Eric Schneiderman doubles down on a national mortgage settlement. Page 8
Carl McCall says SUNY’s money problems will only get worse. Page 23
NOVEMBER 14, 2011
Andrew Schwartz/Joey Carolino
VOL. 4, NO. 17
MTA’s new boss Joe Lhota has his work cut out for him. Page 10
The end of the millionaires’ tax may be just the beginning Page 12
CUNY Month ad 2011_ManMedia 11/10/11 4:54 PM Page 1
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NOVEMBER 14, 2011
He Is The Government
he funny thing about Gov. Andrew Cuomo’s inadvertent description last week of how he sees his job was that he was trying to say just the opposite. Talk 1300’s Fred Dicker had been baiting him with questions about why New Yorkers like their governor but not their government. Rather than grab credit, Cuomo insisted his popularity reflected a Adam Lisberg newfound pride in New York State’s ability to get things done. “I am the government,” he said. (You can download his words as a ringtone on
our website, www.nycapitolnews.com.) The quote spread quickly among New York’s political class because it cut into the usual Albany doublespeak like a dagger of truth. In a style long absent from the governor’s office, Cuomo has tried to exemplify the state of New York in his very person. The state’s major decisions are made by a tight circle of aides, not a bureaucracy. His impressive victories in the Legislature this past session were born of endless meetings with him at the center. When Hurricane Irene threatened New York, he sent his own team around the state to sit with local emergency managers and monitor the response. On the governor’s Flickr feed is a cellphone video shot by his director of state
By The Numbers
operations, Howard Glaser, showing the floodwaters surging through Margaretville, N.Y., and seeping into the floorboards of the gubernatorial SUV. “Open the door, Howard, and let the water drain out,” Cuomo says. Personally steering New York through the floodwaters has worked. Polls show that if anything, New Yorkers welcome the idea of a governor with a firm grip on the wheel. They have seen enough train wrecks already. Over a four-year term, the political risks of taking responsibility for everything in a state of 19.3 million people are preposterously large. But 11 months into his term, Cuomo has made it work. How long can it last? Next year’s budget is billions short of balance.
Wage Increases in New York State by Union
36% 36.25% 34.25% 33.25% 34.25% 32% 31.25%
30.25% 28% 27.25% 27.25% 24.75% 24.25%
30% 25% 18.25%
5% 3.5% 0%
Cuomo is out of step with the majority of the state in opposing a millionaires’ tax, not that it bothers him. And as Irene showed, some things are entirely out of a governor’s control. Still, even if Mother Nature cooperates for the rest of Cuomo’s term, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver may not. Lawmakers who saw advantages in siding with the boss this year may grow restive next year. And therein lies the problem for Cuomo. Some of those other elected officials think they are the government too. —Adam Lisberg, Editor firstname.lastname@example.org
15.5% 13% 12.5% 10%
24.25% 21.25% 21.75% 21.25% 18.75% 18.25%
Source: Citizens Budget Commission
The Month Ahead (Nov. 14–Dec. 2) DEC public hearing on hydrofracking, Dansville
League of Conservation Voters holds cocktail party at the New York Yacht Club in Manhattan, featuring ESDC President Ken Adams
Thanksgiving State Sen. Liz Krueger’s birthday
Fund-raiser for State Sen. Joe Addabbo, Howard Beach, N.Y.
Sen. Chuck Schumer’s birthday
DEC public hearing on hydrofracking, Binghamton
Fund-raiser for State Sen. Tom O’Mara, Club Macanudo, Manhattan
Rep. Tom Reed’s birthday
DEC public hearing on hydrofracking, Sheldrake
NOVEMBER 14, 2011
FanTasy Island Suffau County? Nassolk? Or how about just “Long Island County”? way that could make the situation better,” Law said. “It’s worthwhile to at least explore the issue.” Making Long Island one county would require approval from the Legislature and both counties, a process that could take several years. Law is no outsider gadfly: He runs Long Island’s most powerful business group. And he co-chairs one of Gov. Andrew Cuomo’s regional economic development councils. He acknowledges the LIA still needs to conduct more research to evaluate the pros and cons of a single county. He plans to speak at public hearings to gauge Long Island’s interest in the plan and hold a board meeting on it next month. One major obstacle remains: While Suffolk County is in decent fiscal shape,
Nassau’s situation is dire, requiring state oversight of its finances. (As the former CEO of the Long Island Power Authority, which is $7 billion in debt, Law knows a thing or two about the area’s fiscal problems.) Jon Cooper, a Suffolk County legislator and the Democratic majority leader, sees the two counties as oil and water. Nassau is urban and congested, he says, while Suffolk is rural with an economy largely based on tourism and agriculture. He says the only benefit would be eliminating a few executive government positions, with the negative impact of inheriting Nassau’s loose spending and dysfunctional governance. “We are a prime example of professionalism and bipartisanship, and we don’t want to take a chance on losing
that,” Cooper said. Ideas of this nature have been broached before. Nassau County Executive Ed Mangano has endorsed making Long Island its own state if the two counties don’t start getting more back from Albany than they send there in taxes. Lawrence Levy, executive director the National Center for Suburban Studies at Hofstra University, sees Law’s proposal as a way into consolidating Long Island’s public services and reforming its tax structure—but not a feasible plan in itself. “It’s not going to happen,” he said. “But if you’re hoping to get people to take things more seriously, then it’s not a bad thing to do.” —Michael Mandelkern Oneida Nation
