, residents wanted jobs.
In response, SSBx launched the Bronx Environmental Stewardship Training in 2003. A 10-week intensive job-training program, it confronts environmental, health, poverty and quality of life problems by equipping urban residents to work in "green collar" jobs such as ecological restoration, hazardous waste cleanup, green roof installation and maintenance, urban forestry and landscaping.
Importantly, the program targets people who are facing barriers to employment. "These are folks who have been incarcerated or on public assistance," Craytor explains. "When they rebuilding the Bronx and the city through ecological restoration," she continues, "They're also rebuilding their lives and it affects not just them but their families as well."
The training runs quarterly, graduating approximately 60 trainees per year. So far, it has placed 85 percent of the graduates in jobs, and another 10 percent have gone on to college.
As successful as the environmental stewardship program has been so far, however, it cannot place its trainees in green jobs if those jobs do not exist. While it seems as though PlaNYC2030 would create such jobs, SSBx staffers find that, in many places, PlaNYC2030 misses the chance to help make a "green collar" workforce into reality. This seems surprising considering the attention that even presidential candidates have paid to developing green collar jobs, and SSBx's national notoriety (Its founder, Majora Carter won a 2005 MacArthur Foundation "genius grant" for her work in that area).
As an example, SSBx cites PlaNYC2030's treatment of combined sewer overflows. Every year, stormwater overwhelms the city's sewage system, causing approximately 27 gallons of raw sewage and polluted water to be discharged into New York City waters. This is a particular problem in the South Bronx.
"Everything on the street -- oils, anti-freeze, trash, metals -- all that gets released into the river untreated," explains Craytor. Not only does that reduce water quality overall, but "it means kids can't play out in the river on a summer day, or on the beaches."
Just before the release of PlaNYC2030 in April 2007, SSBx joined over 40 environmental and community organizations from across all five boroughs to form Storm Water Infrastructure Matters (S.W.I.M). Created to ensure swimmable waters around New York City, S.W.I.M advocates for sustainable storm water management measures such as green roofs, rain gardens, disconnecting rain gutter downspouts from shared drains (which tend to overflow), and porous pavements. All of these treat storm water as a resource to be captured and re-channeled to help create and maintain green space. Not only does this approach keep the city's waters clean, but green space also cools and beautifies the city, provides recreation and improves air quality. And, the retrofitting needed to put these mechanisms into place creates green jobs.
PlaNYC2030, however, fails to adopt such an approach – it expands the capacity of current water treatment plants rather than seeking innovative alternatives. This, Craytor contends, is the opposite of sustainable thinking.
"Every dollar we put into expanding sewage treatment facilities is one less dollar to put into doing something that has multiple benefits. Do we want to invest in one thing that only gives one type of yield?" she asks. "Or do we want to invest and spread the rewards in terms of cleaner air, reducing the heat island effect, providing jobs, creating habitat space and improving the quality of life, and the psychology of our community – seeing green space as opposed to just the urban gray concrete fabric?"
SSBx is working to boost PlaNYC2030's sustainability. On June 24, 2008, the state legislature agreed to provide tax credits to offset $4.50 a square foot, approximately 25 percent of the cost of installing a green roof (roofs that are either partially or completely covered with vegetation). By capturing stormwater, green roofs prevent it from entering the sewer system, while also keeping buildings warm in the winter and cool in the summer. Not coincidentally, more green roofs in New York City also mean more jobs for B.E.S.T. graduates.
Although the tax abatement is only a pilot program that expires in one year, SBBX and SWIM members will try to persuade the state to extend it. In the meantime, they will focus on implementation. "Right now, the important thing is that city agencies make [the credits] easy to apply for, and make the process open and transparent, " says SBX policy director Rob Crauderoff.
Advocates believe that creating clear goals, timelines and ample opportunities for public participation will help PlaNYC2030's suggestions become sustainable realities with a life beyond the current administration. "A plan in and of itself doesn't mean anything," Crauderoff comments. "We want to see the plan as a tool."
Melissa Checker is assistant professor of urban studies at Queens College, City University of New York. She is the author of Polluted Promises: Environmental Racism and the Search for Justice in a Southern Town, Â
Because of the slumping economy and uncertain financial markets, officials managing government budgets across the nation can expect a tough year or two. But recent press reports and a review of new reports from New York City's fiscal monitors suggest that the federal government and New York State face deeper problems in the immediate future than the city does.
