February 18, 2003

FEDERALISM AND THE STATE OF THE CITY

By James Eugene*

I happened to attend the Speaker Gifford Miller's State of the City address, and I was left with a few impressions that I will share with you.

First, Miller is ready for prime time. It was a well-delivered speech with a couple of cute little references that most of the insiders in the audience recognized. Miller paid due homage to his fellow Council Members in a very collegial way. And he acknowledged the reality of Council actions by bringing in real people who were assisted by Council initiatives. While I never liked this use of people as props (started by Ronald Reagan), the people seemed to be genuinely thrilled to be there and appreciative of the Council's actions.

Second, Miller hit upon important topics for New York City. The main thrust being that New York City does not receive its fair share of dollars from Albany or Washington, D.C. The theme is not new. The Federal argument has been trumpeted since 1976, the year of the Daniel Patrick Moynihan's first U.S. Senate campaign. The Albany argument has been trumpeted nearly as long if not longer. However, Miller did a nice job of laying out the numbers, showing the irrationality of how the State and Federal government work. Miller then proceeded to try to sow the seeds to build a grass roots campaign to change all this. All of which I can and do support.

But my third thought is distressing and that thought is Miller doesn't stand a chance at the Federal level and only a slim chance of some help at the State.

Let's look at the Federal government. Moynihan discussed this "fair share" disparity until he was blue in the face. Each year for 24 years, Moynihan issued a report showing how much New York State paid to the Federal government in taxes and how much it received back and each year New York got hammered. Now, to be honest, a portion of this disparity is because of military bases. New York State does not have many military installations, partly for strategic reasons and partly because of our own fault. We don't want bases. Witness the struggle for Homeport on Staten Island. There was such anti-Homeport sentiment from the peace crowd, centered in Manhattan, that it is amazing that New York City had a navy base if only for a few years. So since we chose to avoid military bases, maybe we should discount a little of the inequity.

But that much said, New York State still does not get its fair share. It didn't under Presidents Clinton, Bush the First, Reagan or Carter. And during part of this tenure there were Democratic Congresses. Do we really think we have a chance with Bush the Second and a Republican Congress (without a Republican U.S. Senator from New York)? Such a fight suggests Don Quixote.

Maybe this was the reason that Moynihan at the end of his tenure rethought the federalism issue and proposed such a radically conservative proposal that it was almost liberal (and maybe it was liberal). Moynihan hypothesized that it may be better to just end all these Federal programs and cut Federal taxes drastically. By doing so, Moynihan argued that the taxes being "sucked" out of New York and into Washington would not be sucked out of New York, and that the state government could then use this money to establish its own set of programs with a lower combined total Federal and State tax bill. No one took Moynihan seriously, but he was in earnest and theoretically it made a lot of sense.

Now I do not expect Moynihan's plan to ever come to fruition. Washington knows a cash cow when it sees one and New York is a cash cow. But why not support tax cuts that hit heaviest upon New York State. It is not conservative to do so, just prudent. For example, in the early 1990's when Bush the First proposed a tax cut on capital gains, the Great Liberal Governor in Albany actually supported the proposal. Why? Because he knew it would assist an ailing Wall Street. (Of course, Mayor Dummy Dinkins, not thinking on behalf of his City, opposed the proposal.) If we are going to have tax cuts, then let those tax cuts be on the taxes on which New York disproportionately pays the most. If we aren't going to get the money back from the Federal government as part of the Federal budget, then at least we shouldn't pay the money to start with.

From the State standpoint, fair share is a more tortuous road. There may be some relief, but it all comes with tricky strings. Pataki really played a shell game with the current State budget. For example, he kept the School Tax Relief program (whereby home owners received property tax reductions due to State aid), but he cut State school aid to localities. That's right, he is allowing homeowners to receive tax savings so that no one blames him for taking their tax decrease away. However, he is then cutting school aid forcing localities to raise local taxes or cut school programs anyway. What a shyster! What a coward! He did not have the guts to do the dirty work himself. Does Gifford Miller really expect any help from this mini-man whose budget was clearly crafted to cover his own ass? We may get a small commuter tax. We may get some one-shots, but let's face it, as a city, we are really on our own.

And that is the one thing that was missing from Miller's speech. We are on our own. And his speech was devoid of ideas that we can implement on our own as a City. The City controls only so much, but Miller had nothing to add on how to impact those areas. Two or three ideas might have been helpful. I do not blame Miller. Some of his predecessors did the same thing. (I've heard different permutations of this speech at various times in my life.) But there were areas that he could have addressed. Even if they were small, they would show some vision, a framework for locally addressing our problems since the bums in Albany and Washington will not be of much help. And I am sure it is frustrating to have no money. But you have to play with the cards that are dealt to you even if you are playing with four cards and everyone else has eight.

I NOW TAKETH AWAY…

A few columns ago, I praised a column in the N.Y. Post. Now I am going to hammer the rag. In an editorial comparing the budgets of Mayor Billionaire and Governor Patcuomo, the Post rated the budgets based upon the amount of complaining from outside sources. The premise was that in hard budget times, the more complaints one heard about the budget cuts, the better the budget. Thus, Governor Patcuomo was praised and Mayor Billionaire was criticized.

The Post forgot one simple thing. Mayor Billionaire is in his second year of cutting, Governor Patcuomo is only in his first. Governor Patcuomo spent one year doing a "everything is roses" budget, when he knew he should have cut earlier. Mayor Billionaire went straight to the dirty work (although I might agree that he has not done enough).

Given this scenario, of course everyone would be irate without our mamby-ish Governor. He promised the world to so many people last year, knowing that he would have to take it away this year. For example, health care raise for the Dennis Rivera crowd last year that we could not afford is followed by giant cuts this year. What does the Post expect? Seashells and balloons? Moreover, rather than making his own cuts to pet programs, Governor Patcuomo saves these programs while cutting the essential services traditionally provided by our State government and cutting aid to localities. The Governor has been budgetarily dishonest and for that he deserves to be hammered. And criticism of his budget is not a reflection of his strong leadership, it is merely a reflection of his political cowardice and dishonesty.

* James Eugene is the pseudonym of a veteran of NYC government affairs. Inside The Big Apple will appear exclusively on the Empire Page. If you want to send tips or column ideas to James Eugene, email them to jameseugene@empirepage.com.