The March 9,2009 Issue of The Capitol

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www.nycapitolnews.com2 MARCH 2009 THE CAPITOL

March April May June July August31st

BY JULIE SOBEL

By law, the New York State budget is due March 31. That has not meant much: every year

except two over the last two decades, New York has fl own on autopilot for the start of the fi scal year while legislators locked antlers and tussled over pet projects.

After unexpectedly becoming governor just weeks before the deadline in 2008, Paterson was late with his fi rst budget. And while he started the process early, releasing his executive budget in December in an effort to get done well ahead of March 31, things are not looking too good for that effort. Some have even begun to question whether they will be able to even come close to wrapping up negotiations by the end of the month, deadline be damned.

After all, legislators who oppose Paterson’s proposed spending cuts have nothing to gain from a prompt budget submission.

“Every month, every week they don’t do the budget is a week he doesn’t get to reduce, to restrain spending,” said E.J. McMahon, of the Empire Center for New York State Policy. “Delay serves the interests of those who don’t want to cut spending.”

Whether the budget will be late is one question. Whether it matters is another.

During the budget battles of the 1980s,

missed deadlines risked paralysis for state government and missed payments for the many groups reliant on state money. State employees often were paid in IOUs, nursing homes and hospitals were left in a lurch with the state failing to make Medicaid payments, and cities

Though Some Safeguards Are in Place, Late Budgets Still Mean Big Problems First default comes for the schools, then the local government and nonprofi ts

Whether the budget will be late is one

question. Whether it matters is another.

April 9

April 1

August 11

May 15

May 16

August 4

April 14

August 4

June 7

June 8

April 2

April 5

June 4

May 19

198819891990199119921993199419951996199719981999200020012002200320042005200620072008

DAYS LATE: 20DAYS LATE: 19



DAYS LATE: 69

April 20

April 19

DAYS LATE: 68July 13DAYS LATE: 104


DAYS LATE: 126May 5DAYS LATE: 35

August 3DAYS LATE: 125DAYS LATE: 46DAYS LATE: 45

DAYS LATE: 133DAYS LATE: 0DAYS LATE: 0DAYS LATE: 1

DAYS LATE: 9

A short history of our late budgets

and towns were forced to borrow money, cut services or default on their debt.

The state government, though, eventually developed a contingency plan designed so that most New Yorkers will not even notice when the budget is several weeks past due.

“The Legislature’s and the governor’s budget houses have been very skilled over the course of these 20-odd years in

developing short-term mechanisms to respond to that,” said Dall Forsythe, Mario Cuomo’s former state budget director.

Now temporary appropriations bills keep state funding at existing levels and allow budget brinksmanship to go on, without much attention from voters.

The three-card monte began, recalled Forsythe, under Cuomo,

as partisan acrimony led to later and later budgets.

“I don’t think it came about by design, I think it was more like evolution,” he said.

Now when a budget is late, the fi rst major impact comes in mid-May, when school districts across New York have budget votes. With no state budget, school districts are forced to make property tax and school funding decisions without a

clear picture of how much state aid they will receive.

According to several budget experts, this uncertainty can result in lower school funding and higher local taxes.

“As a general rule, if the budget is delayed past the day of school budget votes, the net effect is probably to depress the level of spending increase in school budgets,” said Bob Ward of the Rockefeller Institute, “because many districts at least will be a little conservative on their revenue estimate.”

A delayed state budget also can stymie local governments’ efforts to budget and plan effectively. A late budget can delay new programs, frustrate nonprofi t organizations that rely on state grants and adversely impact the state’s credit rating.

Some fi scal experts propose moving the start of New York’s fi scal year from April 1 to July 1, which would be the day after revenues are clear at the end of the fi scal year for the federal government and most local governments, on June 30. New York is the only state in the nation whose fi scal year starts in April and, perhaps not coincidentally, consistently has the most chronically delayed state budget in the nation.

[email protected]

CASH GRAB 2009


CASH GRAB 2009

BY DAVID FREEDLANDER

For months, the 2010 budgethas not been the elephant in the room—it has been the anvil on

which hopes have been dashed.Want reform of the most dysfunctional

Legislature in the country? Wait until after the budget.

Want gay marriage? Wait.Want Rockefeller drug law reform, or a

revamped Better Bottle Bill, or movement on a host of other issues? Back of the line, bud. Heard about the budget defi cit?

But next year, as the saying goes, is fi nally here.

And after a lifetime in the wilderness, the Democrats have fi nally arrived only to fi nd a state government stretched to the breaking point.

The handicaps the party is facing at their debut is staggering. A $14 billion—and growing—defi cit. A governor with record-low poll numbers. And a newly minted Senate majority holding on by the slimmest of margins. And a desire to show the state that they made the right decision when it put Democrats in charge.

“The Democratic party is in control,

and so there is a feeling that we must get this done and get this done right,” said Assembly majority leader Ronald Canestrari (D-Albany/Rensselaer/Saratoga). “There is a feeling of greater responsibility and an awareness that we are in this together.”

And even though all three men in the budget room are, for the fi rst time in 70 years, all Democrats, longtime Albany watchers say that does not mean that a spirit of comity infuses this year’s negotiations between Gov. David Paterson (D), Assembly Speaker Sheldon Silver (D-Manhattan) and Majority Leader Malcolm Smith (D-Queens).

“Clearly, the Assembly has its own fi scal and political needs, the Senate has its own fi scal and political needs, and the Governor has his own political and fi scal needs,” said longtime Albany Democratic insider Steve Greenberg. “All three have a stake in insuring that the others’ needs are met somewhat. The partisanship may be gone, but that doesn’t make it any less complicated. I think they recognize that voters know they control the state and are going to hold them responsible.”

But in the “some of the men in the room

are more equal than others” folkways of Albany, the strongest hand appears to belong to Silver. The Assembly speaker, after all, has an impenetrable veto-proof majority, and, unlike his counterpart down the corridor, faces no threat as his status of leader of his conference.

“Silver’s in the driver’s seat, no question,” said Blair Horner, legislative director of New York Public Interest Research Group. “He’s the last one to ever show his cards, but whatever budget they ultimately agree to will have the signifi cant impact of the speaker on it.”

This moment of Democratic triumph is as much to Silver’s credit as anyone’s. When the Democrats were exiled from the rest of the government, he steadfastly held his ground in the Assembly and watched patiently as the Democrats slowly gained seats in the Senate.

“He’s stood up to the Republicans for years,” said Democratic consultant Hank Sheinkopf. “New York has universal pre-kindergarten, and New York has rent control because of him. You know what his priorities are and you know what he’s going to do.”

Some have speculated that Silver will

be more willing to compromise than his two counterparts in order to prop up his most vulnerable counterparts, and keep the state moving leftward.

“I think the speaker genuinely likes David,” said one Assembly Democrat, “And he wants him to stay there.”

The reason for this, Silver-watchers say, is that the speaker prefers to have a relatively weak governor whom he can bend, rather than a hard-charger like Andrew Cuomo, or even (to his horror) Rudy Giuliani.

And Silver has an interest in the Democrats expanding their majority in the Senate so that the pile of progressive initiatives that he has seen stoppered by the Republicans fi nally have a chance of passage.

But others say Silver has accrued power in Albany by attending to the needs of his conference, and he is unlikely to change now.

“Albany seemed to always have a divided legislature, and Republicans in the Senate and Democrats in the Assembly got very used to dealing with each other,” said Robert Bellafi ore, a

In Budget Negotiations, Money, Politics, Power, Ego, 2010 and Majority at StakeTests ahead for Paterson, Silver, Smith and rest of Legislature in fi nal weeks

continued on page 6

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As the state and city economy drags, itis incredible that firefighters who pro-tect and keep New York City safe are inthe crosshairs being blamed for thecity’s municipal economic problems.

New York City Firefighters risk theirlives and health daily in what is consid-ered one of the most dangerous profes-sions in the nation.

The governor’s budget, at the requestof Mayor Bloomberg, seeks to changeNew York’s pension system to increasethe retirement age for firefighters.While New York City and State offi-cials are understandably looking to cutcosts, clearly they do not understandthe great life and health risks or physi-cal demands of firefighting.