he name has yet to be worked out, but that hasn’t stopped Kevin Law, the president and CEO of the Long Island Association, from pushing a long-shot plan to combine Suffolk and Nassau counties into a single behemoth. Suffolk and Nassau are already two of New York’s biggest, richest, most powerful counties, and Law says their clout in Albany and Washington would be doubled if they were mashed together into a single entity of 2.8 million residents. He also says a unified school system, police force, sewage system and other services would save taxpayers millions. He acknowledges this is something of an aspirational goal. “When you set out on an objective, maybe you don’t achieve your original objective, but you learn things along the
Giving Thanks Without the turkey, Native Americans in New York celebrate thanksgiving For most New Yorkers, the origin of Thanksgiving is a harvest feast shared by Pilgrim settlers and friendly Wampanoag Indians who helped them survive the brutish winter. But for many Native Americans in New York, the custom of thanksgiving is more widespread, and much older. “Native tribes have had thanksgiving ceremonies for thousands of years,” said Arlene Hirschfelder, an author of multiple books on Native Americans. “Giving thanks is not new—in fact, it’s ancient. This Thanksgiving Day is no biggie.” Some tribes in New York celebrate the American version of the holiday, but they place more emphasis on their own customs. “What we always say is we like to give thanksgiving every day, and many other times during the year for ceremonies,” said Darwin Hill, a traditional chief of the Tonawanda Band of Seneca Indians. In New York, the Six Nations of the Iroquois are known for starting meetings and ceremonies with a thanksgiving
NOVEMBER 14, 2011
address. Typically recited in one of the Iroquois languages, the speaker recognizes everything from a tribe’s beginnings to the basic elements of life to the sun, moon and stars. “It covers a lot,” Hill said. “It can take about a half hour to say it. So that’s what we say is Thanksgiving for us. We observe it every day, not just on a special day.” The Shinnecock tribe celebrates a Thanksgiving gathering a week before the national holiday, said Beverly Jensen, a tribal member and spokeswoman. The boisterous community gathering includes a meal with succotash, corn, venison, oysters and clams, and often a basket dance performed by the young women in the tribe. “It’s the Shinnecock nation giving thanks, and that’s how we do it,” Jensen said. “We have our own Thanksgiving, which is why we are healthy people—we have two Thanksgivings.” Yet some groups want nothing to do with the American holiday, seeing it as the start of centuries of theft and broken promises.
The Oneida Nation’s float, “The True Spirit of Thanksgiving,” has appeared in the Macy’s Thanskgiving Day Parade since 2008 and will be among the entrants again next week.
“The legacy after the first Thanksgiving is that the Native people were basically overwhelmed, with their land taken, and that sort of thing,” said Professor Philip P. Arnold, interim director of the Native American Studies program at Syracuse University. But the early, friendlier interaction provides the basis for celebrating the bond between indigenous groups and the immigrants who adopted the harvest festival and made it an American tradition, Arnold said. The Oneida Indian Nation, for example,
has a float in the Macy’s Thanksgiving Day Parade each year as a reminder that Indian culture remains an important part of this country, said Ray Halbritter, the Oneida leader. “Four hundred years ago, American Indians welcomed the first Europeans who came to our homelands in the spirit of thanksgiving,” Halbritter said. “For us, the Thanksgiving Day holiday is about friendship and helping those in need.” —Jon Lentz email@example.com
Where’s Cuomo? Not in his native Queens—or most other boroughs
’m a Queens boy,” is what Gov. Andrew Cuomo often likes to say, but his official visits around New York state say otherwise—upstate and Long Island have received much more love and attention than his hometown borough. Travel records posted on the governor’s “CitizenConnects” website show Cuomo has made six appearances in the Buffalo area and five in and near Syracuse. He recorded a total of almost 50 trips upstate, including eight related to Hurricane Irene, about double the number as in New York City and Long Island combined. Yet Cuomo has made just a sole appearance in his native Queens since January: walking across the Nassau County border in the Little Neck-Douglaston Memorial Day parade. In fact, the Queens native has hardly visited New York City’s outer boroughs, home to more than one-third of the state’s population. Cuomo has made just one trip each to Brooklyn and Staten Island this year, and none at all to the Bronx. Bronx Borough Historian Lloyd Ultan can’t recall any governor—much less a Democratic governor—serving a term without making a single stop in “the most Democratic county in the whole country,” where 70 percent of registered voters are Democrats. Franklin Delano Roosevelt made several stops in the Bronx during his time as New York’s governor. So did Nelson Rockefeller. George Pataki frequented the borough for work and pleasure—one of his favorite eateries is said to be in Belmont. But Cuomo has not yet set foot in the Boogie-Down Bronx since assuming his post, even though 9 out of 10 Bronx voters pulled the lever for him. Asked why the governor hasn’t been seen more often in the outer boroughs, spokesman Matt Wing said only that Cuomo has traveled throughout the state for multiple public forums. “Governor Cuomo is governor of the entire the state of New York, and will continue to travel to every corner in order to engage the people in their government,” Wing said. Ultan says it is probably too early into Cuomo’s four-year term to judge, but the Bronx could use some attention from Albany. “The Bronx is the poorest county in New York,” he said. “Anything that can be done on the state level, and anything the governor could do to alleviate those issues, would be welcome.” —Pei Shan Hoe
Pei Shan Hoe is a reporter at The New York World, an accountability journalism project covering city and state government based at the Columbia University Graduate School of Journalism.