Why the difference? The answer for the fiscal monitors seems to be that the Bloomberg administration has done a good job of managing its short-term budget problems. Their reports include, however, some details and caveats that suggest some of the short-term political calculation built into the city's four-year financial plan. It says little about the city's major budget problems beginning in fiscal year 2011, just after the current, term-limited administration and City Council leadership depart. The few actions mentioned for the longer-term - such as property tax increases and labor savings - are vague and politically difficult.
First the larger context: The federal budget problems are enormous. The Times recently reported that the deficit for the 2009 fiscal year (beginning Oct. 1, 2008) will exceed $500 billion. That can only be bad news for the city -- and other local governments -- whoever wins the presidency and control of Congress in the fall elections. Of course, Congress and president can manage the deficit in the short run just as they have for several years -- borrowing more money to balance the budget, something New York City and New York State can't do.
Closer to home, the New York State budget problem is less clear. A flurry of remarks and actions by Gov. David Paterson in late July suggested big trouble just ahead. But there is some doubt how deep the problem is. In fact, the Times found at least some anonymous critics who think the governor is crying wolf.
With state revenues, particularly from Wall Street, falling faster than anticipated, the governor projected that the deficit in the state's next fiscal year (FY 2010, beginning April 1, 2009) will be $6.4 billion, up from $5.0 billion, and the total deficit for the next three years from 2010 to 2012, will be $26.2 billion, up from the $21.5 billion originally projected.
But to put these big numbers in perspective, the New York State Financial Control Board July report on the city's adopted budget for 2009 and financial plan for 2009-2012 says city deficits could total more than $19 billion over the next three fiscal years, 2010 to 2012. (The city's total budget is generally only about half of the state's budget.) Yet neither the Financial Control Board nor the other two city fiscal monitors reporting in July, the city comptroller and the state deputy comptroller for New York City, seem unduly concerned about the city's ability to meet those gaps.
Certainly if the state has a major problem, the city will have a problem, dependent as it is on state aid. (It accounts for nearly 20 percent of the city's total revenues.)
As required by state law, the adopted budget for fiscal 2009, which began July 1, 2008, is balanced. Beyond that, the financial plan projects budget deficits of $2.3 billion in 2010, $5.2 billion in 2011, and $5.1 billion in 2012. The Financial Control Board projects the possibility of much higher deficits those years: $4.3 billion, $7.5 billion and $7.5 billion, respectively. The state comptroller's report projects roughly similar risks.
The city comptroller's July report estimates much smaller risks for 2011 and 2012, averaging $5.6 billion, and, in fact, projects a smaller deficit for 2010 ($2.0 billion) than does the mayor. The main reason for the comptroller's lower deficit number in 2010 is his projection that the mayor is underestimating tax revenues for that year by $570 million. (For more on the mayor's proclivity for underestimating revenues, see the July finance column.)
The biggest variable for 2010, however, is a projected 7 percent increase in the average property tax rate (the rate was cut by 7 percent last year). The $1.2 billion that this would generate in 2010 is in the four-year plan. That would increase to $1.3 billion in 2011 and $1.4 billion in 2012. But the revenue is not there until the City Council votes to adopt it. The mayor and city comptroller assume the council will do so; the other two monitors aren't so sure, so they call its inclusion in the plan a risk.
Since it is nearing legacy time for the term-limited mayor and City Council leadership, it is a little hard, from a political perspective, to see their parting on the heels of a significant tax increase, particularly when so many members of the council, including Speaker Christine Quinn, will be seeking higher office. A more likely scenario is some forthcoming plan that generates a $1.2 billion substitute for the tax increase.
One possibility: another round of the mid-year cuts across agencies that were made last fall. However, the monitors' reports suggest that further reductions might provoke more opposition than last year's cuts, which generated savings of $618 million in FY 2008 and $1.145 billion in 2009.
Education got cut last year and, given its size, presents a likely target in a new round of cuts. The city's 2009 education budget is $21 billion (including education's share of pension and debt service costs), or 35 percent of total expenditures. Cuts, though, would put the mayor's legacy in his priority area - education -at risk.
The Bloomberg years have seen very large increases in city funding for education. From 2003 to 2008, according to the state deputy comptroller's report, city education funding increased at an annual average rate of 10.9 percent; during the same period, state funding increased at an annual average rate of 6.7 percent.