Years of cumulative health hazards,take a great toll on firefighters, in manycases shortening careers and lives. Thegrowing physical (NYC Firefightersare required to carry up to 130 poundsof gear) and environmental dangers ofthe job mandate firefighters have regu-lar annual medical examinations byFDNY doctors just to be recertified forfull duty.

Through a now multi-month misinfor-mation campaign designed to demonizefirefighters, the city claims they arepaying more for firefighter pensionsthan for salaries of current firefighters.

Have we forgotten so soon that this isbecause of a single catastrophic eventwhere 343 firefighters tragically diedand thousands more were permanentlydisabled?

Clearly this tragedy, in which NewYork City Firefighters conducted thelargest rescue effort on American soil –with 25,000 civilians rescued that day -- was something far beyond anyone’scontrol.

According to the New England Journalof Medicine, on 9-11 over ten thousandNew York City Firefighters lost on av-erage twelve years of lung capacity asresult of their service in the months-long rescue and recovery operation.

Many young firefighters were forced togive up their careers and retire prema-turely, because of their extensive expo-sure during the rescue and recoveryoperation at the World Trade Centersite. Over 1,000 were permanently

disabled losing their careers and theirhealth.

Preliminary data shows that since 2002over 80 of the FDNY responders to theWorld Trade Center attacks have sincedied of rare cancers, lung disease andother ailments.

It is amazing that the very same electedleaders complaining about our pensionsare the ones who visit firefighters in theBurn Center and who to tell our wid-ows about our bravery, dedication andsacrifice in eulogies at firefighter funer-als.

Even before the 9-11 attacks, MountSinai School of Medicine researchersfound that New York City Firefightershave a greater incidence of cancer thanany other profession due to regular ex-posure to smoke and toxins.

The smear campaign against our fire-fighters is not even based on facts. In-stead spin and half-truths are beingspoon fed to the public, editorial pagesand elected leaders.

The fact is that throughout their ca-reers, New York City Firefighters con-

tribute a percentage of their salariesinto the pension fund from which thesebenefits are paid. Each pension benefithas been factored in as a part of fire-fighters’ contract negotiations and issimply deferred wages.

The current pension system for fire-fighters has always been a contributorypension and not merely a gift from abenevolent employer, as some bureau-crats like to imply.

For the city to suggest that a 60 yearold firefighter, carrying 130 lbs of gearand equipment up several flights ofstairs to fight a fire or rescue an uncon-scious citizen is its optimal budget sce-nario, clearly shows their lack ofunderstanding of public and firefightersafety.

New York City Firefighters will con-tinue to take the risks inherent in thejob, but for city officials to suggest thecurrent FDNY pension system is unrea-sonable further shows the lack of un-derstanding of the work we do.

Steve Cassidy is the President of theUniformed Firefighters Association ofGreater New York.

By Steve Cassidy

Stop Manipulating the Facts About New York City Firefighter Pensions

BEING A NEW YORK CITY

FIREFIGHTER IS ADANGEROUSPROFESSION

Ten Firefighters Injured, Two Seriously,

at Queens FireNew York Times, February 5, 2009

3 Firefighters Die in Blazes inBrooklyn & BronxNew York Times, January 24, 2005

Firefighters injured when wall collapses

WABC-TV, December 30, 2008

23 Firefighters Injured in 6-Alarm Flatbush FireGothamist, August 2, 2008

Three Firefighters Dead, Four Critical in

Bronx, Brooklyn BlazesAssociated Press, January 23, 2005

FDNY Reels from Father’s DayFire CasualtiesNew York Post, June 19, 2001

Friday Funeral For 2nd Fallen FirefighterFDNY Veteran Killed in Deutsche Bank Building FireThursday Accident Hurts More FirefightersWCBS-TV, August 24, 2007

Eight Firef ighters Injuredin West Side BlazeNew York Sun, July 14, 2008

Infernos Kill 3 FirefightersNew York Post, January 24, 2005

Freight Train of FireNew York Post, January 27, 2009

New York City Firefighter Injured

In Brooklyn Blaze;

Police On The Hunt For Arsonist

WABC-TV, February 2, 2004

14 Firefighters, 10 Civilians Injuredin Three-Alarm BlazeWCBS-Newsradio 88, December 30, 2008

Staten Island firefighter killed in blaze

honored by Bloomberg

Staten Island Advance, January 03, 2009

Firefighter Killed in Staten Island Blaze

WNYC/National Public Radio, November 23, 2008

LIKE NONE OTHERIN THE WORLD


former aide to Gov. George Pataki and a communications consultant. “It’s harder when you are in the same party.”

Indeed, Assembly Democrats privately fret that their infl uence has weakened now that they’ve been joined by fellow party members in the rest of the Capitol.

(“Great,” one Assembly Democrat is reported to have said on election night as the polls showed a Democratic takeover of the Senate. “Our dicks are even smaller now.”)

Silver has already been out front on a host of issues, including the MTA bailout, the tolling of the East River bridges and Rockefeller drug law reform that Smith, presiding over the more conservative Senate, couldn’t take up.

Smith’s job, meanwhile, has been diffi cult enough even before he took up the budget. Republicans are already crowing that he has been unable to move more than a couple of dozen bills through the conference as he takes extra precaution to not lose a single Democratic vote.

The budget negotiations, though, will be the fi rst true test of Smith’s leadership. For months, when asked about future Senate initiatives, Smith has demurred, saying with a shrug that whatever the Senate took up was entirely up to its members.

Such an approach will not be possible when he sits down across from Silver and Paterson.

Smith is still seen by many as something of an unlikely majority leader, and even though his colleagues say he has grown into the role in recent months, he is still vulnerable to a revolt within his own conference. If he falters during budget time, it could spell the end to his brief tenure as majority leader.

“Malcolm’s job is to prove that he can be an effective leader,” said Sheinkopf. “He has to learn to go through the fi re and he has to represent the needs of legislators from more conservative and less conservative districts.”

The so-called Gang of Three—Brooklyn Senator Carl Kruger and Bronx Senators Ruben Diaz and Pedro Espada, the three conservative Democratic senators who withheld support for Smith until the last possible moment—remain a factor. Few doubt that they will forego an opportunity to show their independence during budget negotiations.

As those three pull Smith in one direction, his slender majority will likely pull him in another. The GOP is already accusing the Democrats of downstate bias, and so Smith is likely to look to shower as much cash as possible on Democrats who represent swing districts on Long Island and upstate.

“I know we talk about one New York, but let’s face it, all of the low-hanging fruit is gone,” said one Senate aide. “We’re maxed out in the city, so it’s all about the suburbs and the Hudson Valley.”

Smith would be struggling enough with the natural diffi culties of putting a budget together for the fi rst time He is handicapped even more, though, by the fact that the Senate Democrats have yet to fully staff their budget team since their takeover of the body was delayed by the Gang of Three.

This year represents Paterson’s fi rst real budget negotiations as well, last year’s late season call-up notwithstanding. And if Smith has a small margin for error, Paterson’s is microscopic. Typically, a governor in budget negotiations has more insight into the exact nature of the state’s fi nances, and can use the bully pulpit to bend the others to his way. But that’s unlikely this year as Paterson’s poll numbers have tanked alongside the state’s budget outlook.

“You can usually count on the governor to crack the whip,” said one Albany insider. “But that’s unlikely when you have a lower approval rating than someone who went out with a hooker.”

His poll numbers have led many Democrats to fret that he will be a drag on the 2010 re-election campaigns. If Silver and Smith hear loud enough concerns from their members, then Paterson could be shunted to the side.

“There is going to be nobody to blame,” said one Assembly Democrat. “Unless we give the voters a scapegoat, they are going to want to throw us out of offi ce. I think there are some people here who want to see the governor thrown under a bus.”

The governor has begun to reassert control over the last several weeks, but many doubt that he will emerge more popular after the budget negotiations than he was before it. The best he can do is to limit the damage to his standing and to spread the pain as fairly as possible, according to political observers.

The key, many say, is to make the kind of cuts that most state residents do not notice, and to do most of the cutting this year, before he and the rest of the legislature have to face the voters.

Since he shares a political party with Smith and Silver, Paterson will be unable to triangulate and make stands popular with his Democratic base that are in opposition to the Legislature.