The best items from City & State First Read Not getting City & State First Read each morning? Visit www.nycapitolnews.com/ﬁrst-read to subscribe. • Republican senators who voted for same-sex marriage last spring are counting on a ﬂood of gay money to help them keep their seats next year—but the opponents plan to make their voices heard as well. An invitation making the rounds in Bay Ridge, Brooklyn from the Catholic War Veterans of Kings County asks veterans to attend a reception for Republican Sen. Marty Golden “for his fearless defense of the sanctity of marriage.” • New York foreclosures are expected to spike in the coming months when
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antiforeclosure programs begin to sunset. “Make no mistake: The crisis has not left New York,” said Fern Fisher, a deputy chief administrative judge and director of the New York State Access to Justice program. “There will be more foreclosure ﬁlings.” A moratorium on foreclosures imposed by large banks ended, but a ruling by Chief Judge Jonathan Lippman to force mortgage companies to pay more attention to their paperwork was credited with slowing the number of foreclosures in New York. Nearly 10,000 new foreclosures were issued in the ﬁrst nine months of 2011, compared with over 15,000 over the same period in 2010. EDITORIAL Editor: Adam Lisberg firstname.lastname@example.org Managing Editor: Andrew J. Hawkins email@example.com Reporters: Chris Bragg firstname.lastname@example.org Laura Nahmias email@example.com Jon Lentz firstname.lastname@example.org Photography Editor: Andrew Schwartz Intern: Michael Mandelkern
• The Committee to Save New York, the business-backed group that supported Gov. Andrew Cuomo’s budget and the property tax cap that passed this year, is still the top spender on lobbying through the ﬁrst two thirds of 2011. But it’s unlikely to eclipse the state record for annual lobbying dollars set a year ago by the American Beverage Association, which spent about $12.9 million opposing a proposed soda tax. The committee has spent nearly $9.77 million so far, close to the $10 million it initially planned to spend, but it has been sitting on the sidelines since June. • Now that the Public Employees Federation’s contract with the state has been ratiﬁed by the union’s membership, President Ken Brynien has his sights set on the next battles: stopping pension reform and preventing future budget cuts. Governor Cuomo’s call for an additional 2.5 percent across-the-board cut, after last year’s 10 percent reduction, has Brynien concerned
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about a decline in the quality of services provided by his members, most of whom are government employees. • Legislation allowing for gun microstamping died in the State Senate in 2009, but Attorney General Eric Schneiderman still thinks it has a shot. “I’m conﬁdent it will eventually become law,” Schneiderman said after accepting the Theodore Roosevelt Leadership Award from Citizens Crime Commission President Richard Aborn at a fundraising event. When he was in the Senate, Schneiderman sponsored the microstamping bill, which would allow law enforcement ofﬁcials to trace guns from leftover shell casings. The bill came within two votes of passage in 2009, and even though Republicans in the majority refuse to bring it up again, Schneiderman said there’s still hope. “That same session we lost on [same-sex] marriage, too,” he said. “And now that’s law.”
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New York City’s current solid waste management system is neither economically nor environmentally sound. So, what steps should the city take to save money and help the environment? Find out at our upcoming policy forum:
I Used to Know That CIVIL WAR
Tuesday, December 6 from 8 a.m. to noon. New York City Bar Association 42 W. 44th Street bet. 5th & 6th Ave. Learn more and RSVP at www.nylcvef.org/wastedopportunity
Organized by the New York League of Conservation Voters Education Fund, this forum is generously sponsored by the Rockefeller Brothers Fund. Additional sponsors include: The Energy & Environmental Law Committees of the New York City Bar Association, Columbia Law School’s Center for Climate Change Law and City Hall News
NOVEMBER 14, 2011
Packed with interesting facts and surprises, the Civil War comes alive as part of the best-selling “I Used to Know That” book series from Reader’s Digest. Relive the story of the people who fought the battles, the volunteers who came to their aid, and the path to freedom for those brought to America in chains. “I Used to Know That Civil War” is on sale nationwide now from Reader’s Digest Books. www.amazon.com
A HospitAl FigHts BAcK Kingsbrook Jewish Medical Center fights to stay open By Laura Nahmias
ingsbrook Jewish Medical Center has done everything right, but still faces the possibility of closure—one of five private hospitals in Brooklyn that a state Medicaid Redesign Team has labeled “endangered” because of its shaky financial situation. The work group convened by Gov. Andrew Cuomo suggests several Brooklyn hospitals might need to be shuttered, or adopted by larger for-profit institutions, in order to sponge up the massive debt endangering their bottom lines. The other four threatened hospitals are Interfaith Medical Center, the Brooklyn Hospital Center, Wyckoff Heights Medical Center and the Brookdale University Hospital and Medical Center. But Kingsbrook, a small hospital that serves a largely elderly population, is not drowning in debt. And while it’s barely making money, the hospital has broken even year after year for more than a decade, said the hospital’s CEO, Dr. Linda Brady. The hospital is in the black because it has made a series of smart financing decisions, unlike some of its counterparts in the borough. Those debt-ridden facilities generally cite their poor patient populations, and overbuilt physical plants made with bond issues guaranteed by the state’s Dormitory Authority, as their reasons for running up a tab. Kingsbrook invested heavily in information technology and used its systems to lower emergency room wait times, eventually saving enough to afford a new emergency room with more beds for patient triage. It also lowered its patient mortality rate by 43 percent. A lack of investment in health technology is one of the reasons the hospital system is failing elsewhere, said Stephen Berger, who chairs the Cuomo work group. “Look how far behind we fell, in terms of the rest of the world, in delivering electronic medical systems and records,” Berger said. “Your bank knows, your telephone company, your cable service knows more about you than your doctor does. This is madness! So we have got to undo a whole pattern of investment, and recreate a totally different pattern of investment over the next decade.” But the state’s Health Department has said any hospital operating without at least a 3 percent profit margin is “at risk,” and that includes Kingsbrook, which has a patient population made up largely of what are called “dual eligibles”—patients who use both Medicare and Medicaid and account for the highest costs in the health-care system. Potential cuts to Medicare at the federal level and possible state cuts to the Medicaid reimbursement rate would slash the hospital’s income, threatening the
fragile balance it has been able to achieve. During last year’s campaign, Cuomo conceded the state could not afford to save everyone. “The state will have to resist the political pressure to apply this special treatment to all institutions that face closure due to financial circumstances,” Cuomo wrote in one of his campaign policy books. “The state cannot afford to guarantee the continued existence of every institution.”
