Politics on the Hudson

Republican challengers are seeing a new line of attack this weekend as the Working Families Party meets in Buffalo to select its candidates for statewide office.

The labor-friendly party’s business arm, a data gathering company, is under investigation by the U.S. attorney’s office for its involvement in last year’s New York City elections. The party was also given a list of suggestions by former New York Chief Judge Judith Kaye, who urged the party to be more forthcoming with its financial records.

Democratic gubernatorial candidate Andrew Cuomo’s campaign announced Thursday it would not seek the party’s endorsement. Cuomo has the backing of the Independence Party, giving him a second ballot line in November.

Now Republicans are using his stance against other Democrats who are accepting the party’s backing, including U.S. Sen. Kirsten Gillibrand, D-N.Y., and Comptroller Thomas DiNapoli.

The campaign of Republican David Malpass released a statement knocking Gillibrand for accepting the party’s nomination:

“It is difficult to imagine that a United States senator from New York, the highest taxed state in America and a state on the brink of fiscal insolvency, would agree to serve as a standard bearer for such an economically dangerous organization,” Malpass said in a statement.

Comptroller hopeful Harry Wilson of Scarsdale, Westchester County, also released a statement praising Cuomo for not taking the party’s ballot line.

“If Tom DiNapoli accepts the WFP ballot line, it will tell voters everything they need to know about his candidacy,” Wilson said.

Gillibrand’s campaign shrugged off the criticism.

“She will not be at the convention, but she has already received the endorsement of the WFP executive committee,” said spokesman Glen Caplin.

DiNapoli’s campaign plans to participate, said spokesman Matthew Ehlinger.

“We’re going to be there,” he said.

Any borrowing could have a negative impact on taxpayers down the road, state Comptroller Tom DiNapoli cautioned today.

DiNapoli said any loans taken out this year to cover deficits would do little help the passage of next year’s budget.

“New York already has misused debt too often,” DiNapoli said in a press release. “When you borrow to close budget gaps, there’s nothing to show for it but the billions taxpayers pay out each year—no roads, no schools, no bridges.

“And borrowing for this year does nothing to address next year’s budget gap. It’s time to put aside borrowing proposals and move forward with a budget that recognizes New York’s fiscal reality. Every day of delay is just more wasted time.”

According to the comptroller’s office, the state debt level stands at $60.4 billion and will grow to $67 billion by the middle of this decade.

DiNapoli, a Democrat who faces re-election this year, has a laundry list of fiscal proposals that can be found here.

Gov. David Paterson also said today he was opposed to any borrowing, but when pressed by reporters after a leaders meeting in state capitol building, would not rule out the possibility.

“I wouldn’t take it off the table,” he said. “I wouldn’t take anything off the table.”

One other note on Comptroller Tom Dinapoli: He has hired the Benensen Strategy Group  for polling and research – the same one Barack Obama had pretty good luck with this year. The outfit is run by Joel Benenson, a former Journal News and Daily News reporter who was an adviser to Mario Cuomo when he lost his campaign for a fourth term in 1994 to George Pataki.

One other campaign note: if Gov. David Paterson appoints Attorney General Andrew Cuomo to the Senate seat Hillary Clinton is expected to soon vacate for the State Department, Cuomo’s successor will be  appointed by the Legislature. That will mean that none of the statewide officials (Gov. Paterson is the third) would have been elected by the people to their positions.

(editor’s note: post amended/condensed to avoid duplication)

   The growth in personal income taxes continued to decline last month, according to state Comptroller Thomas DiNapoli’s October Cash Report. Business taxes were significantly below what they were last year and are expected to continue dropping off, the report said.

   “The big picture is becoming even more dismal,” DiNapoli said in releasing the report, a day before lawmakers meet in a special budget-cutting session to deal with the state’s $1.5 billion-and-growing deficit this fiscal year. “The numbers continue to fall, and it’s expected to get worse in December and January. The massive losses in the financial sector aren’t over yet.”

   DiNapoli encouraged lawmakers to take action now, rather than wait, as some legislative leaders have proposed.

   Here are some statistics from the report:

  —General fund revenues of $31.3 billion were $44.8 million below the Budget Division’s projections.

  —General fund business-tax collections were $35.6 million in October, slightly higher than anticipated. However, general-fund business tax collections have been reduced by more than $900 million since the fiscal year began.

  —Collections of personal income taxes were $251.8 million for October, $24.8 million below what was projected through October. Total personal income-tax collections of $14.5 billion are $1.8 billion higher than last year at this time. Withholding collections have remained strong throughout the year, but growth appears to be slowing.

  —Total spending of $67.5 billion was $437.9 million below what has been planned. The difference is mainly due to lower-than-expected spending for local assistance programs, and lower-than-anticipated spending for general state charges and capital projects. This was offset by slightly higher-than-expected spending for other state programs.

   The global credit crunch is hampering local governments’ ability to access the credit markets, according to a report released by state Comptroller Thomas DiNapoli this morning. Impaired access to capital could jack up debt-service costs and potentially delay planned projects, he said.

   “The credit crunch is squeezing local governments,” DiNapoli said in releasing the report. “The disruption in the markets could have serious implications for school districts and local governments, which need access to short-term credit to manage cash flow and finance infrastructure projects.

   “Higher borrowing costs are making an already volatile fiscal situation more challenging for school districts and local governments. These are tough times, and local governments face hard choices. In today’s environment, local officials have to reevaluate their cash flow needs and pay very close attention to movements in the market,” he said.

   Decreased demand from banks, money market funds and institutional investors have combined to constrain the municipal bond market, the report said. The volume of new issues in September was about 40 percent less nationwide than September 2007, it said.