The fi rst thing the governor can do, say many politicos, is make sure the budget is on time and to give New Yorkers a sense that there is a competent steward leading the state.

But no matter what the Democrats do, they are likely to receive no help from the Republican counterparts, who are expected to stand shoulder to shoulder with advocacy groups bemoaning the cut in funding, and who will almost certainly vote in unanimous opposition to the budget.

“We could be giving out lollipops to little girls in pigtails,” said one Senate Democratic staffer. “And they are going to vote ‘no.’”

[email protected]

continued from page 4

The middle classis being squeezed againIt’s time for a fair solution to the budget crisisThe governor’s budget proposal is an attack on

the middle class.

The proposed spending plan will cost theaverage family of four more than $3,800 per year innew taxes and fees.

The news gets worse if you’re a state employee.You get squeezed even more.

In addition to the taxes and fees imposed on theaverage working family, the governor also wants totake away collectively bargained pay raises andstrip away one week’s pay (lagged pay).

The new taxes and fees combined with the lossof salary mean the budget will cost the averagestate employee more than $6,800 in the first year!

The New York State Public EmployeesFederation (PEF) recognizes the state’s dire fiscalsituation, but believes the burden of fixing thiscrisis must be shared.

We have solutions. Here are just a few:

• Cut wasteful spending on priceyconsultants and contractors —(SAVE: $730 million over three years);

• Reduce employee overtime costs —(SAVE: $160 million); and

• Increase the income tax on wealthy NewYorkers — (ADD: $2-$7 billion in revenue).

New York’s middle class, those who rely onessential state services, and the workers whoprovide them shouldn’t bear the brunt of the state’sfiscal burden.

We’re calling on the governor and Legislature toconsider our proposals before further tightening thesqueeze on the middle class and most vulnerableNew Yorkers.

CUT THE WASTE,NOT THE WORKERS.

Clip & send to Governoror Call 1-877-255-9417

�

New York StatePublic Employees Federation, AFL- CIO

Representing 59,000 professional, scientific, and technical employees

Kenneth Brynien Arlea IgoePresident Secretary-Treasurer

pef.org

There is a better way. Log onto www.pef.org

CASH GRAB 2009

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Financial Crisis Hits Wealthy New Yorkers, Tax Revenue Crisis Hits Poorer OnesDeep reverberations in services for declineof top earners’ salaries and bonus caps

“If people are not getting their bonuses,

then New Yorkers are going to suffer.” —Assembly Member

Jonathan Bing

BY CHRIS BRAGG

When Comptroller Thomas DiNapoli (D) announced in late January that Wall Street

had paid out $18.4 billion in bonuses during 2008—the sixth highest fi gure on record, even though fi rms received $700 billion in taxpayer money—President Barack Obama termed the development “shameful.”

“There will be a time for them to make profi ts, and there will be a time for them to get bonuses,” he said then. “Now’s not that time.”

But for New Yorkers, the shock was not that the bonuses were so high. The shock was that the bonuses were so low.

The $18.4 billion represents a 44-percent drop from 2007 levels, according to the comptroller’s offi ce, a decline of $14.5 billion. That is the largest decline (in dollars, though not percentage) ever. As a consequence, the state is expected to collect $1 billion less in taxes for 2009.

“I have some concerns about my colleagues railing about bonuses,” said Assembly Member Jonathan Bing (D-Manhattan), whose Upper East Side district includes many people employed on Wall Street. “Not that I don’t agree that many of these people were making too much money for not very stellar performances. But Wall Street bonuses are very strongly tied to our fi scal health. If people are not getting their bonuses, then New Yorkers are going to suffer.”

New York’s tax structure is more dependent than any other state’s on the personal income tax, with the top 1 percent of earners paying 41 percent of the state’s taxes. An Assembly report issued in February predicted that only 19.2 percent of wages earned in New York

will be from Wall Street by 2010-2011, down from 24.4 percent in 2007-2008.

The state is also the most vulnerable to dramatic swings in the personal income

tax because bonuses can fl uctuate so wildly from year to year.

In past recessions, bonuses have typically rebounded to previous levels within two or three years. The circumstances will likely differ this time, however, because of the government’s increased long-term involvement in the fi nancial sector and because of the national demonizing of huge bonuses in the wake of the fi nancial meltdown.

The long-term decline likely means big budget cuts for schools, hospitals, pensions and social services. Much more so than in the country as a whole, the difference in the incomes of top earning New Yorkers will hit poorer New Yorkers dependent on government programs.

“What’s happening now is just bad. There’s no ambiguity,” said Andrew Friedman, co-executive director of Make the Road, a Latino advocacy nonprofi t which does not usually make a habit of cozying up to corporate interests. “We’re not sitting here saying, ‘These folks are getting their comeuppance.’ We’re for greater equality in society, but a fi nancial collapse is not really a constructive way to achieve that.”

The pain will get worse. Twenty thousand teachers likely would have been put out of work this year under Gov. David Paterson’s (D)

budget were it not for federal stimulus dollars which prevented the layoffs. A recent report by the Albany-based Rockefeller Institute found that tax revenues nationwide will not recover to pre-recession levels during that time period. New York will likely take even longer to recover because revenues have been so heavily concentrated in the fi nancial sector.

The state’s budget problems will likely further be exacerbated by the Obama administration’s cap of $500,000 on cash bonuses for the top 25 earners at banks receiving government bailout money.

The average fi nancial industry salary in 2007 was $400,000, with the vast majority of that salary paid through cash bonuses. So capping the bonuses of the top 25 earners at $500,000 would have a dramatic impact on the average salary, said Partnership for New York City president Kathryn Wylde, since the previous average was driven up so dramatically by executive bonuses.

“That will obviously have a signifi cant impact on the amount of taxes paid, as well as on whether we can keep top talent in New York,” she said.

One silver lining is that the top 25

executives at those companies will still be allowed to receive unlimited bonuses in the form of preferred stock.

Executives would then be allowed to sell the stock once their company pays back bailout money. Assuming the fi rms do make a comeback, revenues from those stocks would eventually become taxable.

In addition, replacing cash bonuses with preferred stock also would urge executives to focus on the interests of their shareholders, said Banking Superintendent Richard Neiman.

“These are still going to be reasonably profi table businesses,” Neiman said. “They just may not be as a large and as leveraged as in the past.”

[email protected]

With Wall Street revenues having propped up Alba-ny spending for so long, the fi nancial collapse will have a much greater effect on government services in New York than the rest of the country.

CASH GRAB 2009

New York State Building &Construction Trades Council

“Building an Economic Ladder to“Building an Economic Ladder tothe Middle Class thrthe Middle Class through the Unionough the UnionBuilding TBuilding Trades…”rades…”

NY State B.C.T.C.890 Third Street

Albany, NY 12206 (518) 435-9108

Edward J. Malloy,President

• IDAs give millions of our tax dollars to private businesses. Let’s ensure that thisinvestment is good for New Yorkers

• In order to stimulate New York’s economy,IDA reform must include prevailing wagesfor construction workers and regional hiringand apprenticeship requirements.


From taxing pornographic internet downloads and iPods to non-diet soda, almost no stone

was left unturned by Gov. David Paterson as he looked to raise revenues to fi ll the state’s rapidly emptying coffers. But while New York’s dire fi scal straits—the once $5 billion budget gap grew to $13, then $14 billion—have prompted Paterson to propose a series of new fi nes and fees, New York is far from the only state looking for unusual ways of addressing a gaping budget gap.

California:Golden State legislators

in February rejected Gov. Arnold Schwarzenegger’s (R) proposed tax on golf-related activities aimed at reducing their staggering budget defi cit of over $41 billion over the next 18 months. The proposed tax had targeted greens fees, practice balls, cart rentals, lessons and private-club membership fees and dues.

Massachusetts: Gov. Deval Patrick (D) has

proposed a gas tax and Treasurer Timothy Cahill (D) has a proposal to license three slot machine parlors around Massachusetts as a means to raise cash quickly (Cahill estimated that selling the slot parlor licenses could raise up to $3.3 billion right away). Patrick expressed skepticism about the slot machine plan, arguing that gambling resorts, though not an immediate solution, would create more jobs and economic development than slot parlors.