The sense that dumb luck and politics might infiltrate the Brooklyn working group’s final recommendations scares health providers, said Edwin MéndezSantiago, a former commissioner of New York City’s Department for the Aging. “If you just cut something now, are you going to create a bigger problem and a bigger expense for the state further on in the future?” he wondered. “I think there’s reason for concern, since we know there
are so many variables out there.” At the ground-breaking for the new emergency room, Brady trumpeted the achievement, something that could set the hospital apart at a time when state officials are mulling its fate. The ground-breaking “provides ample evidence that KJMC can and will continue to step up and serve our community in Central Brooklyn,” Brady said, “which has been hit especially hard by the continued poor economy and significant drop in funding for social services.” firstname.lastname@example.org
LOCAL 1000 AFSCME, AFL-CIO DA N N Y D O N O H U E , P R E S I D E N T
On the line every day. We’re family, friends and neighbors doing the work that matters.
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10/4/11 1:10 PM NOVEMBER 14, 2011 7
Why Eric Schneiderman is the darling of Occupy Wall Street, and what a mortgage deal without New York means for the state BY ANDREW J. HAWKINS
Amid the arrests and the chanting, a strange thing happened at a recent Occupy Wall Street protest in Lower Manhattan: A Democratic elected official was singled out, not for ridicule or scorn but for praise. “We have Mr. Schneiderman, who is not going along with the banks but is investigating them,” said Zacary Lareche, 47, from East Flatbush in Brooklyn. Lareche was standing on the lip of a fountain in the middle of Foley Square, overlooking a vast throng of protesters on a sunny Saturday afternoon. Using the “human microphone” technique popularized by the protesters, Lareche told the assembled crowd about his struggles with foreclosure, and about his belief that Eric Schneiderman, the New York attorney general, was that rare politician working for the victims, not the perpetrators, of mortgage fraud. “We appreciate that,” Lareche said. “We need more people like the attorney general to put their heads together to stop the banks, to bring our communities around.” Schneiderman is making a name for himself, in Zuccotti Park and elsewhere, by objecting to the broad mortgage settlement deal being negotiated between the federal government, attorneys general from all 50 states and the major U.S. banks. Schneiderman has so far refused to be a part of the deal, calling it too lenient toward the banks. Along with Delaware Attorney General Beau Biden, Schneiderman is investigating
the loan servicing and mortgage practices of several institutions like Bank of America, and objects to any deal that would release them from some civil liability. The major financial services firms have a heavy presence in those two states, giving their attor-
Andrew Schwartz/Joey Carolino
Eric Schneiderman is making a name for himself, in Zuccotti Park and elsewhere, by objecting to the broad mortgage settlement deal being negotiated by the federal government.
Another reported provision in the settlement would be $1.5 billion to help distressed homeowners, and $2.7 billion to finance legal aid programs, housing counselors and borrower support. If Schneiderman maintains his opposition to the
cates are anxiously awaiting the final deal, worried it will be too weak to have a meaningful effect for stressed-out homeowners. They support Schneiderman’s investigation into bank foreclosure practices, but remain skeptical that any of the money from the settlement will ultimately reach the hardest-hit communities. “Twenty-five billion dollars may at first glance seem to be a big number,” said Josh Zinner, codirector of the Neighborhood Economic Development Advocacy Project. “First of all, it’s divided among the five biggest servicers, including the four largest banks in the country. In a way, that’s chump change for them, given the amount of damage their practices have caused.” Zinner said it was unclear how the banks would disburse settlement money intended for troubled homeowners. “The vast majority of funds that comes out of the settlement—they’re not going to go to states to set up programs,” he said. “The money is going to be at the discretion of the banks themselves to figure out how to use it. It’s supposed to be used to write down principal, but a lot of that is at the bank’s discretion.” The number of foreclosures has dipped in New York, thanks to a bank moratorium on foreclosures and a court ruling that ended the notorious practice of the financial industry robo-signing foreclosure documents without scrutiny. But experts predict that number will rise again, and warn that the housing crisis is far from over. “Make no mistake: The crisis has not left New York,” said Fern Fisher, a deputy chief administrative judge and director of the New York State Access to Justice program. “There will be more foreclosure filings.” Exacerbating things further is the state’s most recent cost-cutting budget. Funding for a major foreclosure-assistance program was zeroed out in Gov. Andrew Cuomo’s executive budget. The Assembly attempted to set aside $1.5 million to continue funding the program, but Cuomo vetoed it, arguing that the state could not afford the appropriation. Schneiderman said he hopes his stance on the mortgage settlement with the banks will encourage other states to join him in calling for a more rigorous deal. Already, attorneys general from California and Massachusetts have expressed solidarity with New York. And a deal without some of the nation’s most populous states could be widely seen as lacking credibility. With the economy and the housing market struggling through recovery, time is naturally of the essence. “We think we should do a more comprehensive approach,” Schneiderman said. “We don’t think it’ll take very long. It’s a matter of political will.” email@example.com
“That’s chump change for them, given the amount of damage their practices have caused.”