   Local governments outside New York City issued $5.1 billion in short-term debt last year, with more than half of the borrowing done school districts. Nineteen percent of short-term borrowing was for counties, 14 percent for towns, 10 percent for cities, 6 percent for villages and 1 percent for fire districts. (more…)

   In a budget forecast released this morning, state Comptroller Thomas DiNapoli projected that state business and personal income tax collections will decline sharply this year and in 2009, and the state’s financial imbalance will worsen as it continues to reel from large losses on Wall Street. The General Fund deficit could climb to $1.6 billion in the current fiscal year, and the cumulative deficit over three years could be more than $30 billion.

   Last week, Gov. David Paterson’s Division of Budget released budget numbers predicting a shortfall of $1.2 billion this year and a cumulative $47 billion over four years.

   DiNapoli’s report is required by law. The comptroller, governor and Legislature are required to separately report expected revenues and spending for current and future fiscal years by Nov. 5. DiNapoli emphasized the need for the state to control spending.

   “The numbers are bad, and they’re going to get worse,” DiNapoli said in a statement. “The fallout from deteriorating economic conditions—particularly on Wall Street—hasn’t stopped. New York is facing deep budget holes and the state’s structural imbalance is worsening. We have to avoid temptation. Budget gimmicks and bad borrowing may look like the easy way out, but those are the kind of wrong choices that helped make a bad situation even worse for New York in the long run.” (more…)

   State Comptroller Thomas DiNapoli appears to agree with Gov. David Paterson that the state will have to reduce spending next year to deal with New York’s fiscal crisis. Here’s what DiNapoli has to say about the Mid-Year Financial Plan, which the governor released today. The governor said the state has to cut 25 percent of its spending supported by taxes next year.

   DiNapoli’s statement today:

   “New York State is facing staggering budget shortfalls. State revenues are dropping off and the markets’ errtic swings continue. The economic turmoil is driving New York into a very deep budget hole. And our past use of fiscal gimmicks has made the state’s financial situation even worse.

   “The consequences of the fiscal crisis haven’t fully played out yet. We need to assess what we can afford, and make sure we don’t keep spending money we don’t have.”

   State Comptroller Thomas DiNapoli just issued an audit critical of the state Thruway Authority’s capital plan for 2005-11, saying it does not identify priority projects or say if they are on time or on budget. They will cost a lot more than the $2.7 billion projected and take a lot longer to finish, DiNapoli found. Auditors said it was difficult to track the status of the various projects and items in the plan.

   “In January, I said the Thruway Authority shoudl hold off on toll hikes,” DiNapoli said in a statement. “The Thruway Authority has not looked at its own spending or prioritized projects. Now the Thruway is pushing back the very projects it used to justify the toll increase in the first place. It begs the question even more: were the toll hikes necessary?”

   DiNapoli’s office began a series of audits on the Thruway Authority after several toll hikes were proposed. The Authority voted to raise tolls, claiming it needed extra money because of decreased traffic and in order to pay for the capital projects.

   The Authority’s capital plan includes more than 300 projects valued at about $2.14 billion for bridge and highway projects, $342 million for equipment and other facility capital needs, $250 million for the Canal System, and $7 million for economic-development projects. 

   Of 486 project items auditors examined, 90 were ahead of schedule, 151 were on time, 161 were behind schedule and 66 had been deleted. Overall, project item budgets increased by a net total of more than $514.7 million, or 19.5 percent, over the original capital plan, they found. (more…)

   There is some good news and some bad news about the state’s financial well being: Overall General Fund tax collections were up 11.2 percent six months into the fiscal year compared to last year, even though the economy has been volatile, according to a report released today by state Comptroller Thomas DiNapoli. However, trends show that the growth is slowing, the study found. Business taxes are down 13 percent from last year, and the growth in personal income tax is starting to drop off.

   The comptroller’s report found that total personal income tax collections grew 15.4 percent threw September when compared with last year. They were up 24.6 percent for the first three months of the fiscal year. Meanwhile, business-tax collections through September were down $356.7 million from last year.

   “The state started the fiscal year with surprisingly strong personal income-tax collections that fueled growth in state revenues. But that growth is falling off and things are looking very shaky,” DiNapoli said in a stateent. “Personal income taxes will likely decline significantly when Wall Street bonus payments drop off in December and January.

   Despite the state spending reductions taken this year, the state “faces potentially unprecedented deficits,” he said.

Gov. David Paterson plans to appoint a panel to consider ways to get private investment in state infrastructure projects, potentially like the building of a new Tappan Zee Bridge, he announced today.
The panel on public-private partnerships, headed by one of his key aides, is to issue a preliminary report in 90 days and a final one in six months. “There’s a lot to do to fix New York State’s infrastructure, and there’s not a lot of money to do it with,’’ said state Comptroller Thomas DiNapoli. “New York needs to craft new strategies to address our capital needs…’’
Last week, Paterson’s administration announced a $16 billion plan to build a new Tappan Zee Bridge across the Hudson River between Rockland and Westchester counties, and to add a commuter-rail system in Rockland that the new bridge would carry over the Hudson before joining up with tracks leading to Grand Central Terminal in Manhattan. The plan also calls for an expansion of bus service in the area. A financing plan is due out in the middle of October.
Paterson aides today didn’t specifically identify that project as one the commission will look at, but other administration officials have said before that getting private money for the bridge would be considered in trying to find the money needed for it.
Last year the administration of former Gov. Eliot Spitzer looked at privatizing the state Lottery, and there has also been talk of doing the same to the state Thruway.