Pennsylvania: Gov. Ed Rendell (D) is

contending with a budget gap of $2.3 billion. He has proposed increasing

cigarette taxes by 10 cents per pack and is pitching a plan for state control and legalization of video poker machines in bars. Rendell says that the revenue gained from state control of video poker and increased tax credits would go to helping prospective students pay for community colleges and state universities. According to Rendell, he cut $1 billion from the proposed state budget and needs the video poker money to fund the program.

North Carolina: Gov. Beverly Perdue (D) ordered

$87.6 million transferred from the state’s lottery reserve fund to a general fund, rendering

them available for any spending purpose.

Profits from the North Carolina Educational Lottery were

intended to be spent on education, but Perdue said she now plans to

spend the money on the state’s day-to-day operating needs. North Carolina faces a $2.2 billion budget gap.

Some states with the worst defi cits

have brand new governors to deal with

them. In Arizona, Gov. Jan Brewer

(R) succeeded now-Homeland

Security Secretary Janet Napolitano

(D) as governor on Jan. 21. She proposed

a $1 billion temporary tax increase this

month. Illinois is in dire shape as well:

a new study put out by the Commercial

Club of Chicago says the size of the

budget defi cit has nearly doubled in

two years, from $4.3 billion to $8.1

billion. There, Gov. Pat Quinn (D) took

over on Jan. 29, immediately after Rod

Blagojevich (D) was removed

from offi ce. Both new governors

avoided getting into specifi cs of

their budget plans during the

fi rst month in offi ce. New taxes are

likely to be part of the mix.

ELSEWHERE

Other States,Same

ProblemsBy Julie Sobel

The publication for and about New York State Government

www.nycapitolnews.com

CASH GRAB 2009

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$11 billion in new Federal Medicaid funding is “not a blank check.”

President Obama and Congress are sending $11 billion in Medicaid funds to New York State. This funding must be used the way it was intended:to protect essential healthcare services forNew York’s most vulnerable residents.

Albany should use these “FMAP” fundsto invest in primary and preventive care,and to protect our hospitals, nursing homesand home care providers from the devastatingcuts proposed by Governor Paterson.

Tell Albany: Healthcare dollars should be spent on healthcare.

“These funds are intended to go directly towards helping struggling Americans keep their healthcare coverage.”

— President Barack Obama,National Governors Association, February 23, 2009

New York State’s Medicaid Shortfall 11 Billion.0000

Eleven Billion

President of the United States

February 2009

For Healthcare

United States Federal Government

Washington, D.C.


reservations about the proposal, including Paterson, claim that raising taxes on high income earners may encourage them to move out of the state. In one estimate, wealthy fl ight caused by the proposed tax hike would cost 22,000 private sector jobs, according to a study released by the Manhattan Institute last month.

E.J. McMahon, director of the Manhattan Institute’s Empire Center for New York State Policy, said that the economy could be damaged badly even

without an exodus of wealthy residents.“It doesn’t matter how high you jack

up taxes in New York: A-Rod and Katie Couric will still be here,” Mr. McMahon explained. “That’s not the kind of person we’re talking about. We’re talking about entrepreneurial, job-creating people who in a severe recession are the only people who have choices about where to be and what to do.”

But New York experienced no such effect when it raised taxes on millionaires in 2003 (although McMahon notes that the 2003 hike provides a poor basis for comparison, since they were temporary and mitigated by federal tax cuts). Studies have shown that California and New Jersey have not experienced the phenomenon either, despite some claims that fi nancial problems in those states are partly attributable to tax increases on the wealthy.

According to a study conducted by the California Budget Project, the number of millionaire taxpayers in California increased by nearly 50 percent in the three years after the passage of 2004 legislation raising their taxes. That hike increased taxes on those making more than $1 million to 10.3 percent—the same rate currently proposed under the fair share plan in New York. In addition, the average income of those who chose to leave the state was less than the income of those who stayed.

There are other studies that point to the contrary, but even Kim Rueben, a senior research associate at the Tax Policy Center in Washington who opposes New York’s income tax hike, agreed that fears of fl ight do not hold water.

“There’s no empirical evidence that people have left due to top income tax rates,” she said.

The fate of the tax is far from certain. It has strong support in the Assembly, but Democrats’ narrow majority in the Senate and less than enthusiastic support from Majority Leader Malcolm Smith (D-Queens) seem to be endangering the proposal.

State Sen. Eric Schneiderman (D-Manhattan/Bronx), who introduced the bill, predicted that its basic three-tiered structure would be included in the budget, albeit potentially with some “tinkering” on the details.

The alternative plan submitted by State Sen. Jeff Klein (D-Bronx/Westchester), which would double the standard deduction for all taxpayers making less than $250,000 and give the tax cut in form of a debit card to ensure that the money is spent, has gained little traction, despite being backed by the Retail, Wholesale and Department Store Union, a strong Democratic ally. Klein’s plan would increase the standard deduction to $15,000 for a single person. Politics at play within the Democratic conference have been blamed for the lack of interest shown in the bill, with some seeing the WFP as insistent that only its plan be presented as an option.

Where things go from here is unclear. State Sen. Liz Krueger (D-Manhattan),

who chairs the Select Committee on Budget and Tax Reform, said she expects some personal income tax adjustment in the budget.

She added, however: “I don’t think it’s necessarily that bill,” referring to the fair share proposal. Krueger noted that because the economy is likely to continue deteriorating, the state’s sources of revenue will be revisited several times over the coming year.

“I don’t think we’re doing one budget this year, I think we’re doing one every three months,” she said. “We’re not going to be able to wait a year to reevaluate where the state is.”

Direct letters to the editor to

[email protected]

BY ROSS GOLDBERG

As legislators debate whether to levy a “millionaire’s tax” on New York’s wealthiest

citizens, opponents to the measure are sounding a familiar alarm: a surcharge on the rich, they say, will simply send high-income residents fl eeing from the state.

That is the argument being made by some of New York’s most powerful politicians, including New York City Mayor Michael Bloomberg (Ind.), who has called it “crazy” to increase taxes on people with the means to move. The argument packs considerable punch during a recession, when the prospect of hemorrhaging job-creating entrepreneurs can scare even the most populist of leaders.

The argument, however, is largely unsupported by the facts, according to many economists—including some who oppose the top bracket tax increase—who insist that wealthy fl ight is a myth.

“Most people are not as tax-sensitive as we think they are,” explained Iris Lav, deputy director of the Center on Budget and Policy Priorities in Washington, D.C. “There are a lot of reasons why people live where they live. They live there because their businesses are there, because they like it, because their families are there. State income taxes are pretty low on their list because it just doesn’t make that much difference to them.”

Backers proposed the income tax hike to help close New York’s $14 billion

budget gap. Most prominent among them is the so-called “fair share” plan, which would increase marginal tax rates on New Yorkers making more than $250,000. The tax hike is tiered, so that while taxes on income exceeding $250,000 would rise 1.4 percent, taxes on income exceeding $1,000,000 would increase 3.45 percent, to a total of 10.3 percent. Currently, all households making more than $40,000 pay the same 6.85 percent marginal rate.

Many Democrats in the Legislature,

as well as the Working Families Party (WFP), which is lobbying heavily for the bill, argue that the tax is the least painful way to close New York’s budget defi cit. Deep spending cuts proposed by Gov. David Paterson (D) would only lengthen the economic downtown by undermining important public services, said WFP spokesperson Dan Levitan. The party believes raising taxes is more effi cient, particularly on the wealthy, who are less likely to spend their income than poorer people.

But those who have expressed

A Thousand Opinions on Effect and Future of Millionaire’s TaxFight over proposals, but economist near-unanimity against wealthy fl ight

“There are a lot of reasons why people live where they live,” said Iris Lav,

deputy director of the Center on Budget and Policy Priorities in Washington

State. “Income taxes are pretty low on their list because it just doesn’t make

that much difference to them.”

How Would You Fix the Budget?

