BALCONY Issues in the News

New York City mayor: Don’t cap state property tax

by Joan Gralla

New York City Mayor Michael Bloomberg on Friday said he opposed the governor’s plan to cap property taxes because it was “undemocratic” and could require the city to pay for the extra costs that result.

Outside New York City, property taxes are the main way that counties, cities and towns raise money. If they can raise property taxes only 4 percent or less each year, the state likely will have to pay more of their budgets, and probably will siphon more of New York City’s tax dollars.

Bloomberg, an independent seeking a third term, on his weekly WOR radio show faulted some other cities for overpaying their workers, saying: “It’s going to become an obligation of the state, which means it’s going to become an obligation of the city.”

Every year New York City, whose economy powers the state, sends the state billions of dollars more in tax revenue than it gets back in aid.

Democratic Governor David Paterson says the property tax cap is needed to cut some of the nation’s highest rates which choke economic growth.

Also, banks’ wariness of real estate loans could lengthen the recession by imperiling job-creating construction projects.

A spokesman for the governor was not available for comment.

Bloomberg cited a range of problems with a plan to improve Manhattan’s Pennsylvania Station by moving its entrance a block west to the James A. Farley Post Office.

Not only were multiple levels of federal and state approvals needed but the design was too complicated.

“You’d have to go through so many twists and turns underground; nobody would want to use it because it would take so long to get down to the track,” Bloomberg said.

Any improvements for the overcrowded transit hub might be limited to just opening up space at Cablevision’s (CVC.N) Madison Square Garden, which sits on top of the station, he said.

Spokesmen for two developers that planned a massive complex around the new Pennsylvania Station, Vornado Realty Trust (VNO.N) and the Related Companies, were not available.

by James M. Odato and Rick Karlin, Capitol bureau

ALBANY — Gov. David Paterson and public employee unions are closing in on a deal to avoid the governor’s proposed 8,700 layoffs. Under the preliminary plan, the state would provide $20,000 “buyouts” to workers who voluntarily leave the payroll, people briefed on details said Wednesday.

The deal, the subject of serious discussions in recent days, calls for the unions to endorse a new pension package — the governor’s proposed Tier V — with more modest benefits terms than those available for decades to public employees.

The deal calls for the governor to drop his layoff plan. But the departures would have to take place this year.

Officials with the Civil Service Employees Association and the Public Employees Federation declined to discuss the deal, and the governor’s spokesmen would not take questions on it.

People briefed on details, however, said momentum for the deal has been building for days, and an announcement appeared imminent on a resolution to the layoff plan. But talks lost steam after news circulated Wednesday that the governor had vetoed a bill to extend expanded pension benefits for newly hired cops and firefighters.

The buyout offer would be for workers eligible for retirement, according to the people briefed, but details were still being sewn together. Initially, the deal would be an expense rather than a savings for the state. The costs could mount, into the tens of millions of dollars, to pay for the buyouts of almost 7,000 workers.

Savings from a Tier V package wouldn’t be realized for several years. Nevertheless, Paterson would be able to boast that he accomplished a major pension change that no other governor could produce.

Paterson accomplished something along those lines Tuesday when he vetoed a generous but costly police and fire pension bill that critics called a symbol of the state’s profligate spending.

The veto came without fanfare and took many in the Capitol by surprise. Noting that “state and localities are hemorrhaging revenue at an alarming rate,” Paterson vetoed a measure — identical to one approved by lawmakers and signed by the governor every year since 1981 — that allowed police and firefighters to continue collecting a more generous pension even as other public employees saw their benefits reduced.

The veto could put police and firefighters on the same footing as other public workers. Currently, so-called “uniformed” workers can retire with half-pay after 20 years of service. Although other state employees also can retire in 20 years under the system, they receive less of a payout, around 40 percent of pay.