NOVEMBER 14, 2011
neys general an outsize voice. With or without New York and Delaware, the negotiations are almost over, and the vague outlines of a deal have begun to emerge. In late October, The New York Times reported the settlement could total up to $25 billion, $5 billion of which would be paid by the banks. The remaining amount would consist of credits to banks for loan modifications for a small percentage of homeowners. The U.S. Department of Housing and Urban Development maintains the deal would hold the banks accountable. Schneiderman disagrees. “The releases are too broad,” Schneiderman said to City Hall after a recent fundraiser in midtown Manhattan. “And the right parties aren’t at the table, either. The only folks that are being negotiated with are the banks, so the only mortgages that are being dealt with are the ones the banks hold in their own portfolios. That’s less than 20 percent of mortgages in America.” Many troubled mortgages would not be included in the deal, such as those handled by Fannie Mae and Freddie Mac, Schneiderman complained.
proposed deal, New York could lose out on that pool of cash, further exacerbating the budget woes of cash-strapped antiforeclosure programs across the state. But Schneiderman pushed back against the assertion that New York could lose out if the state were not attached to the final deal. New York-based trustees, like Bank of New York Mellon, that handled toxic mortgagebacked securities are under investigation by Schneiderman’s office. Any cash resulting from the settlement of those cases would be a windfall to the state. “Every mortgage-backed security was full of mortgages that were either in New York or Delaware trusts,” Schneiderman said. “So they have to go through Beau and me, one way or the other.” Besides, he argued, the 50-state settlement isn’t just about negotiating the best deal for New York. “New York will never get left out,” he said. “It’s just a matter of if we can get everyone else on board—for a bigger deal that also would be better for the economy.” Meanwhile New York housing advo-
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NOVEMBER 14, 2011
DRIVING THAT TRAIN
Lhota highly qualified, but trouble ahead as he looks to take helm at MTA BY JON LENTZ
f Joseph Lhota is confirmed as chairman of the Metropolitan Transportation Authority, he will bring his political savvy, firsthand knowledge of budgets and finance, and valuable experience overseeing New York City
Legislature will support, Russianoff said. Uncertain federal funding will factor in as well, but the governor could play a key role in that arena, too. “They are trying to get $2.2 billion in a federal loan for the East Side Access project,” Russianoff said. “The extent the governor goes to bat for that has a lot to do with whether they’re going to have success or not.” Besides funding ongoing projects like the Second Avenue subway and connecting the Long Island Rail Road to Grand Central Terminal, Lhota will likely
is somebody who’s tough and fair to carry us through the kind of economic problems we’re having today,” Vallone said. “I think he’s an excellent choice, because you need somebody there who knows this city backwards and forwards and knows how to get things done.” Former colleagues describe him as a levelheaded straight shooter who was also warm and affable. Joel Miele, a former commissioner of the Department of Environmental Protection, said Lhota was particularly effective delegating authority. “He historically laid out what he would
subways and train lines. William Ronan was secretary to Gov. Nelson Rockefeller and former dean of NYU’s Graduate School for Public Administration who had served for two years as commissioner at the Port Authority when he became the MTA’s first chairman. Ravitch came from the construction business and ran the state’s Urban Development Corporation when he took over the MTA. “Being chairman and chief executive officer, it is very important to have business know-how, to be sophisticated about politics in the best sense of the
Joe Lhota’s lack of extensive transportation experience is seen as a liability, but his background ﬁts the pattern of past appointees like William Ronan and Richard Ravitch. MTA
WILLIAM RONAN (1968–1974)
RICHARD RAVITCH (1979–1983)
JOSEPH LHOTA (must be conﬁrmed by State Senate)
“You’re not the technician. You’re the leader of a 50,000-person organization that spends billions of dollars every year. So having a business background is valuable, having experience in government is valuable, and Lhota had both of those.” government’s day-to-day operations. But for all his abilities, Lhota’s success at the MTA may be largely out of his control. “Whether our economy turns around, what the politics of New York State are, who the mayor is, what kind of deal he can negotiate with the unions, what the federal government does or doesn’t do with respect to infrastructure financing— they’re all variables,” said Richard Ravitch, a former lieutenant governor who is credited with reviving the vast transit system in the early 1980s. “And he has no control over any one of them.” Putting it more simply, Lhota’s tenure will come down to one thing: money. Keeping the system funded depends on Gov. Andrew Cuomo and to what degree he can use his political capital on behalf of the city’s subways, buses and commuter rail lines, said Gene Russianoff of the Straphangers Campaign. With only three years of the MTA’s fiveyear rebuilding program funded, and shortfalls predicted for the state budget, it’s an open question what kind of plan the MTA can put together that the governor and the
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face difficult fights over an MTA payroll tax that is unpopular in the city’s suburbs and the renewal of expiring union contracts. Add to that the bad economy and a costcutting governor who has already raided $100 million in funds dedicated for transit, and Lhota will have what many consider one of the toughest jobs in government. Lhota has declined to speak about his nomination until after he is confirmed by the Senate. Still, if anyone is able to take on the challenge, it is Lhota, especially at a time of financial difficulty, said a number of former colleagues and past political adversaries. As deputy mayor for operations under Mayor Rudy Giuliani, Lhota held one of the city’s most powerful positions. As a Republican with a Republican boss, he honed his negotiating skills as a calmly effective deputy dealing with an overwhelmingly Democratic City Council. Former Council Speaker Peter Vallone Sr. said he met with Lhota every week, and remembered him as a hard-nosed but evenhanded negotiator. “I had nothing but good things to say about him, because what you need