“One possibility would be giving the governor the same power that the mayor of the City of New York has to es-tablish the overall revenue number. The mayor of New York City can effectively set the overall expenditure total for the budget or at least most [of it], with room for some tinkering, but for the most part can set the overall parameters of the budget because the mayor has the power to decide what the revenues will be. Under the city charter, New York’s governor has more budgetary power than those in most states, but does not have this particular power. And if the governor did have that authority, you would not have the perpetual budget gaps that the state continually faces.”

BOB WARD, deputy director of the Rockefeller Institute of Government:


CASH GRAB 2009


BY SAL GENTILE

Bob Master has met with State Sen. Brian Foley (D-Suffolk) more times than he can

remember. He has gleaned aspects of the newly minted senator’s politics, he has sized up Foley’s place in the conference and he has gauged the Long Islander’s interest in a labor-backed proposal to raise taxes on wealthy New Yorkers.

But on the last item, he is still not sure where Foley comes down.

“He is fundamentally sympathetic to the idea of progressive taxes,” said Bob Master, the legislative and political director for the Communications Workers of America and co-chair of the Working Families Party, which are both pushing the plan. “He hasn’t exactly made up his mind as to whether this is the right bill.”

The powwows with Foley are part of a new and unfamiliar dynamic confronting labor unions in the Democratic Senate. Individual members no longer fi nd themselves under the iron rule of an imperious overlord: the majority leader.

The current one, Malcolm Smith (D-Queens), has a tenuous hold on power with the Democrats’ two-seat majority. Even as Gov. David Paterson (D) has taken the public heat for administration infi ghting, Smith has lagged in putting together a staff and assembling a leadership structure since striking a deal to lead the conference just days before the session began.

The shifting political terrain has empowered unions to take their proposals directly to the individual members of the conference, rather than lobby Democratic leaders. If labor unions attract enough rank-and-fi le support in the Senate, they

say, they can force Smith’s and Paterson’s hands.

Sensing a leadership vacuum, the state’s disparate unions have also been consolidating their power by partnering in ways that would have been impossible under the Republican majority.

“It’s provided a greater opportunity for us because we have the time to spend to deal more with understanding what we all have in common,” said Dick Iannuzzi, president of the New York State United Teachers, of the cooperation among unions. “And that certainly helps you to build a strong coalition.”

NYSUT, which endorsed several

Republicans in key races in 2008, has joined the WFP-led coalition to push for higher taxes on those making over $250,000 a year. 1199/SEIU, the powerful health care union and longtime ally of Senate Republicans, has been pouring money and resources into the campaign as well.

“They bring a huge amount to the table here, huge,” Master said of his new allies. “To have [us] working together, which is unprecedented, makes for an extremely potent combination.”

But not every union has gained as much access to the new Senate majority.

The public employee unions, among the Republicans’ strongest allies, have found themselves shut out from the negotiating process for the fi rst time in years.

Literally.“We’ve tried to set up appointments

with [Smith], and we’ve been unsuccessful,” said Arlea Igoe, secretary-treasurer of the Public Employees Federation. “We’re not sure where this disconnect is coming from.”

The relationship between Smith and the public employee unions has been contentious since Smith declared in January that “patronage day is over,” and proposed cutting the state workforce in half. The statement was widely seen as a dig at both the Senate Republicans and the unions that helped them stay in power.

Some of the unions have since mended fences with Smith and Paterson, both of whom have backed off proposals to cut benefi ts for public employees. But even when they do get the chance to sit down with the Democratic leaders,

representatives for the public employee unions make little headway.

“We met with the administration last fall and offered them about a dozen recommendations of things that could save hundreds of millions of dollars. And they’ve done virtually none of them,” said Stephen Madarasz, communications director for the Civil Service Employees Association. “They seem receptive to what you’re saying, and then nothing happens. … We’re baffl ed.”

Republicans, meanwhile, have quietly maintained ties with the unions, hoping to wrest control of the Senate from Democrats in 2010. When the party fell from power last year, many Republicans blamed their awkward alliance with organized labor and promised to fi nally shed those ties once they were in the minority.

But as Paterson’s approval ratings plummet and Democrats hash out what is likely to be one of the most unpopular budgets in decades, Republicans have sought union support in the belief that they may be able to regain the majority in 2010.

“They may be holding back now because, if the landscape can change a little bit more, they can use [the unions’] money,” said one Republican operative of the party’s ties to labor. “They’re not about to make the decision yet. … And frankly, with Paterson taking on all this water, they don’t have to.”

On an ideological level, many Republicans dislike the unions’ push for increased taxes. They support cutting benefi ts, restructuring the pension system and slashing the state workforce.

But they may have no choice but to stomach an uncomfortable relationship with organized labor if they want to win back the majority.

That fact is not lost on the unions.“They know us and they’re continuing

to work with us,” Madarasz said of the Republicans. “They have to.”

[email protected]

Alliances and Grumbling as Unions Find Footing in Shifting Albany TerrainNew coalition gains infl uence, once-powerful public employee unions shut out

How Would You Fix the Budget?DALL FORSYTHE, budget director for former Gov. Mario Cuomo:“I think chang-ing the [dead-line] day is a good idea. Make it July 1 like most of the other states.”

A broad coalition of unions representing public employees andhealth care workers is pushing for an increase in taxes on those making over $250,000 a year.

The health care workers’ unions, traditionally strong Republican allies, are partnering with Democratic-aligned unions to protest Gov. Pater-son’s proposed cuts to Medicaid.

CASH GRAB 2009

151515

who pays the

The Executive Budget proposal for education

would devastate New York’s public schools and

reverse the progress we’ve made in education, from

pre-kindergarten through post-grad. New Yorkers

overwhelmingly support raising the income tax on

the wealthy to protect vital public services and

oppose cuts to education and health care.

Do the right thing: Ask our wealthiest citizensto pay their fair share. Don’t balance thebudget on the backs of our neediest children.

price?

www.nysut.org

New York State United Teachers represents more than 600,000 professionals in education and health care.

Richard C. Iannuzzi, President

When schools get cut,


Gone are the days of gift baskets and golf course rendezvous. Gone too are the steak dinners and Sidecars at Jack’s. The passage of harsher restric-

tions on lobbying in state government a decade ago have severely limited the where, when and how of influence peddling, forcing many in the field to get down and dirty with the details of policy and legislation.

The new political landscape, with Democrats in control of the state government, has also reshaped how lobbying is practiced in Albany.

“Anybody who thinks you’re going to pass a piece of legislation because you bought someone a ham-burger is either delusion-al or stupid or lying,” said one lobbyist.

With the Senate under Democratic con-trol, many lobbyists are already learning their old techniques no longer hold sway. Some are reporting of having to lobby each of the 32 Senate Democrats individually to get certain poli-cies passed, making for long days trudging back and forth between the State Capitol and the Legislative Office Building. But even though Democrats are excited to be in the majority and fairly accessible these days, lobbyists still have the arduous task of getting all 32 Democrats to ensure a margin of victory for any legislation or policy.

For James Featherstonhaugh, a veteran Albany lobby-ist, there are two ways into a legislator’s good graces. The first, he said, is through constituent contact, introducing lawmakers to people from their own districts that can help localize whatever the issue the lobbyist is trying to sell.

“All legislators take constituent complaints seriously,” Featherstonhaugh said. “But sometimes you just can’t do it.”

If a lobbyist is unable to find a constituent to serve as a prop, then Featherstonhaugh suggests targeting a legisla-tor’s senior staff with what he calls “simple substance.”

Other lobbyists argue against the simple approach, preferring to win over legislators with in-depth research reports and policy statements. But most agreed that PowerPoint presentations can only go so far. After all, the best lobbyists are often seen as the ones that can remember the names of a legisla-tor’s spouse or children.

“Learn what people’s wives did, what their kids did, what their girlfriends or boyfriends did,” one for-mer lobbyist said. “What made them tick? What were their political interests?”

Ultimately, though, patience can be a lobbyist’s best tool of the trade.

“You’re going to have to explain your issues to a whole new level of staff people,” said a lobbying source. “When a lobbyist loses patience, that’s when they should get the hell out.”

—Andrew J. [email protected]

Lobbyists Begin To Piece Together New Approach for New Albany

“All legislators take constituent complaints

seriously,” James Featherstonhaugh said.

“But sometimes you just can’t do it.”

