Paterson's Choice

Cover Story

Paterson's Choice

by Bruce Fisher

Governor Paterson, The Clinton Succession, and the Albany Crisis

New York State just lost another major employer last week when another Wall Street titan was laid low. The state comptroller has a new report out that suggests that the current recession will see more than 200,000 jobs lost in New York City alone. Meanwhile, trend lines in upstate communities are structurally negative, as out-migration and aging-in-place accelerate, and even the sophisticated, relatively dense city of Rochester has the dubious distinction of having made the list of cities in which so-called “structural” poverty has overtaken another one of its ZIP codes.

Depending on who’s counting, the New York State budget is either $6 billion or $13 billion to the bad this year, and will be $47 billion short over the next four years—and New York State, like every other state I know, is constitutionally mandated to balance its budget. Legislative leaders who met with Governor Paterson before Thanksgiving await his executive budget, due out in January, but didn’t give him a single suggestion as to how they might work with him on the major items—namely, Medicaid ($45.2 billion of the $120 billion budget) and schools (another $21.4 billion.)

For most folks, these numbers make the eyes glaze over.

For the business lobbyists who fund Republican campaigns and for many newspaper editorial boards, there is a simple and obvious solution to New York State government’s money woes. The chorus has arisen, and you have all heard it: Cut, cut, cut.

Governor Paterson is loaning his voice to that choir. Go to his budget crisis Web site (www.reducenyspending.gov) and you will see that Paterson presents the issues very thoroughly, but with a very straightforward and unapologetic bias toward cutting. There is even an interactive calculator, where you can try your hand at reducing spending for big categories of programs.

Curiously, you’re not allowed to increase revenue (i.e., raise taxes) to pay for any of these programs.

And nowhere on Paterson’s Web site is there any reference to the discussion he had back in March with Nobel Prize-winning economist Joseph Stiglitz, who summed up his advice in a letter explaining how it’s a really bad idea to cut government spending during a recession. Neither is there any reference to the proposals for “fiscal stimulus”—also known as federal government spending on infrastructure, unemployment, and Medicaid—that could generate either more tax revenue from wages or budget relief by direct federal subsidy of programs into which the recession is now driving more people.

In sum, there isn’t a good solution to Albany’s trouble. Paterson can’t run a deficit, because the state constitution prohibits it. Paterson can’t instantly cut Medicaid, because claims are rising. Paterson has a legislature whose Republicans won’t cut suburban school aid and whose Democrats support their union allies, who don’t want to hear about forgoing the raises to which they are entitled by contracts they negotiated.

You can bet that the state will curtail reimbursements to county governments—which is why, a couple of weeks ago, I was so upset that the Erie County Legislature was not acting to create a dedicated fund for libraries, parks, arts, tourism and the Cornell Cooperative Extension, all of which will be squeezed out of existence unless the county executive from Clarence offers to raise taxes in next year’s election-year budget.

So what’s a governor to do?

I have a suggestion: Paterson should re-think his pledge to appoint someone other than himself to the United States Senate. If Albany is too much for him, this might be a great time to get out of Dodge.

While the getting’s good

A quick consultation with a senior expert in public law confirmed that it is the governor’s sole power and privilege to appoint someone who meets the US Constitution’s standard—i.e., being alive and not less than 30 years of age—to the unexpired term of a vacant Senate seat. The governor can appoint whomever the governor decides to appoint. The appointment is good until the next even year.

So ask yourself: If you had a choice between with the above-described nightmare versus going to Washington to work with Barack Obama, his new cabinet and the massive Democratic majorities in Congress, wouldn’t you choose the shining City on the Hill over the Mess on the Hudson?

I can’t think of a better time to be a senator than now. I can’t imagine a worse time to be governor than now.

Unless…

Unless Governor Paterson wants to seize the day and make this state an interesting, dynamic, and forceful place once again.

I’m sort of tired, in this crisis, of all the old-think I keep seeing. The Buffalo Niagara Partnership just put forward its annual catch-as-catch-can wish-list of federal and state handouts, bailouts, and rule-revisions. This anti-tax, anti-spending group wants lots of tax breaks and new spending so that old-style crony capitalism can continue to flourish here at the Western Door.