like me to get done and then got out of my way,” Miele said. “If I had a problem, that’s the only time I ever heard from him.” One perceived weakness is his limited transportation experience. But attorney Randy Mastro, who preceded Lhota as deputy mayor, noted that Lhota had two years on the MTA board and other relevant experience. “Transportation issues were in his portfolio as deputy mayor for operations, so you could not have someone of more suitable background: knows how to run large governmental organizations, knows how to balance a budget, knows transportation issues, and Joe Lhota hits the mark on all of those,” Mastro said. Jay Walder, Lhota’s immediate predecessor at the MTA, had a lengthy career in transit, but has said that such experience isn’t a key qualification for the MTA job. In fact, some of the most prominent chairmen in the MTA’s history had limited transportation experience when they took over, instead relying on political clout and tough negotiating to maintain and upgrade the miles and miles of
word, because you have to deal with governors, with the federal government, with the city government, with the labor unions,” Ravitch said. “You’re not the technician. You’re the leader of a 50,000person organization that spends billions of dollars every year. So having a business background is valuable, having experience in government is valuable, and Lhota had both of those.” Cuomo’s decision to appoint Lhota is also expected to put more at stake for the governor, who had a distant relationship with Walder and has now taken more ownership of the MTA and its direction. And Lhota’s performance will have has much impact on the agency he now runs as it does on the governor who appointed him. “It’s the relationship of this individual with the governor, and with the MTA board,” Doug Muzzio, a professor of public affairs at Baruch College, said of Lhota. “The semester hasn’t started yet. As a professor, he looks like a successful student who’s got a good GPA. Let’s see how he does here.” firstname.lastname@example.org
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NOVEMBER 14, 2011
PROBLEMS The end of the millionairesâ€™ tax may be just the beginning By ANDREW J. HAWKINS Photos by Andrew Schwartz
NOVEMBER 14, 2011
n a recent afternoon, Dean Skelos stood outside a Jewish soup kitchen in Hasidic South Brooklyn, wearing a blue velvet yarmulke that read “Majority Leader of State Senate of New York” in Hebrew. Skelos was there to chop vegetables and feed the hungry, but his Twitter feud with liberal actor Alec Baldwin over the issue of taxing millionaires was still fresh in his mind. Baldwin had called Skelos a “tool” of the super-rich. The Senate majority leader naturally took issue. “I’m not a tool of the millionaires,” Skelos harrumphed. “I’m a tool of the job creators in this state. And I’m the person that wants to stop that flight of jobs from the state.” Fortunately for Skelos, Gov. Andrew Cuomo is firmly in his corner on letting the temporary surcharge on high-income earners—aka the millionaires’ tax— expire by the end of the year. Occupy Wall Street (and its little brother, Occupy Albany) has reignited the call to extend the tax, as a way to both fill the $2 billion budget gap projected for next year and bring some parity to the tax code. And as public support for the occupation and taxing the wealthy grows,
“If we can get the Senate to wake up and smell the coffee, that makes it a lot easier to persuade the governor.” progressives and labor unions from around the state are marshaling their forces in anticipation of a bareknuckle brawl in Albany next year. But the louder protesters and Democrats in the Legislature cry, the more Cuomo and Skelos dig in their heels. “Last I heard, New York State has a spending problem,” Skelos says. “We don’t have an undertaxation problem, we have an overspending problem. And unless you bring it under control and make some tough decisions, we will not be able to do the good things we hope to do in the future.” At a recent press conference, Cuomo sounded almost Zen-like about the subject. “Would you want more taxes if you didn’t need any taxes?” he asked. “If you didn’t need any taxes for the budget, would you still need taxes just for the sake of taxes? We need some facts.” For Cuomo and the Senate Republicans, letting the tax expire is as much about shattering perceptions of New York as a tax-and-spend bastion as about shattering perceptions that New York governors and Senate Republicans go along with it. (To take one example: The millionaires’ tax scheduled to expire Dec. 31 doesn’t just affect millionaires; it hits individuals who make at least $200,000 and families that make at least $300,000 a year.) Skelos wants to curb spending after years of bloated budgets approved under Majority Leader Joe Bruno. And Cuomo is loath to deviate from his cultivated image as a socially liberal, fiscally conservative, business-friendly governor, even if it means alienating his Democratic base—and being tagged as “Governor 1 Percent,” who sticks up for the rich at the expense of the other 99 percent of New Yorkers. From the outside it looks like a stalemate. Behind the scenes, elements at both ends of the tax spectrum are quietly working on ways to profoundly change New York’s tax code. One plan circulating among
state officials and business lobbyists would simplify and lower corporate taxes, giving a huge boost to the same big banks targeted by Occupy Wall Street. Progressives and Democrats, meanwhile, are talking about how to shift the state’s income-tax burden incrementally higher up the tax brackets. Both of those ideas would have to go through Cuomo. He has rejected both. But for how long?