BY ANDREW J. HAWKINS

Sensing that the GOP’s hold on the State Senate majority was slipping, Albany lobbyist-

extraordinaire James Featherstonhaugh fi gured it was time to recalibrate. So he brought on Frank Hoare, the former executive director of the New York State Democratic Party, who also once served as an aide to both Attorney General Andrew Cuomo (D) and Assembly Member Denny Farrell (D-Manhattan).

Hoare was to be the fi rm’s Democratic ace-in-the-hole.

“There is hardly a Democrat in the entire state he hasn’t done business for,” said Featherstonhaugh, a one-time business partner of former Senate Republican leader Joseph Bruno.

Republican connections like Featherstonhaugh’s have little traction in the new Albany, where Democrats now control all the levers of government. But Featherstonhaugh dismissed the idea that his fi rm is a Republican shop.

“That’s what all of the newspapers have been saying for 20 years,” he said. “It’s always amused me to some extent.”

Still, Featherstonhaugh could see the writing on the wall, as could other lobbying shops that had long prospered from their relationships with Senate Republicans. Powers and Company, for example, a fi rm started by the former chairman of the New York State Republican Committee, William

Powers, also moved to quickly consolidate its relationship with soon-to-be Senate Majority Leader Malcolm Smith (D-Queens) in the months before the election, hiring one of Smith’s former staffers, José Paulino.

Kenneth Shapiro, a partner at Wilson Elser Moskowitz Edelman & Dicker LLP, said that the key to survival after a major political shake-up like the one Albany just experienced is far-sightedness.

“I’ve always supported the minority party in both houses,” Shapiro said. “When they went on to become majority senators, they remembered.”

But after 70 years of Republican control in the Senate, the Democratic coup has hit some lobbying fi rms pretty hard.

“To some, it must have seemed like the GOP rule would last forever,” said one Democratic legislator-turned-lobbyist.

The half dozen or so “Republican niche fi rms,” usually made up of former Senate GOP staffers and Bruno loyalists, are said to be having a much rougher time adjusting. According to their competitors, lobbyists like Victor Farley, who served as counsel to Bruno and two of his GOP predecessors, and Kenneth Riddett, another former counsel to Bruno, have had trouble fi nding clients in the new Albany.

Long ignored by most advocates and powerbrokers, Senate Democrats are now in the majority and inheriting the popularity—and headaches—that come with it. But lobbyists are fi nding the Democrats more diffi cult to approach than their Republican

predecessors, with some complaining about having to arrange meetings with each member of the conference individually to push certain issues.

“There’s a lot more involved getting those 32 people, who have never worked together as a group, to agree on something,” said one Albany lobbyist. “It’s a much more diffi cult task than it was to get the last Senate majority to sign on to a position.”

The type of clients seeking lobbyists has also changed with the balance of power.

“This time last year we were doing a lot of labor and a lot of corporate stuff,” one city-based lobbyist said. “This year, there’s certainly been growth on both sides for people who are concerned about the state budget. It’s really sucking all the oxygen out of all the other issues.”

The slew of so-called nuisance taxes proposed in Gov. David Paterson’s (D) budget has incited a number of groups to seek out lobbyists to oppose them. Others are reporting fi nding new clients in need of lobbying on housing, social

justice, universal health care, marriage equality and other issues expected to be addressed by the Legislature now that Democrats run both chambers.

For example, Paterson’s move to limit tax credits for movie and television producers has spurred a number of broadcast media advocates to hire lobbying fi rms to argue for keeping the credits in place. Also, the National Rifl e Association has stepped up its lobbying presence in Albany, presumably as a result

of losing a key ally in the Senate GOP.The federal stimulus package, which

is expected to pump billions into the state’s beleaguered economy, is also causing much confusion among lobbyists. Potential clients are beginning to approach fi rms with questions about the funding process, even though most are still unsure how that process will work.

“The state needs to devise a system for identifying projects,” said one lobbying source, “because nobody knows exactly how it will happen.”

Regardless of who they represent, those fi rms with a large, experienced lobbying staff—“a complete bench,” as one former lobbyist described it—will be the ones best positioned to sell their ideas to the new Senate majority and get bills passed. Patricia Lynch Associates, Malkin & Ross and Hinman Staub Advisors LLC, which all fi t this description, are expected to do well navigating the new Albany, observers say.

Two shops that do more consulting than lobbying—the Parkside Group and Red Horse Strategies—are also expected to do well, based on their preexisting relationship with Senate Democrats. But one former lobbyist cautioned that these fi rms will always be out-performed by the veteran shops, mainly because they lack the time and patience to do the massive amounts of research and preparation that lobbying demands.

Even though many clients have less money for lobbying fees this year amid the economic downturn, several lobbyists reported a rush of activity, in light of all the uncertainty and chaos that surround the state capitol.

“It’s almost like a recession-proof industry,” one lobbyist said, “but not quite.”

[email protected]

Albany Lobbyists Hire and Recalibrate Amid Recession and One-Party ControlTroubles wrangling Senate Democrats, most veteran fi rms still seen as strong

“There’s a lot more involved getting those 32 people, who have never

worked together as a group, to agree on something,” said one Albany

lobbyist. “It’s a much more difficult task than it was to get the last Senate

majority to sign on to a position.”

CASH GRAB 2009

171717

Times are tough for all of us. But they areparticularly difficult for the more than 200,000children who attend Catholic schools in theEmpire State and their parents. In spite of thefact that 99 percent of our students graduatehigh school and more than 95 percent go tocollege, our schools are closing because of alack of money. Making this situation worse isthat the State of NewYork sometimes fails toobey its own 1974 law that requires it to re-imburse 100% of the expenses that ourschools incur in order to comply with state or-dered mandates. Please make sure that thislaw is followed and the State Education De-partment reimburses all the costs thatCatholic schools incur because of New YorkState mandates.We know times are tough for everyone. But

please don’t make matters worse by short-changing Catholic schools and their stu-dents.

Sincerely,Patricia GabrielPresident,Federation of Catholic Teachers718-370-0081

AN OPEN LETTER TO GOVERNOR PATERSON AND STATE LEGISLATORS

506ALLI ED PR I NTING

N E W Y O R K

TRADES COUNCILUNIONLABEL


BY SAL GENTILE

Senate Republicans are trotting out a familiar rallying cry this budget season, charging

that Democrats from the city are shortchanging upstate and suburban New York.

Shut out from budget negotiations for the fi rst time in decades, Republicans in the State Senate have accused Democratic leaders, all three of whom are from New York City, of looking out for their own backyard fi rst.

“First priority when they talk about things is always New York City,” complained State Sen. William Larkin (R-Orange/Ulster).

Gov. David Paterson’s (D) budget proposal has rekindled a long-running debate in Albany over how much money to take from New York City—which generates more than half of the state’s revenue—and send upstate.

Regions like the North Country have historically wielded outsize infl uence in the budget process because they swing control of statewide races. With the Senate now in the balance, this could be intensifi ed.

Long Island and the Hudson Valley

have raked in more than their fair share because they are considered electoral battlegrounds.

Many thought that dynamic would change once State Sen. Malcolm Smith (D-Queens) became majority leader, and the “three men in a room” were all from New York City.

But the fi ve boroughs are still slated

to lose more than $1 billion in this year’s budget, including court-mandated dollars to city schools and several hundred million in unrestricted aid.

The three men in a room may have changed, but the political reality has remained the same.

“[Democratic leaders] realize that the Senate Democrats were able to garner the majority in the Senate with victories in suburban downstate and also upstate

New Budget Problems, But Old Claims of City Bias Remain StrongScramble to send money upstate, despite all three men in room from Big Apple

Regions like the North Country have historically

wielded outsize influence in the budget process because they swing control of state-

wide races. With the Senate now in the balance, this

could be intensified.

E.J. MCMAHON, director of the Empire Center for New York State Policy:“I’d cap spending growth. If you related spending growth to either infl ation or our personal income right now, in a way that was inviolable, nobody could be propos-ing a $6 million tax increase because you couldn’t increase spending, which would drive an 8-percent spending increase. You’d have to actually spend in line with what the economy could afford.”