But 2009 is a different story. In spite of the City Council's last minute restoration of $125 million in education cuts made by the mayor in the executive budget, city-funded education this year is up only 1.9 percent. (State funding - which currently represents 41 percent of all education funding -- is up 5.6 percent in 2009.)
The reason the 2009 and 2010 budgets look manageable is mostly because fiscal year 2008 ended with a $6.6 billion surplus. That surplus had to be spent, by state law, in 2008, so $3.81 billion was used to pre-pay 2009 expenses and $2.45 billion to pre-pay 2010 expenses.
But the huge rollovers of surplus revenues are over. The most sobering line in the three July reports may be the state deputy comptroller's: "In FY 2009, spending is projected to exceed current-year resources by $4.5 billion, a clear sign of fiscal stress."
The current plan anticipates only an $812 million surplus in 2009. There is also a separate, $300 million reserve fund for 2009 in the plan. Either fund could be drawn down from to make up for any threat in the next few months to this year's budget.
The real trouble looks to be in 2011 and 2012, with the potential of $7.5 billion deficits each year. One reason is a big new expenditure - paying for pollution remediation in the expense budget -- which will add $500 million to each of the 2011 and 2012 deficits. All three fiscal monitors point this out, but the financial plan does not address it.
The Government Accounting Standards Board has said governments must place the remediation costs in the operating budget, not in the capital budget, as New York City has been doing. Placing those costs in the operating budget means the city has to pay the full bill each year. Using the capital budget allowed the city to borrow the needed money and pay it back over the long term, say 30 years, much as a mortgage is paid off.
There are other smaller, but interesting details, in the monitors' reports.
The mayor has slowed down the four-year capital plan, extending it over five years, partly to ease debt service costs. However the cutback, amounting to about $1.7 billion in capital expenditures, will take a toll in jobs and economic activity in the struggling local economy. Meanwhile, the short-term savings on debt service savings are slim: a total of $27 million in 2009 and 2010. (The savings increase in later years, peaking at $143 million in 2015, then diminishing.)
The plan eliminates four years of $200 million-a-year pay-as-you-go capital financing, a move favored by fiscal monitors because the city pays cash for capital projects, rather than incurring the long-term interest costs of capital borrowing. In addition, the plan projects, but provides no details on, savings of $200 million a year in health costs for city workers. The plan also underestimates overtime costs by $100 million a year from 2010 to 2012, according to the city comptroller. (Overtime cost $756 million in 2008, including police overtime of $371 million.)
Lastly, for readers who have followed the bizarre history of property tax politics the past few years (see "Property Tax Reform - NOT"), the Financial Control Board notes that once again the state legislature quietly saved New York City private homeowners from what would have been a higher property tax rate in 2009. Had the complicated law governing annual adjustments to property tax assessments been followed without new legislation, "residential properties would have experienced a much larger tax rate increase."
Paterson has called the state legislature back into session on August 19 to deal with the $26.2 billion in deficits projected for state fiscal years 2010-2012 He has already cut spending for the current 2009 fiscal year to meet a $630 million shortfall this year.
Bloomberg, in the meantime, has expressed no such sense of urgency. His financial plan, at least for the 17 months remaining in his term, looks pretty solid. The fiscal monitors seem happy. Sound management and clever politics suffice for the moment.
Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.Â
If there were any doubts about the severity of the nation's economic ills, the financial panic engulfing mortgage giants Fannie Mae and Freddie Mac quickly dispelled them last week. As with the mid-March failure of Bear Stearns and its takeover by J.P. Morgan Chase, overnight our economic "leaders" pledged billions of taxpayers' dollars to avert an even greater financial calamity. Once again, the average person is reminded that in our "free enterprise" financial system, profits get privatized while losses get socialized.
The latest bailout provides a further sign that a seriously slumping housing market is dragging down the entire economy. Along with other developments this indicates that the national economy likely will not rebound this year and that the malaise will persist well into 2009.
New York City will not be able to insulate itself from the steadily contracting economy. The markers of a slipping local economy are multiplying with rising unemployment, snowballing job losses, rising food and energy prices, mounting foreclosures and extreme nervousness in Wall Street boardrooms and at city and state budget offices.
Fannie and Freddie began life decades ago as creations of the federal government to support mortgage lending, buying mortgages from banks and vastly expanding the pool of inexpensive mortgage money. Together they hold nearly half of the $12 trillion in outstanding mortgage debt in the U.S. Although that is not technically a debt of the U.S. government, Fannie and Freddie's enormous size mean that the government cannot let them fail.
