Wasting A $6 Billion New York Windfall

In From the Desk Of by Hal Peterson0 Comments

April 06, 2015

By E. J. McMahon

On April 1, New York state began a new fiscal year in a unique position: sitting on more than $6 billion in extra cash.

But rather than seizing the opportunity to reduce the state’s reliance on debt while addressing urgent infrastructure needs, Gov. Andrew Cuomo will squander it largely on political pork and corporate welfare.

The money is not “surplus” in the usual sense of the word. Rather, to an unprecedented degree, New York has reaped a multibillion-dollar harvest of fines and penalty payments from financial institutions — mainly multinational banks.

To his credit, Cuomo ruled out any use of the money to pad recurring expenditures.

On the other hand, Cuomo’s windfall allocation plan, adopted with few changes by the Legislature, favors dubious economic development “investments” over more traditional forms of capital spending on existing highways and bridges, transit and municipal water and sewer systems.

The new budget allocates $5.4 billion from the windfall. The first $850 million will go to make a down payment on a much larger penalty the state owes the federal government, to compensate for overbilling Medicaid since the early 1990s.

Of the remaining $4.5 billion, the new budget directs the biggest chunk — $1.5 billion — to Cuomo’s “Upstate Economic Revitalization Initiative,” based on what the governor touts (unsupported by empirical evidence) as a “successful” state-induced economic turnaround in Buffalo.

The new upstate money will go to three metropolitan regions (other than Buffalo) in a competition refereed by Cuomo’s economic development agency; critics have called it the Upstate Hunger Games.

Another $1.28 billion will flow to the Thruway Authority, whose budget has been strained by Cuomo’s signature infrastructure accomplishment: a $4 billion replacement for the Tappan Zee Bridge.

More than two years after construction started, no financing plan exists for the new bridge, but the windfall money will make it easier for Cuomo to put off a toll increase for at least another year.

The much larger Metropolitan Transportation Authority didn’t fare nearly as well. Last year, the state-controlled regional agency said its new five-year capital plan had a $15 billion funding gap.

Even accepting Cuomo’s broad assertion that the MTA plan is needlessly “bloated,” the authority is still billions of dollars short of what it needs to modernize and maintain the transit system during a period of record rail, subway and bus ridership.

Incredibly, however, the only piece of the windfall Cuomo and the Legislature aimed anywhere near the MTA is a $250 million appropriation to begin construction of a new Metro North commuter rail line from southeastern Westchester to Penn Station.

The Penn Station access project is an odd one to be singled out for preferential funding.

As the Citizens Budget Commission noted, “its total cost has not been reported, its benefits have not been quantified, and it is not clear why it is preferred” over other priorities in the MTA plan.

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