FRANK MAURO, executive director of the Fiscal Policy Institute:“At the federal level, the U.S. Offi ce of Management and Budget [OMB], which is the equivalent of the New York State Divi-sion of the Budget—all the tables that are in the president’s proposed budget are made available on their website in spreadsheet format so it’s easy to download the data in a way that’s easy to analyze. … The OMB has been doing it since sometime in the late 1990s, so they’ve been doing it for at least a decade, so it’s something that’s obviously technologically possible. I think that would help to make the budget more accessible to outside organizations that have an interest in analyzing either all or part of the budget.”

How Would You Fix the Budget?

New York,” said State Sen. Brian Foley (D-Suffolk), one of the Republicans’ prime targets in 2010. “So they are going to look after our interests.”

But even the draconian cuts to the city have failed to blunt Republican attacks. They point to the governor’s defi cit reduction plan, which the legislature passed in February, as evidence of the

Democrats’ bias toward the Big Apple. Republican leaders were barred from the negotiations over that plan, which they say gutted programs important to upstate.

“It was raids and taxes,” said State Sen. John Bonacic (R-Delaware/Sullivan/Ulster). “And it was done, really, by three Democrats from New York City, without any input from elected offi cials that represent the other 48.5

percent of the people of this state.”Republicans have pointed to two

elements of the plan that they say will disproportionately hurt upstate: cuts to the State University of New York and the New York Power Authority.

The governor’s plan drew millions from SUNY and funneled the vast majority of it

into the state’s general fund, forcing the system to raise tuition in the middle of the year. But the package left the City University of New York largely untouched.

“There’s a clear disproportion,” Bonacic said.

Republicans have also protested the so-called “sweeps” from NYPA, which provides incentives to companies moving to upstate and western New York by subsidizing their energy costs. Without those incentives, Republicans say, many companies will be unable to hire workers in upstate regions already hit hard by the economic crisis.

“It hurt mainly Western New York, because that’s where most of the companies had been receiving the cheaper energy power, for job creation,” Bonacic said.

Even Democrats fi nd themselves making the case for sending more money upstate, rather than hit back at Republican attacks.

“Upstate and downstate depend on each other,” said State Sen. David Valesky (D-Madison/Onondaga), who has the task of defending himself against claims of city-bias in his marginal seat, adding, “it is my responsibility to advocate for what is best for upstate, and I do so proudly.”

[email protected]

The publication for and aboutNew York State Government


CASH GRAB 2009

191919

www.nycapitolnews.com20 March 2009 THE CAPITOL

202020

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THE CAPITOL MARCH 2009 21www.nycapitolnews.com

BY CHRIS BRAGG

In the mid-1970s, when the city’s fi nances were collapsing, Lewis Rudin convinced many developers to

prepay hundreds of millions of dollars in real estate taxes. The city was saved from bankruptcy, and the Association for a Better New York (ABNY) was born.

Now, with the city and state once again on the brink, Rudin’s son, William, who succeeded his father as ABNY chairman, is looking to build a new coalition. But this time, the members are further afi eld than the real estate community, and their contribution is meant to be ideological rather than monetary.

The loose coalition of ABNY, the Business Council of New York State, the Real Estate Board of New York (REBNY) and the Citizens Budget Commission (CBC) consists of a coordinated effort aimed at rehabilitating the state budget by trying to put the focus on long-standing spending problems and generally opposing tax hikes.

The group is largely in favor of Gov. David Paterson’s (D) original budget proposal.

“We have to use what resources we have to make sure people understand what the governor is saying,” Rudin said.

For the others in the coalition, the current fi nancial crisis is the prime moment to act.

“This is our opportunity,” said Business Council president Kenneth Adams. “And if we don’t take advantage of the opportunity to solve this problem in the next 18 months, then it could take generations to fi x.”

The principals, who include Rudin, Adams, REBNY president Steve Spinola and CBC president Carol Kellerman,

began meeting in mid-December, plotting how to promote what they call a “rational” approach to the budget built on the overarching tenet that the state not use federal stimulus money to simply plug budget gaps. They argue this would be nothing more than a band-aid on a systemic spending problem, especially with Wall Street mired in a long-term decline.

More specifi cally, they all support the pension reform plans put forward by Paterson and New York City Mayor Michael Bloomberg (Ind.).

Each member is charged with bringing something to the fi ght. The CBC shares intelligence it collects about the budget with the others before their studies become public. ABNY has a powerful, broad and bipartisan membership in New York City. The Business Council peddles

infl uence statewide. REBNY has a well-positioned lobbying arm in Albany.

But they still may be no match for powerful public sector unions that can unblinkingly spend $1 million per week to bash the governor’s proposed reductions in health care spending. On the fi nancial front, coalition members admit they

simply cannot compete.“We’re not going to win the overall

public relations battle. We’re not spending that kind of money,” said Spinola.

The idea instead is to collectively serve as a counterweight, writing op-eds, appearing jointly on television and meeting together with lawmakers.

The coalition’s opponents reject their argument as unimpressive.

“I’m not surprised to see that the state’s most powerful interest groups would be out making the same tired old argument and wanting to contribute nothing during an economic downturn,” said Working Families Party spokesperson Dan Levitan.

There are barriers, however, that make working collectively diffi cult. Getting in the same room is a task: The group

was originally supposed to meet every two weeks, but that now happens only once a month and usually over conference call.

The four principals have not yet met all at once with a single lawmaker. They have appeared only once together on television, in December, on New York 1. They have published one op-ed together on pension reform, which appeared in the Albany

Times Union on Feb. 1. More are planned, but the schedule and outlets are not set.

Kellerman says at this point she essentially considers the alliance a “working group” that exists primarily to share information over e-mail and conference calls, so that individual members can speak from similar talking points while conducting business separately.

“It’s not a formal group in any way,” said Kellerman. “It doesn’t really have a structure.”

Sometimes, the groups cannot speak as one simply because their memberships work cross-purposes. For instance, Kellerman has chosen not to include her name in an upcoming Daily News editorial in opposition to the “millionaire’s tax,” because the CBC is less strongly opposed to the tax than the other groups.

Likewise, the CBC wants to rid the state of Empire Zones, but many members of the Business Council benefi t from the tax breaks those bring. And Kellerman does not think an increased sales tax on consumer items like soda is such a bad idea, while the others oppose all tax increases.

There have been other disconnects as well: though everyone in the coalition counts reforming the state’s health industry as a key aspect of cutting state spending, that is not one of the coalition’s major talking points. (Notably, 1199 and the Greater New York Hospitals Association are both members of ABNY.)

And while the coalition’s broad goal is clear, the specifi c solutions they are promoting for this year’s budget session remain somewhat vague. Still, Rudin noted that the group has at least had some success in getting their big idea across to another diverse set: the New York Post, Daily News and New York Times have all endorsed their notion of reducing the state’s long-term spending.

But Adams is confi dent that he and his colleagues are getting their message across, with the situation growing increasingly worse.

“People could say we needed to cut spending before, but now it’s an economic reality,” Adams said. “All I can say is, tune in. Stay tuned.”

[email protected]

ABNY-REBNY-CBC-Business Council Coalition Moves in Unison, MostlyBalancing schedules and competing interests in advocating for budget reform

“This is our opportu-nity,” said Business

Council president Ken Adams. “And if we don’t

take advantage of the opportunity to solve this

problem in the next 18 months, then it could

take generations to fix.”

Carol Kellerman Steve Spinola Lewis Rudin Eric Adams

CASH GRAB 2009


State budget cuts threaten a short-fall of up to $300 million for health care in New York City, and stimu-

lus spending could affect an even great-er amount. With deadlines looming, Linda Gibbs, Deputy Mayor for Health and Human Services, and Alan Aviles, President and Chief Executive Offi cer of the New York City Health and Hospitals Corporation (HHC) traveled to Albany to make their case to legislators and join City Hall and The Capitol for an On/Off the Record breakfast Feb. 25 sponsored by the Greater New York Hospitals As-sociation.

The discussion ranged from how to sort out the Big Apple’s fair share of cuts, the on-the-ground effects of Med-icaid cuts, to what might have been dif-ferent if their boss, New York City May-or Michael Bloomberg (Ind.), had been president instead of Barack Obama.

What follows are selections from the on-the-record portion of the morning.