Four months after the Federal Reserve handed J. P. Morgan Chase $28 billion to buy Bear Stearns, the U.S. Treasury is prepared to lend Fannie and Freddie as much as it takes to save them and, if necessary, to directly invest taxpayer money in equity shares of the mortgage giants. The price tag will make it the mother of all bailouts -- $250 billion or more.
The mortgages Fannie and Freddie buy and hold are all prime. But during the real estate boom, lenders issued many mortgages based on the expectation that housing prices would stay high -- and go even higher. Dean Baker, one of the few economists who warned long ago about the housing bubble, says that Fannie and Freddie helped fuel the bubble through their eagerness to purchase loans made in over-heated markets. With housing prices falling about 20 percent in many parts of the country and certain to fall further, ordinary folks who once had good credit are now walking away from their dream homes. Fannie and Freddie have taken $11 billion in losses so far. That number will continue to grow as the housing slump worsens, compounded by mushrooming defaults in sub-prime mortgage and a general economic recession.
We're not officially in a "recession" until the economic sages of the National Bureau of Economic Research's Business Cycle Dating Committee announces that we are. Always reluctant to make such a declaration this close to an election, the non-governmental committee probably will not render that determination until later. However, six straight months of national job losses already totaling a half million jobs make it pretty clear that if this is not a "recession," it's tantamount to one. The unemployment rate has started to shoot up and for certain demographic groups, such as black men, official unemployment already reaches 9.3 percent.
At the same time, record oil and soaring grain prices have created havoc for consumers and threaten hundreds of millions of poor people worldwide with deprivation and starvation. In the U.S., hikes in the cost of energy and food have forced consumers to curtail spending on everything else, exacerbating the downturn. The $100 billion in tax rebates paid out over the past two months as part of the federal stimulus package did little to lift retail sales since many households are paying so much more now for necessities and trying to make up for disappearing and shrinking pay checks.
New York City is starting to see monthly job declines, with a combined loss of 5,000 jobs in May and June. For the past three calendar years (2005 to 2007), New York City job growth averaged about 1.8 percent a year, or 67,000 jobs annually. For the first half of this year, job growth has slowed to a crawl. Wall Street has shed 7,500 jobs since last fall, still far below the 22,000 suggested by news accounts. (The Labor Department attributes this discrepancy to the fact that many Wall Streeters facing layoffs are kept on payrolls while they receive severance pay. Eventually, the layoffs will reduce the Wall Street headcount.)
Job declines have also occurred this year in employment agencies, management consulting, business services, hospitals and corporate headquarters located in New York City. Law and accounting firms and advertising agencies have all seen job levels remain flat over the past year.
Record tourism due to the low value of the U.S. dollar has contributed to continued job growth in retail stores and in restaurants, sectors that would normally slow in a weakening job market.
As job losses spread to more sectors and deepen in finance and professional and business services, the city's overall job level will shrink much further. City and state budget forecasters foresee sizable net job losses over the next several months with the mayor's office projecting the city will lose approximately 90,000 jobs by the spring of 2009.
Over the past two months, the city's unemployment rate jumped by seven-tenths of a percent from 4.7 percent in April to 5.4 percent in June, matching a similar increase at the national level. Initial claims for unemployment insurance in the city are running about 10 percent higher than they were a year ago.
While daily papers seem to relish reporting continued high prices for Manhattan condos, city tax records show home values in the other boroughs are falling and mortgage foreclosures are mounting. By early this year, 15 percent of all sub-prime mortgages in Brooklyn were already in foreclosure with many more headed that way. The slowing job market and rising food and energy prices are beginning to severely pinch household budgets across the city. More families must turn to food pantries; the New York City Coalition Against Hunger reports a 9 percent increase in the number of meals food charities served in March and April compared to a year ago. Skyrocketing energy prices pushed up the New York metro Consumer Price Index by one percentage point in each of the past two months.
The unprecedented Fannie Mae and Freddie Mac bailout, the prospect of rising bank failures and reports of continued losses at major Wall Street banks paint a picture of severe and deep-rooted problems in the nation's financial sector. These problems, together with the continuing fallout from the bursting of the housing-market bubble, have pushed the economy down and are likely to keep it there for the next several months. National economic policymakers are facing their greatest challenge since the Great Depression as we grope our way toward a new financial order.