I see that United State Senate prospects Mayor Byron Brown and Congressman Brian Higgins, along with the county executive from Clarence, both endorse the Seneca Gaming Corporation’s Buffalo casino—which the Senecas say they won’t build because it won’t make money—as an economic development bonanza.

And I see that onetime regionalism advocate Kevin Gaughan now spends his time on the a curious crusade not against the existence of sprawl-inducing, duplicative town governments, but rather in an effort to pinch a town board member here and there, leaving town governments intact, intransigent and in the way of meaningful regional governance.

The only bright lights in this part of the state are UB President John Simpson and his visionary UB 2020 plan, Buffalo State College President Muriel Howard and her largely unheralded stewardship of SUNY’s only urban college, and Assemblyman Sam Hoyt and his steady advocacy of high-speed rail, green jobs, and smart growth.

Paterson ought to sit up and take notice: The only way to get through this mess is to get radical.

Revenue, reform, and restructuring

As former Rochester mayor and fellow brand-new professor Bill Johnson and I wrote last week in the Albany Times-Union, Paterson ought to get going right now on putting every single one of the Lundine Commission reforms into his next budget.

Here’s what that means: The governor needs to drive the boat on consolidation and regionalization of expensive, duplicative local government, and use the savings to invest in the stuff that will stimulate the economy.

Why should Simpson’s UB 2020 plan starve so that the county executive from Clarence can continue to subsidize sprawl-inducing roads out in towns whose governments are obsolete?

Why should Muriel Howard’s campus—which brings thousands of students (and their money) up to Buffalo from the New York metro area—face cuts while millions of dollars are lavished on those duplicative, unnecessary administrative structures called suburban school districts? (Hint: New York City has one school district for eight million residents living in 300 square miles. There are 29 school districts within Erie County. Hello?)

Why should Sam Hoyt’s bipartisan leadership of a drive to invest in engineering the next steps of high-speed rail be under-funded so that localities can continue to collect—by last count—more than $4 billion in various state subsidies?

And why should the control boards that allegedly report to the governor continue to soak up staff resources, salaries, consulting and attorney fees without advancing the functional integration of governments—building on Erie County’s national-award-winning computer system?

Paterson is going to have to do a deal with the state legislature that will involve—gasp—revenue, which is the dainty word for tax increases. The state income tax rate will be raised. Paterson is going to have to do a deal with Congress, and soon, if he’s going to get more Medicaid money to meet the rising costs here.

There’s nothing like a good crisis to show what a leader is made of. A good leader does deals that exact a price. So if Paterson is going to get more money from taxpayers, then he should change how it’s spent. If he’s going to get more money from Congress, then he should make sure that it gets to the right healthcare system. There’s no time like the present to stop subsidizing dysfunction.

Now that Paterson has sung the “cut, cut, cut” aria, it’s a good time for him to lay out his agenda for restructuring and for the stimulus that his SUNY leaders, his legislative allies, his president, and his Nobel Prize-winning economists are all advising him to do.

In the alternative, he could just punt and head down to Washington on the 150 mile-per-hour Acela train.

Take it from a visitor, the kind we get here in Buffalo from time to time. Home for the big meal last week, a wistful native found it easier to leave, she said, because “somehow it doesn’t feel any more like Rockefeller’s Empire State.”

That’s true. What our current governor does in the next month will determine how folks feel for years to come about Paterson’s Empire State.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

Reader Comments

Chop Chop
04 Dec 2008, 13:06

I am rather surprised to you complaining about catch-as-catch-can wish-list of federal and state handouts, bailouts, and rule-revisions and then supporting the granddaddy of all catch-as-catch-can wish-list of federal and state handouts, bailouts, and rule-revisions programs known as UB 2020.

As a SUNY alumni, I am incredibly grateful for the sound, affordable education I received there. But, during the Pataki/Bruno era the University at Buffalo really seems to have lost its focus. They are spending $millions a year in an attempt to get a team that compete successfully in Division 1 sports, while at the same time cutting library spending and faculty hires.

