By Henry J. Stern
March 7, 2008
The New York State Legislature, known far and wide for its self-indulgence and dysfunctionality, faces two major deadlines at the end of this month.
That means 24 days remain for the solons to take action on both congestion pricing and the $124.5 billion state budget proposed for fiscal 2009.
On congestion pricing, or bridge tolling, we have been told that March 31 is the last day New York State can pass a bill in order to qualify for federal transportation funds.
In our judgment, that date is fiction. If you recall, last year we were told that July 16, 2007 was the absolute deadline for New York State to apply to the US Department of Transportation for hundreds of millions of dollars that would go to implementing an elaborate system of cameras and other machinery to collect fees from drivers entering Manhattan below 86th Street. We said that threatening the loss of outside funds was a scare tactic as old as Moses.
The 2008 model of congestion pricing, produced by a committee stacked with its proponents, moved the northern limit of the Forbidden City (as in Beijing) or the Forbidden Zone (as in Superman) south to 60th Street. Further migration in either direction is possible. After creating its own forbidden zone, London just about doubled its area, and raised the entry fee from 5 pounds (now about $10 as the dollar sinks) to 8 pounds ($16). Over the years, the toll on the Triborough Bridge has risen from 25 cents to $4.50. Once government imposes fees, they tend to rise again and again.
For example, after the passage of the 16th Amendment in 1913, the Federal Income Tax was imposed with rates ranging from one to seven per cent of personal income. The top rate rose to 90% during World War II, and has since been reduced to a mere 35 per cent. New York State's top rate is now 6.85% and New York City's is 3.68%. The Assembly Democrats want to increase the tax rate on higher incomes, but the Senate Republicans do not. At this time, Governor Spitzer is resisting an income tax increase, but some Democrats in Albany opine publicly that he will cave. Rule 12-T: "Time will tell."
These early skirmishes are depicted in Fred Dicker's story on p2 of Thursday's Post: GOV & BRUNO UNITE VS. SILVER TAX HIKES. The lede: "Gov. Spitzer and Senate Majority Leader Joseph Bruno, in a rare alliance against Assembly Speaker Sheldon Silver, yesterday rejected plans to raise income taxes for the wealthy by up to $5 billion. Spitzer, like Silver a Democrat, repeated an earlier pledge not to raise taxes, saying "That is something that we cannot afford to do."
Today, Dicker reported on an Assembly hearing. Under the p2 head,
EXPERTS BARE PLAN TO SPARE NY TAXPAYERS, he wrote: "Assembly Democrats could avoid hiking New York's highest-in-the-nation tax burden by targeting pork-barrel waste, bloated state services, profligate legislative payrolls and runaway education and health care spending, independent fiscal experts said today."
One expert quoted was Elizabeth Lynam, deputy research director of the Citizens Budget Commission, who said: "The first place to look is at spending cuts, not tax increases." The other, E.J. McMahon of the Empire Center for New York State Policy, an offspring of the Manhattan Institute, said that there is enormous potential for savings in a state budget of $124.5 billion." Dicker quoted McMahon as saying "You have a payroll under Gov. Spitzer's budget that, far from shrinking, is growing, and we're promising another record year of school-aid hikes."
The conflict between the Governor and the Assembly was discussed today in a p1 article in the Sun by Jacob Gershman. Headed
SPITZER WILL YIELD ON TAXES, ASSEMBLY DEMOCRATS SAY. Gershman writes: "Governor Spitzer, despite his stern assurances to the contrary, will have no choice but to yield to political and budgetary pressures in coming weeks and consent to a 12% income tax increase on the state's top earners. In a direct challenge to Mr. Spitzer's line-in-the-sand pledge not to raise taxes, Assembly Democrats are poised to pass legislation that would lift the income tax rate of residents making more than $1 million a year to 7.7% from 6.85%."
Gershman's detailed story, worth reading if you like inside Albany stuff, continues on p4. Its sources are blind quotes, except for Assemblyman Richard Brodsky, who said: "He's willing to raise insurance fees on the middle class, and he's willing to put congestion fees on the middle class... but he won't tax people who make over $1 million." The question arises whether Brodsky is speaking for Speaker Silver or on his own. We observe that the premature, inappropriate, saber rattling remarks which last year came from Governor Spitzer now emanate from emboldened legislators. One point that Brodsky did not mention is that people who earn more than $1 million a year usually have homes in several states, and can switch residency as their accountant advises. Then the state can chase them to see where they spend 183 days each year.
