Friday, December 5, 2008

Albany Times-Union, Sunday November 30, 2008

Region's survival depends upon support for reform


By BRUCE FISHER AND WILLIAM A. JOHNSON JR.
First published: Sunday, November 30, 2008
New York is shrinking. The Empire State has continued to diminish in rank and influence over the past 30 years, as first California and then Texas surpassed it in population and political status.
Between 1970 and 2007, the two largest states had combined population growth of 28.9 million, while New York increased by a meager 1.06 million. Florida, Arizona and other Sun Belt states have also had exponential growth.
By 2020, upstate New York may be unrecognizably smaller. A recent county-by-county analysis of population trends in all 50 states tells the story.
The Wharton School's Peter Linneman and Albert Saiz predict that by 2020, every county outside the New York City metro area will lose population. Chautauqua County, despite its strong tourism base, agriculture and tradition of entrepreneurship, will lose tens of thousands of residents. The counties in the Mohawk Valley between Albany and Syracuse will fare the worst. Cayuga County, near Syracuse, will lose 60 percent of its people. The immediate Rochester area won't lose much, but that's not saying much — because it won't grow, either. New York's second-largest metro area, Buffalo, will shrink another 10 percent.
Pennsylvania, Ohio and Michigan look about the same in the Linneman-Saiz model. But the situation for New York is particularly difficult. It's time for state government to shed illusions about upstate's ability to turn itself around and accept four facts:
Until the Sun Belt fills up and runs out of water, we won't grow.
Our local government structure is unsustainable even now. By 2020, it will be completely dysfunctional.
Many local governments count on state aid to balance their budgets. According to the state comptroller, more than $4.1 billion was distributed to counties, cities, towns and villages outside of New York City in 2005, and an additional $9.8 billion was spent on school aid. Given the $47 billion projected state deficit over the next four years, it will be nearly impossible to sustain these levels of state support.
Our land-use practices undermine our economic sustainability.
As our population grows older, smaller and poorer, and the state's financial crisis escalates, we need to radically restructure local government, re-think our land-use practices and use new technology tools to manage government services regionally.
State government, at both the executive and legislative levels, has to get engaged in proactive ways uncharacteristic of its past hands-off approach. The status quo is no longer acceptable.
Since 1990, three gubernatorial commissions have advocated the same thing: Restructuring local government is long overdue, and very achievable.
Former Lt. Gov. Stan Lundine led the latest commission, which made numerous recommendations to modernize antiquated structures, share services with adjoining jurisdictions and consolidate structures whose autonomy is no longer justified by expense or practice. Gov. David Paterson generally endorsed the findings last spring, but his attention has been distracted by the larger fiscal crisis.
The secretary of state has grant funds that help local governments pay for whatever technical assistance they need to do merger or shared-service agreements. The 21st Century Demonstration Project Fund, which evolved from the work of the Lundine Commission, promotes "large-scale, transformative change in municipalities … that can be used as living laboratories for municipal innovation." The first of these grants, which will give incentives for creativity and risk-taking, should be awarded next spring.
Unfortunately, too many state and local elected officials and the special-interest groups that control the flow of business in Albany resist any change in the status quo. As the recent aborted special legislative session demonstrated, leaders continue to punt in the face of impending fiscal ruin.
Land-use practices, which are dictated by local home rule preferences, continue to impair the state's ability to re-position itself. In Monroe County, for example, the three largest development projects, each estimated to cost more than $250 million, involve two that aim to restore downtown Rochester's economic viability, and a third to transform a nearly abandoned inner-ring suburban mall into a mixed retail, entertainment and commercial project.
All will require huge public subsidy, and all will compete in a county with a declining population and challenged tax base.
Other retail and commercial projects are being proposed within this same shrinking metropolitan region, without regard for duplication or need. The same situations are in play elsewhere in the state. A regional land-use policy would rectify these intolerable redundacies.
If these trends are to be changed, the governor, Assembly speaker and Senate majority leader must:
Identify which of the Lundine Commission recommendations they can collectively, or individually, embrace. Those items must take priority for enactment in 2009.
Educate the populace about the need for local government reform. The public must be able to envision how restructured local governments will look and perform. This is where technology can be useful, using the tools of GIS, social networking, and other sophisticated modeling and distance-communication tools. One picture is worth a thousand words.
Help create an environment in which all key constituent groups understand that the only way New York will ever successfully compete against the Sun Belt is through radical transformation of all of our municipal structures, not mere tinkering with a few of them.
New York can no longer rely on Wall Street to foot 20 percent of the state's revenues. Neither can it rely on the upstate tax base.
We simply do not have $130 billion (see chart) to fund archaic, inefficient and duplicative local governments. With population shrinkage and a humbled Wall Street, we won't have that kind of money tomorrow, either.
That's why the budget crisis must result — at the very least — in implementing the Lundine Commission report. Even if we somehow do come up with the funds to sustain local government as currently organized, our experience tells us that we shouldn't. Why should we continue to rely on downstate taxes to subsidize upstate dysfunction? More efficient, consolidated and regionalized local government could, in a conservative estimate, yield a 10 percent savings.
That $13 billion in annual savings is about equal to the projected deficit facing Gov. Paterson. That's money that should either be saved or invested, not spent as it is now — if we're going to survive past 2020.
Bruce Fisher is the director of the Center for Economic and Policy Studies at Buffalo State College and a former Erie County deputy county executive. William A. Johnson Jr. is distinguished professor of public policy and urban studies at Rochester Institute of Technology. He previously was mayor of Rochester.

Cost of government
In 2005 (the last year for which the state comptroller's reports are available), the cost was more than $240 billion.
$110.3 billion State government
$69.8 billion NYC government and schools
$30 billion 698 other school districts
$18.7 billion 57 counties
$6.3 billion 932 towns
$3.8 billion 61 cities
$2.3 billion 556 villages
These figures don't include billions more in spending by 2,403 special purpose districts and public authorities in the state.

Wednesday, December 3, 2008

Should he stay or should he go?

Current Issue: Artvoice v7n49, week of Thursday December 4 » back issues

Cover Story

Paterson's Choice


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.