They also have a Biotech/health sciences initiative going that would require $billions in public investment to focus almost all research towards biotech and biomedical devices. This endvor builds on the Pataki era and his stupid Centers for Excellence. Buffalo got one for Bioinformatics. $300 million later, we have a center that is half empty and and costs $1 million a year to heat and cool. It now appears (UB2020) that we need to uproot an entire campus and move it next to the Center for Excellence in order to save this white elephant.

UB (and possible other SUNYs) really need to feel some serious budget pain. Bloated upper management salaries and misplaced priories are something we can no longer afford.

RenDog
04 Dec 2008, 13:45

Including Sam Hoyt in this list is an insult to the reader's intelligence. He's been 'radically' doling out slush and taking center-stage at ribbon cuttings since '92. That makes him more of a problem than a solution by any measure.

Christopher Bieda
04 Dec 2008, 13:54

Bruce, what did Stiglitz's letter say about raising taxes in a recession?

WNYmind
04 Dec 2008, 14:59

B. Fisher has really put his foot in his mouth this time. He says, "The only bright lights in this part of the state are UB President John Simpson and his visionary UB 2020 plan..." That is a laugh. Simpson's plan is nothing but a retread of a laundry list of recycled ideas from the same old crowd of people who got Buffalo in the rut it is in decades ago. There is nothinng new in Simpson's plan.

On the academic side, he simply wants to starve the majority of programs at UB in order to feed his flegling bio-med pet project he inherited from past presidents. On the campus development side, he dove-tails this obsession with the desire to relocate the medical school from the Buffalo south campus to the proposed medical campus. It is a game of musical chairs that will leave Buffalo with no net gain and an emptied out south campus which continues to plauge the Heights.

B. Fisher has a long track record of sounding like a broken record. It's all about reversing the development trends in WNY and forced relocation to the rotted out core city known as Buffalo. Bruce needs to read up on Smart Growth. It isn't about abandoning the suburbs and rebuilding an abandoned, politically currupt city. It is about making all areas more livable. A more diverse and vibrant Amherst or Tonowanda is what Smart Growth is all about. Smart Growth is not about emptying out the suburbs in order to prop up Buffalo. If Buffalo wants to survive it needs to compete, and the same is true for the suburbs. They will need to offer a better (smart growth oriented) product as well.

Bruce also needs to get off the boring regionalism kick that has weighed down WNY for years. That boils down to the dead plan to merge Buffalo with Erie County. That's really backwards regionalism at its worst. The last thing we need is to disolve cities. The problem is with the number of villages and towns. The three cities in WNY should be left alone, and the governor should disolve all of the towns and villages. Turn them into unincorporated areas in the county and let them decide if they want to form new, larger cities or be annexed by existing cities. That's the real approach to regionalism (and the approach that will never happen in WNY).

Bruce is also misinformened about the schools for a similar reason. NYC has one school district, so does the City of Buffalo. What is the point of this factoid. Consolidating school districts in WNY would be fine and dandy. All you have to do is cut budgets, close schools, and force people to decided between higher property taxes and larger classroom sizes. In fact, that is what the BPS is in the process of doing (i.e. closing schools and increasing classroom sizes). Bruce seems to be suggesting something different, and more grandious.

Bruce Fisher
04 Dec 2008, 23:16

Professor Stiglitz's letter is posted on the website of the Fiscal Policy Institute, www.fiscalpolicy.org

In New York State law, there are no unincorporated areas. Merger of cities with counties is the successful approach taken in Louisville, Indianapolis and in Ontario cities. Such mergers are legal under the General County Law of New York State, and permissible under Article 1 of the Constitution. (It is a canard that such mergers are unconstitutional.)

I agree that towns and villages should be dissolved. There is also no justification for multiple school districts.

The rationale for these changes is not simply about cost-savings. It is also demographic -- Upstate New York has a shrinking population -- as well as a matter of sound administration of diminishing resources. Many academic economists in the US and Canada have documented the negative effects of sprawl and of town-centered land-use planning. The Munk Institute at the University of Toronto has many publications on this issue.

Finally, on the issue of appropriate investment of public funds in long-enduring educational, transportation and community-quality inputs: they should not be starved or shelved just because $4 billion of state tax money goes to support local governments.