Do these stories indicate a shift in the balance of power, or simply backbenchers making noise? Brodsky's language was contemptuous to a governor from his own party, but the legislator apparently believes that he has the freedom to tell the truth as he sees it.
The response to Brodsky came from the governor's senior adviser, Lloyd Constantine, a lifelong friend and colleague of Spitzer, who said "He's not going to break the pledge {not to raise taxes}. He's been very clear about this." But then came the escape route: "At this point, the governor has determined that the enactment of new taxes is counter-productive to the overall economic goals of the administration. This is unequivocally a new tax." But note the "at this point." Today is March 7. What will happen by March 31, the statutory deadline for the adoption of a state budget?
Last year Governor Spitzer yielded on a number of important issues in order to wrap up the agreement by April 1, just one day late. Since he, like other chief executives, defends everything he ever does, and rarely admits to a mistake (blaming his aides for most of Troopergate), it is unlikely that he will state objectively his view on the adoption of last year's budget.
This year, however, we will know whether the governor stands firm or turns tail. He is in a difficult position, since on the major issue of tax increases, his principal ally is his worst enemy. There is talk that Bruno will be indicted any day now, and no one in our pay grade knows whether that is true. My belief, which may or may not be correct, is that the decision will be made personally (although possibly without prints) by Attorney General Michael Mukasey, and that if the indictment hasn't happened yet, it is unlikely to happen soon.
People, even public officials, can make mistakes and violate laws in ways that may not add up to indictment in a Federal case, unless a prosecutor is particularly bloodthirsty or ambitious. Look what happened in New York State 95 years ago.
You probably know by now that the only governor of New York State to be impeached, William J. Sulzer in 1913, was convicted of insignificant charges when his real offense was defying Tammany Hall, which had selected him to be governor. Sulzer was a hero but his lieutenant governor, Martin H. Glynn, became governor on October 17, 1913, serving through the year 1914. He was more amenable to the wishes of Tammany than his predecessor. Glynn, a longtime resident of Albany, wrote an article in 1919 for the American Hebrew, "The Crucifixion of Jews Must Stop!" Sadly. Glynn committed suicide in 1924 as the result of chronic back pain.
Sulzer was elected to the Assembly three weeks after he was removed as governor. The next year, he ran for governor as the candidate of the Prohibition and American parties, but he lost. His candidacy led to the election of Republican
Charles S. Whitman, whose son, Jr., was later elected a New York City civil court judge. Whitman, Sr. served two two-year terms as governor, lost to
Al Smith in 1918, and defeated Smith in the 1920 Harding landslide. Whitman lost to his nemesis in 1922, and Smith served three more two year terms until he ran for President in 1928. Smith was succeeded as governor by Franklin D. Roosevelt, who served two terms until he was elected President in 1932. The governor's term was lengthened to four years, starting in 1938.
While we are turning the pages of political history, 1916 was the year when President Woodrow Wilson (He kept us out of war.) defeated Charles Evans Hughes, who had been governor of New York from 1907 to 1910 (while Robert Moses was on the Yale swimming team) Hughes resigned from the Supreme Court to run for President. The story goes that at bedtime election night,, Hughes was leading and his butler said, "Good night, Mr. President" By morning, the tables had been turned and Wilson had been reelected, so the butler woke him, saying "Good morning, Mr. Hughes." Who knows?
Back from the past. We observe that Governor Spitzer's behavior has improved substantially this year. It is to his credit that he learned from last year's series of unfortunate events. However, this does not mean that the legislature will adopt his program or respect his priorities, good as they may be. They will do what they want, as usual, with deference to their contributors and to those who can threaten political reprisals. Hopefully, they will no longer be able to blame Spitzer for their own dysfunctionality.
Just as the March madness describes the mood during the post-season basketball playoffs, the legislature is headed for its own frenzy as the month winds down. So far the pace has not significantly quickened, but we predict that it will. Speaker Silver is known for the tactic of not reaching agreement until the last minute, or until his terms are met. The problem is that, with his penchant for linkage, he may use legislative pay increases as a carrot for his members to follow his bidding on issues that are merely substantive.
If one wanted to be theatrical, one could call this month's drama "Three Characters in Search of a Budget." While the lion slowly becomes the lamb, we will watch with you as the play unfolds. Will it be comedy, tragedy, or farce?