For New York City this means that the near-term economic outlook is for a moderate recession at best. Job losses over the next year may turn out to be less than earlier in this decade, but the loss of 80,000 or 90,000 jobs (about 2.7 percent of all private jobs) is still substantial. We also face financial and housing problems and rising food and energy prices that did not exist during the last recession.
Moreover, the city's economic outlook is clouded as never before by Wall Street's uncertain fate. Over the past quarter century, the financial sector has dominated the city's economic fortunes, taking it for a roller coaster thrill ride through both up and down cycles. Right now, the ride is a lot more harrowing than we bargained for: We're moving fast and headed down, and we don't know what lies ahead around the corner.
James Parrott is deputy director and chief economist of the Fiscal Policy Institute. He has been studying and writing about the New York economy since he landed in New York City a quarter century ago.Â
The economic mood is sour. Unemployment is up. The cost of gas is up, food is up and healthcare is up. One thing that is down, though, is New York City’s budget outlook. The city budget approved last month cuts money for senior centers, youth programs and other services. And officials warn this might only be the beginning.
That is what happens in a recession. We have to make some painful cuts. But we also have to have the nerve to talk about how to bring in more revenue. It’s the same as when you hit a financial crisis in your household budget. You make some cuts, but you also figure out how to bring in more income. That is why lots of New Yorkers work two jobs.
During the recent budget negotiations, the mayor wanted to suspend rollbacks in the property tax. The City Council reportedly preferred an increase to the hotel tax. Both proposals pose real problems. The first hurts working families and the second hits tourism, critical for the local economy. Though we avoided both taxes in the budget that just passed, they remain on the table for the foreseeable future.
What if, instead, we could raise money to save vital programs by simultaneously bringing fairness back to the city tax code? What if we could close an appallingly unfair loophole for the wealthiest New Yorkers and, according to the Fiscal Policy Institute, make more than $200 million in revenue appear to plug the budget gap?
Well, we can.
State Assemblymember Micah Kellner has introduced legislation that would change the city’s Unincorporated Business Tax to eliminate an unfair exemption for private equity and hedge fund managers. This loophole allows some the richest people in the city to avoid paying business income taxes on a major source of income called “carried interest” – fees charged by managers of investment firms based on the returns they deliver to investors.
Most economists agree that carried interest really is a fee, and therefore should not be eligible for preferential tax treatment. At the federal level, carried interest is treated as a capital gain – taxed at 15 percent -- rather than as personal income, which would be taxed at 35 percent. (Citizens for Tax Justice, a national advocacy group, has assembled an information sheet on the tax break.)
Here in New York, the carried interest exemption completely prevents billions in investment profits from being taxed at all.
For years, this loophole went largely unnoticed. But the explosion of private equity firms and their unique structure has made this an issue. As the industry has grown by leaps and bounds, the amount of carried interest and the revenues that could be reaped from it has grown exorbitantly. Closing this loophole would raise $25 billion in taxes nationally over the next 10 years, according to Citizens for Tax Justice.
One beneficiary of this loophole is New York financier Henry Kravis, whose massive private equity fund owns everything from Toys R Us to Sealy mattresses and lots more. His firm – Kohlberg, Kravis and Roberts – banks much of its profit on returns from investors. Kravis, a billionaire many times over, can certainly afford to pay his fair share.
Instead, much of his firm’s income is exempt from the city’s business income taxes. The result: Millions of New York taxpayers with middle-class incomes pick up the slack while also losing government services to budget cuts. To level the playing field somewhat, Kellner's measure would close this loophole and tax Kohlberg, Kravis and Roberts' profits at a 4 percent rate.
An effort to close the federal loophole passed the House last year, but not the Senate. Barack Obama favors closing it, John McCain opposes such a move. So there’s a chance something will happen on this in Washington next year.
New York, though, should not wait to act on its own. For starters, the City Council through a home rule measure could direct the state (as it did with congestion pricing) to act on its behalf and tax the fees. A majority of City Council members are on record in favor of closing the “Rich Guy” loophole.
Unless there is a special session, the legislature will not get to act on Kellner's bill this year. But with the city and state both looking at budget gaps over the next several years, this is an issue that isn't going away.
It is not often that you can raise money for the public coffers by doing the right thing. This is most certainly one of those times. We cannot let it pass us by. We are out of time and money. The mayor and governor must act to close this loophole, or the rich in New York will just continue to get richer as the rest of us suffer.
Dan Cantor is the executive director of the Working Families PartyÂ