t wasn’t the biggest demonstration of the last several months, nor was it the loudest, the most confrontational or the most theatrical. But the location was distinctive: not down on Wall Street, but in midtown Manhattan, outside of Cuomo’s office. Almost 100 protesters called for an extension of the millionaires’ tax. They shouted slogans in Spanish, railed against the rich and the powerful and attempted to deliver a letter of their demands to the governor’s staff. (They were rebuffed.) One protester named Wayne Starks, of grassroots organization VOCAL-NY, said Cuomo’s refusal to extend the tax could literally kill him. He said having no millionaires’ tax could mean more cuts to Medicaid and Medicare; and Starks, who said he is living with HIV/AIDS, is unsure whether he could live through another round of spending reductions.
“I could die,” Starks moaned. Unfortunately for the protesters, Cuomo was not in Manhattan to hear their message. Nor was he in Albany several weeks earlier when a few dozen people gathered outside his office on the second floor of the Capitol with similar demands. They tried to catch him outside a Huffington Post awards ceremony in October, but Cuomo slipped away undisturbed. The governor has a knack for avoiding awkward confrontations with the Occupy Wall Street movement, just as he has a knack for plugging his ears to their demands. At a recent press conference, Cuomo sounded amused but exhausted from having to continuously shoot down the suggestion the tax be extended. “I’m not going to start playing that game,” he said, when asked if a worsening economy could bend his will. “If, if, if, if. Let’s get the facts. My position is my position. The speaker’s position is his position. I understand all the positions and the opinions. We’ve been discussing this for years. Feels like years and years. But there is a lot of hyperbole in the air for an amazing scarcity of facts. I get the fear and frustration that’s out there. I really do.” The facts, as Cuomo sees them, were sketched out in a recent video released by his office to promote the NOVEMBER 14, 2011
property tax cap, which has declined in popularity as local governments begin to come to terms with the spending cuts they will have to make under the cap. Fifteen of the highest-taxed counties in the nation are in New York, Cuomo says. School supervisors and other bureaucrats are earning salaries out of whack with the services they provide. And Cuomo believes voters, not politicians, should determine how much their local governments spend. It was an uncomplicated message, at least until Occupy Wall Street lit a fire under a millionaires’ tax movement that seemed stymied for months. When a splinter group set up camp in Academy Park in Albany, Cuomo’s aides attempted to persuade Mayor Jerry Jennings to evict them, to no avail. And with the state’s $2 billion budget gap next year expected to widen amid reports of a shortfall in tax collections, the clamor surrounding the protests and the millionaires’ tax is sure to grow louder. “There is no reason in this economic climate, when the state faces a deficit, rather than make further cuts, that we should be giving a tax break to people making more than $1 million, that can close any potential deficit in our state budget next year,” said Assembly Speaker Sheldon Silver.
eanwhile, the push to cut corporate taxes has been underway since before the economy collapsed. Eric Dinallo, superintendent of insurance under Gov. Eliot Spitzer, wanted to reform and consolidate the corporate tax code to help New York retain its position as financial capital of the world. A private-sector working group based out of the state Tax Department was created in January 2008 to make recommendations on simplifying the tax code, cutting tax rates and closing loopholes, The Capitol has learned. And even after Spitzer crashed and the burned, the group’s proposal went nowhere. But it also never really went away. “Originally the proposal was that through this process everybody would pay less—banks, corpora-
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tions, etc.—by some amount,” said one source with knowledge of the proposal. “In order for everyone to suck it up and go with the program, they were originally offering that they were going to reduce the rate across the board for everybody, so that even if you’re relatively worse off than your neighbor, everyone
“When these issues start hitting home, these legislators are going to have to start making decisions. What’s worse? Losing these services in my community? Or reinstituting that millionaires’ tax?” would be paying a little less.” Another source with direct knowledge of the proposal was more blunt: “It would have been a monumental bombshell.” But not the kind that Cuomo needs. At a time when public support for Wall Street has fallen off a cliff and protesters across the country are clamoring for financial equality and accountability, the Cuomo administration wants nothing to do with it. “In our opinion, the current draft proposal does not achieve the reforms needed and it is not supported by this governor or his administration,” Cuomo spokesman Josh Vlasto said in a statement. “Obviously it would be irresponsible for a new administration to terminate all ongoing private sector advisory efforts upon taking office, but it would be equally irresponsible to hold the new administration accountable for them.” Disavowing the corporate tax-reform proposal— just like standing firm against the millionaires’ tax— underscores how seriously the Cuomo administration
takes the larger conversation unfolding about taxes in New York. His aides insist there is no linkage between talks on corporate taxes, income tax fairness and the millionaires’ tax. But those links are starting to be forged in spite of him.