Q: We have an enormous budget hole in the state. The money will have to come from somewhere. Why not from New York City, and, specifi cally, not from social services and health care?Gibbs: Well, I don’t think anyone has said that it shouldn’t, in its fair share, come from New York City, and the mayor’s been really clear on this. We manage our own huge budget and have our own budget challenges that we’re trying to resolve, so we know very well that you have to look at program cuts, that you have to look at new revenues, that you have to look at any effi ciencies that you can get out of the existing system, and so we can appreciate the seat that the governor is in, in trying to balance the state’s budget and in trying to have sound fi scal planning for the long term for the state. And so, as we assess the state budget, it’s not, “Don’t take any money out of us and take it out of everybody else.” It’s more, “Have you set forth a series of proposals that, programmatically, are maybe ‘it’s the best of the worst’ in terms of what you need to reduce and how you need to constrain spending, and has New York City been treated fairly, or have we been

treated unfairly?” So we feel very strongly as we look at the budget, there are some pieces that in fact are fair but then some that are taking more than a fair share out of New York City. So it really is around making the case of where we believe the impacts are disproportionate on the city. And when we look at the health care budget, we have to understand the impact of that on the ability of our public hospital system as well, in order to plan for its own fi scal stability over the long term.

Q: How will the cuts that are being talked about change the way health care services happen in New York City?Gibbs: There are a number of provisions. Probably our biggest concern with some of the way that the state has reduced spending in the social services area is where they’re reducing funding that comes to localities but they’re not reducing the mandate for that underlying service. And so it’s just a matter of cost shifting to the locality and increasing our fi scal burden in a way that we can’t control. So, for instance, withdrawing all the funds to run our food stamp program, to run our cash assistance offi ces. The state had basically said, “We’re no longer going to help you to pay for that,” without giving us any increase in resources to accommodate that increase. And you can’t, you obviously can’t close down the offi ces. There’s no way you’re going to serve poor people, to meet their needs if you’re not spending those administrative dollars. So that’s one where it’s an unfunded shift of a mandate to the localities, taking the dollars away, but not really helping us to fi gure out how to downsize or reduce programs. So that’s a real unfunded mandate, a burden shift.

Q: Are you surprised, with the leadership of the state all made up of New York City residents, that you are having trouble with this?Gibbs: Not at all. Because of course, as we all know, whenever you’re in a leadership position you’re the leader of the entire jurisdiction and not just your home jurisdiction. And the leader of the

entire state that you represent. And these are natural tensions that will always come up in the budget process—on the other side of the ledger we always try to recognize where there are good actions, we are allies with the governor’s offi ce on a lot of the Medicaid reform activities. We believe the Medicaid rate-setting structure does incentivize some bad behaviors and practices and needs to be restructured to incentivize good practices. The good preventive care, the good community-based care, rather than incentivizing inpatient care. So there are certainly parts of the governor’s plan expanding some of the coverage to some additional populations in need of health insurance.

Q: A lot of people are concerned that New York will take the stimulus money and use it to fi ll the gaps rather than to create new spending which will create new jobs. Why do you think using it to plug budget gaps is a better use of it?Gibbs: I think it’s a balance. And I think that both of those objectives are legitimate objectives and, to be clear, the stimulus package was quite specifi c that budget relief was among the appropriate ways to use the stimulus money. And, if you think about it, if you didn’t use it for budget relief, it just means that the programs would be closing faster, there would be more layoffs, and the people who run those government programs wouldn’t be there to provide services—and it would be counterintuitive to sort of shut down a huge segment of activity at the same time that you’re building a massive new segment. So you get quicker results by retaining some of those government services. But budget relief was a very clear, acceptable and encouraged use of stimulus dollars. But you don’t want to use it all on budget relief, because there is this increase in need, and we have to make sure that we have strategies in place to help those who were hardest-hit. Mortgage foreclosures, homelessness, making sure that we’re using resources to prevent people not only from losing their homes but from actually needing to turn to shelters or, God forbid, to the streets as their only recourse. Jobs. Training. Helping to identify where the new employment is going to be, get the skills, into the workforce, to meet that, both of the traditionally hard to employ and more marginalized segment of our economy that will need our attention now more than ever, as well as people who are recently unemployed. And thinking about how we can use the stimulus to offset on a macroeconomic level some of the worst impacts of the recession at the same time that we pay attention to the fi scal integrity of the city and state budget.

Q: Especially with Medicaid, what do we really need to do to make sure

this money is being spent in the best possible way?Aviles: Well for us, I mean just to focus for a moment on the public hospital system in New York City, we provide a tremendous amount of care to the residents of New York. So 1.3 million New Yorkers receive care through the public hospital system in New York City every year. Last year 450,000 of them were uninsured. That’s an 8-percent increase from the year before, which gives us a sense, not surprisingly, of what the trend lines look like in terms of our role as a safety net, not just to Medicaid patients but for the vast number—and the growing number—of uninsured individuals. … We invest very heavily on that front end of primary care, preventive care, early screening for disease, particularly around cancer and cardiovascular disease, so all of that sort of hangs in the balance. And the real problem at the moment is you have this countercyclical phenomenon for systems like ours, safety net systems not just here but across the country. Because we’re so dependant on Medicaid dollars—65 percent of our revenue comes from Medicaid—that the moment the economy starts to tank, that is the moment that both the need for a safety net increases, but it’s also the moment when states become pressed and have trouble meeting their share of the Medicare costs for sustaining this.

Q: What do you think of what President Obama has been doing on these issues?Aviles: When the president was talking to the governors, I think he said something that very much bears on the budget situation in New York and across the country—with regard to the Medicaid dollars in particular, the so-called FMAP dollars, where the federal government is increasing the federal match for Medicaid in order to support Medicaid programs across the country: he said, “It is not a blank check.” The purpose of this money is to secure health care for Americans who need coverage and need access to health care, and I think that’s a very important point, because the reality is that the state will get close to $5 billion going into this next fi scal year to deal with what they have characterized as a $1.3 billion state cut that they need to make—so more than adequate numbers to mitigate the deep cuts that were being proposed. Everybody’s expecting shared sacrifi ce, but it could also move forward the health care reform agenda with some of those dollars.

Q: Maybe if your boss had gone through with his presidential run we might be talking about something different?Gibbs [laughing]: Well, the recession obviously wouldn’t have happened.

Gibbs and Aviles Diagnose Impact of Budget Cuts on City Health Care

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A message from the New York State Trial Lawyers Association Nicholas Papain, President132 Nassau Street New York, NY 10038 Tel: 212-349-5890 www.nystla.org

Don’t believe everything you hear about the legislation that would allow patients access to justice if they belatedly discover they have been harmed by their health care providers’ negligence.

FICTION: S.1729 and A. 4627 eliminate the statute of limitations.

FACT: The legislation actually provides for the same 2 ½ year statute of limitations. It just begins to run when the patient knew or reasonably should have known that an alleged medical error has caused injury, as opposed to when the malpractice occurred.

FICTION: If the statute of limitations were to be eliminated, medical liability premiums would need to be raised by at least another $150-$200 million per year.

FACT: An independent study found that a shorter statute of limitations had “no significant effect” on either malpractice insurance premiums or losses.1 Other independent studies also found that a date of discovery rule has “no significant impact” on the number of claims filed.2

FICTION: High costs are one of the main factors forcing many New York doctors to close their practices or move out of state.

FACT: New York has a rich supply of physicians – the state ranks 4th out of 50 states for the highest ratio of physicians per capita and near the top for every medical specialty.3

1 G. Blackmon, and R. Zeckhauser, “State Tort Reform Legislation: Assessing Our Control of Risks,” in Tort Law and the Public Interest, Peter H. Schuck (cd.) (New York: W.W.Norton & Co., 1991).2 Adams, E. K., and Zuckerman, S., “Variation in the Growth and Incidence of Medical Malpractice Claims,” Journal of Health Politics. Policv and Law 9(3):475488. 1984.3 “Physician Characteristics and Distribution in the U.S.,” American Medical Association, 2008.

© 2009 NYSTLA

NEW YORK STATE TRIAL LAWYERS ASSOCIATION

Protecting New Yorkers Since 1953

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The March 9,2009 Issue of The Capitol

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