Only future hires are covered in the veto, which has no impact on anyone now employed in the public sector.Labor advocates weren’t happy: “I’m kind of puzzled more than anything,” said state Sen. Diane Savino, D-New York City, who co-sponsored the bill extending the fire and police benefit. “This is something you would think the governor would have let us know. … If they’re using this as a bargaining (tool), this is not the way to do it.”

Budget watchdogs hailed Paterson’s veto for breaking what they described as a woeful tradition that favored powerful unions but shortchanged taxpayers.

The veto “is sending a really strong statement,” said Elizabeth Lynam, deputy research director at the Citizens Budget Commission, which studies state spending.

“Gov. Paterson made a gutsy decision,” agreed New York City Mayor Michael Bloomberg.

The higher police and fire benefits force municipalities to put about 15 percent of their payroll toward retirement costs, compared to 7.5 percent for other municipal jobs.

As of March 2008, the average person enrolled in the police and fire pension program earned $88,440, while the average pensioner collected $37,030, according to data from the state comptroller.

Paterson’s veto could be overridden if two-thirds of lawmakers in each chamber vote against him. But that could draw the Legislature into a potentially bruising and high-profile discussion of the state’s growing public employee cost, and the influence that police and fire unions wield over the Assembly and Senate.

Moreover, the veto is a concrete move in a legislative session that’s seen numerous calls for caps on spending as well as property taxes — pleas that have been met with indifference in the Legislature.

James M. Odato can be reached at 454-5083 or jodato@timesunion.com; Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

State pension tiers

New York’s pension system for public workers has changed over the years. Current workers can fall into one of four “tiers,” with benefits dropping from first to last. The tiers are based on the hire date of a worker:

Tier I: before July 1 1973

Tier II: July 1, 1973-July 26, 1976

Tier III: July 27, 1976-Aug. 31, 1983

Tier IV: Sept.1 1983

Police officers and firefighters fall into Tier I or II regardless of their hire date.

Source: Office of the Comptroller

Sparring in Albany Over Raising Wages to Build Lower-Cost Housing

by Manny Fernandez

Two seemingly like-minded political allies — labor unions and nonprofit developers of lower-cost housing — have taken opposing sides in Albany over a bill that would require the developers to pay construction workers the prevailing wage, essentially a union-level wage far higher than nonunion pay.

The developers, many of whom rely on government subsidies to build housing for low- and moderate-income families, say the bill would cut the production in half and increase rents at a vulnerable time for the industry, when the economic downturn has hampered the financing of low-cost housing. Supporters, however, argue that a prevailing-wage law would ensure quality construction and a decent standard of living for workers.

The bill, introduced in the Assembly in January and in the State Senate in April, would require developers of government-subsidized residential housing projects to pay the prevailing wage. It will be debated as part of committee hearings in Albany on Tuesday. Another bill in the Assembly and the Senate would require prevailing wages on projects financed by industrial development agencies.

Under state law, laborers on public works projects must be paid the prevailing wage, which varies according to the trade and location. The proposed legislation would expand the definition of public works to include all government-subsidized building projects by for-profit and nonprofit developers. Most workers who build subsidized low-cost housing in New York City are not currently required to be paid the prevailing wage. Projects receiving federal subsidies are required to pay it, under federal law.

“There is always arguing about what is public work and what is not public work,” Assemblywoman Susan V. John of Rochester, chairwoman of the Assembly’s Labor Committee, who introduced the bill, said in a phone interview on Monday. “This is an effort to try to clear it up.”

A report released last year by a nonprofit policy research group found that imposing prevailing wages on low- or moderate-cost housing projects could increase total development costs by about 25 percent and increase rents in a typical apartment by about $400 a month. The report was prepared by the Citizens Housing and Planning Council, which is made up of housing developers, construction company executives, bankers and academics.

The median nonunion wage for New York City construction workers in selected trades was $13.50 an hour in 2007, and the union median wage was $19.57, according to the report. Because of the increased costs associated with paying the prevailing wage, developers would need larger government subsidies to build the same number of units, according to the report.