Chop Chop
05 Dec 2008, 08:34

The keyword being appropriate this time I guess. Many of us do not consider it appropriate for UB to ask the state to throw $millions if not $billions at UB2020 and their Disneyland of the North scheme. The biotech emphasis of UB2020 is an idea pulled right out of the 1990's. It distorts all research going on at UB. For example, where is their renewable energy program, a growing area of research in the current millennium? Oh yea, I forgot, UB has Harvey Stenger, coal dude. Way to not go UB.

WNYmind
05 Dec 2008, 11:00

Chop Chop is 1000% correct. UB has picked a silver bullet (biotech) that every other university in the US and abroad has picked and invested 50x to 100x more in. On top of that, other regions have more supportive industry to make biotech turn a profit. It is a pipe dream for UB. More sad, UB has totally ignored the existing industry in the area and lost the opportunity to turn its attention to areas where there is a regional strength (i.e. energy, auto power train technology, waste disposal, etc....). It is not as glamorous as biotech, but UB could actually do more in these areas and have something to show for it.

Bruce Fisher seems to be in a rut. Regionalism, bla bla bla. Boring dude. Bruce is correct, the state could force municipalities to merge. The easiest way to go would be to merge all the towns and villages into one big city in WNY. That would mean there would be 4 cities in the metro area, Buffalo, Tonawanda, Lacawanna, and the new merged city (call it whatever you want, Am-Che-Ton-Clar-Burg, etc...). That would solve the regionalism debate once and for all. The new super city would be the largest city in the region, rule supreme, and could tackle smart growth and land use issues on its own.

It sounds like a plan, call Kevin Gahn and get it rolling.

Christopher Bieda
06 Dec 2008, 10:10

Apparently, Dr. Stiglitz didn't have time to do a rigorous analysis. His statement that "Under [a] proposed increase ... less than one percent of New York taxpayers would pay more. It is hard to imagine that many people would be prompted to pack up and leave New York because of that."

"Hard to imagine." Not exactly the sort of solid reasoning one expects from a Nobel, but it is on its face rather shaky, isn't it? Also, Stiglitz is careful to avoid saying that it is hard to imagine that the affected taxpayers wouldn't move, only that "many people wouldn't" (a group that conspicuously includes unaffected persons). It would not take many of the affected taxpayers making the decision to move to drastically reduce the revenues achieved, especially, as seems probable (at least as probable as other things are "hard to imagine," I suppose) the richest of the affected (being the most severely affected) would be the most likely to move, meaning that the loss of the top 10% of that group to New Jersey or Connecticut would mean WAY more than the loss of 10% of the projected revenues to be achieved. The lack of an exodus in the period 2003-2005 Stiglitz refers to is not particularly comforting, since unlike the current period, that was a growth period, particuraly among the masters of the universe. It is axiomatic among politicos that tax increases are easier to bear during periods of rising income. Fine. Not the case now, even for the rich. (Consider that much of their income comes from the stock market, down 50% from its peak. This affects ALL stock market participants, universally. Wage earners do not often experienece 50% reductions due to contracts, the minimum wage law and the raw fact that they're more likely to lose a job altogether than keep it at a 50% pay cut.)

I am disturbed by the lack of a revenue estimate attached to the tax Stiglitz was referring to. Call ME unimaginative now, but I have a suspicion that the tax increase wouldn't even dent the looming deficit. ("Dent." That's a rigorous term, isn't it? Let's say, "10% haircut.") The tax proposal Stiglitz was referring to was a artifact of the Pataki years when no such immense deficit loomed.

Dee Valenti
16 Feb 2009, 00:45

Hey everyone...did you forget that we live in a country where the people are in charge of the government not the other way around ?

The intricacies of your arguments are interesting but you are not dealing with the fact that when you dissolve a Town or a Village you do not necessarily reduce costs to provide services but you do remove the citizens that much further from the people who are running the Government.

How much local government would you like to see removed ? no more Villages, no more Towns , only Counties who take their cue from Albany ?

Consolidation of services is an issue which can be accomplished without the dissolution of Town and Village Government. The politicians have made such bad decisions for our country that it seems we would be better off making sure that the citizens have direct control over local government operations now more than ever.

Stop these complicated ruminations and get with the real picture....the people need to become more involved not further away from the decision making.

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Paterson's Choice

by Bruce Fisher

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