“It will mean a lot of projects will not be feasible, or in order to make them feasible, they would be feasible for higher-income residents,” said Michael D. Lappin, president of the Community Preservation Corporation, a nonprofit lending consortium that has financed about 125,000 low-cost units around the state. “It will really have a direct impact on all the affordable housing being done. Much of that affordable housing is what has rebuilt New York’s urban neighborhoods.”

The New York State Building and Construction Trades Council of the A.F.L.-C.I.O., an influential labor group that represents the state’s major construction unions, has been pushing lawmakers to expand the prevailing-wage requirements for years.

“Is the cost of construction higher? Yes it is,” said Edward J. Malloy, president of the group. “But I think we deliver a better product, on time and in budget.”

Phillip Morrow, president and chief executive of the nonprofit South Bronx Overall Economic Development Corporation, which builds low-cost units, said the financial impact of paying the prevailing wage was only one concern. Mr. Morrow said he also worried that the nonunion, largely black and Hispanic work force that builds these projects would be replaced with mostly white union labor. “The unions don’t have the best record for employing minority workers and workers from the community,” he said.

Mr. Morrow said that if he had to pay the prevailing wage, his options would be limited. “We’re going to ask for more public dollars. In the Bronx, we don’t have the option of raising the rents. The market is not going to support these higher rents. We have to get more subsidy per unit.”

Opponents of the bill said federally financed projects receive additional money in order to pay the prevailing wage, but the proposed state legislation includes no extra financing. They said that because many of these projects receive private financing, they should not be considered public works, like schools or roads. “It’s absurd,” Mr. Lappin said. “Who thinks of public works as a 40-unit apartment building in the Bronx that needs some public help to keep it affordable?”

Assemblywoman John said developments such as Atlantic Yards in Brooklyn, a residential and commercial project for which the city and the state have agreed to provide subsidies, were clearly public works. “I do believe that it’s important that we uphold the provisions of our State Constitution that say that when we’re spending tax money, people are paid prevailing wage,” she said.

NEW YORK STATE COMMISSION ON ASSET MAXIMIZATION DELIVERS FINAL REPORT TO GOVERNOR PATERSON

Report Contains 27 Major Recommendations to Help Create Jobs, Generate Economic Activity, Benefit Colleges and Universities across New York State

Governor Calls for Creation of State Asset Maximization Board to Provide Oversight Process for Potential Public-Private Partnerships

Governor David A. Paterson today accepted the final report from the New York State Commission on Asset Maximization. The Commission was charged with broadly examining whether asset maximization can benefit the State, as well as whether any specific New York assets are suitable candidates for Public-Private Partnerships (PPPs). The final report contains 27 major recommendations to help create jobs, generate economic activity and benefit colleges and universities across New York State. Some of the key recommendations include: school construction and renovation in Syracuse and Yonkers; 300 bridge renovations in all corners of the State; wind power on the Great Lakes; and high speed rail.

In addition to outlining specific project ideas that could be effective long-term projects, the report also recommends the creation of a State Asset Maximization Board to screen, oversee and implement PPPs. The State Asset Maximization Board will serve as an entry point for new ideas, provide continuous oversight and transparency, and enable New York State to tap into New York’s best and brightest minds – across the public and private sectors. The Board would be unsalaried.

Read the entire press release: June 1, 2009 Press Release

Read the full report from the State Asset Maximization Board: SAM

Retirement Income Security: The Oxymoron

by Thomas J. Mackell, Jr., Ed.D.

We are going through an incredibly frightening environment permeated by muddled objectives, conflicts of interest and what has been characterized as a “legacy of misplaced priorities.”

The world’s financial system has collapsed and global central banks are faced with new, unproven strategies to deal effectively with these turbulent unchartered waters. Credit, which was on a 20-year binge, remains constrained, the markets and the regulatory agencies have failed, and the old rules governing financial flows of capital are moribund.

The nation appears to be on a bullet train to bankruptcy.

Read the entire article: Mackell