mong Democrats in the Legislature, the conversation is also changing. They are beginning to talk about reforming the income tax code, expanding the number of personal income tax brackets and “smoothing out” some of the formulas that generate tax bills. “If you have more brackets and more smoothing and more progressivity…you can actually collect more from your [personal income tax] while shifting some of the burden to higher earners, and potentially decrease the burden on low-wage workers,” said Sen. Liz Krueger. But to conservatives, “progressive tax reform” is doublespeak for tax hikes. “In terms of the actual distribution of the tax burden, it actually is pretty progressive,” said E.J. McMahon, executive director of the Empire Center for New York State Policy. “There are some people, including certain types of Assembly Democrats, for whom the phrase ‘more progressive’ means having a higher rate.” Krueger suggests steering the conversation away from the millionaires’ tax and its negative implications toward a more open discussion about fair taxation in New York. She wants Cuomo to convene a “major tax summit” to discuss all the taxation issues currently facing the state. Cuomo insiders say the governor is open to a conversation about what happens after the tax expires on New Year’s Day, including a discussion about reforming the tax code. But during an election year, hopes for a reasoned, deliberative debate over taxes are slim at best. The lines have been drawn. Assembly Democrats want the tax; Cuomo and Skelos don’t. And after it expires, what Democrats can give Republicans and Cuomo in exchange for some sort of tax reform turns
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attention toward those issues that will dominate the legislative agenda next year: hydrofracking, casino gambling and redistricting, among others. “We’re transactional,” said Assemblyman Jeff Aubry, a long-serving Queens Democrat. “What will be the moment, the issue of the day—who’s to say?”
Cuomo took in contract negotiations with both the Civil Service Employees Association and the Public Employees Federation. Those unions risked layoffs to make a statement on extending the millionaires’ tax, only to ultimately accept the Cuomo administration’s demands. Nonetheless, PEF President Ken Brynien suggested other unions that still have to negotiate contracts with the state, like the United University Professions and the New York State Correctional Officers & Police Benevolent Association, take a hard line with the governor. “The governor’s using his own leverage by saying, ‘We’ll make the savings by contract or we’ll make the savings by laying people off,’ ” Brynien said. “That’s pretty powerful leverage. But I think part of the message back, for whoever he’s negotiating with has to say, ‘We’ll make some sacrifices, but you need to sacrifice too.’ ” Like Cantor, he hopes to peel off a couple of Senate Republicans by using local funding concerns, including the need to rebuild following the damage wrought by Hurricane Irene, as a rallying cry for the millionaires’ tax. “I’ll use Senator Libous as an example,” Brynien said. “When the governor says, ‘You know, we’re going to have close the Binghamton Psychiatric Center, because we can’t afford to keep it open anymore’… When these issues start hitting home, these legislators are going to have to start making decisions. What’s worse? Losing these services in my community? Or reinstituting that millionaires’ tax?” But Brynien said getting it past Cuomo would be even harder. “It’s going to be tough,” he said. “He’s dug in on the issue.” email@example.com
“Would you want more taxes if you didn’t need any taxes? If you didn’t need any taxes for the budget, would you still need taxes just for the sake of taxes?”
hether Cuomo likes it or not, the millionaires’ tax, hydrofracking and redistricting are all being discussed in Albany backrooms, as parts of what insiders say could be a “global resolution” tying them all together in a grand bargain. From the left, millionaires’ tax advocates saw cracks in the Senate Republican façade from Deputy Majority Leader Tom Libous. He told an interviewer he could be open to new revenue sources if it helped his and other communities recover from upstate flooding. He later walked back those comments and reaffirmed his opposition to the millionaires’ tax—but the left saw signs of daylight between him and the party line. They also see voters’ growing support for a millionaires’ tax weighing heavily on suburban Republican senators, who could be pressured to support a true millionaires’ tax—with a baseline of $1 million in annual income—or face potential challengers and negative attack ads. The theory is: Pressuring moderate Republicans worked for same-sex marriage, so why not for the millionaires’ tax? “It’s as much the Senate as it is the governor, perhaps even more so,” said Dan Cantor, head of the laborbacked and left-leaning Working Families Party. “If we can get the Senate to wake up and smell the coffee, that makes it a lot easier to persuade the governor.” Labor unions also plan to keep up the pressure on taxing high-income earners. But their ability to influence the governor is limited, given the tough stance
As Millionaires’ Tax Sunsets, Remembering Its Origins
ack in March 2009, there was no Occupy Wall Street, no 99 percent, no pepper-spraying cops, no tent cities in lower Manhattan. But within the span of a few weeks, Democratic leaders in Albany slapped together a plan that would hit the state’s wealthiest earners in their pocketbooks. The Legislature passed a temporary surcharge on individuals earning at least $200,000 a year and on couples making $300,000 or more, at a rate of 7.85 percent. The millionaires’ tax, though it was hardly just a tax on millionaires, was born. The catalyst was Gov. David Paterson’s surprise reversal on taxing high-income earners. For months he waffled on the plan, arguing it would drive businesses from New York. But as the state’s economic outlook worsened, and under pressure from the Working Families Party and labor unions to avoid laying off public sector workers, the governor was forced to give the proposal another look. “When the budget was still had a $15.9 billion deficit in March, I was still fighting the notion of taxing,” Paterson recalled. “But when it got over to $21 billion, I knew I had to do it.” On March 24, Paterson showed up unexpectedly at a meeting of the Black, Puerto Rican, Hispanic and Asian Legislative Caucus in Albany, and to much surprise declared his support for a millionaires’ tax.
Senate Democrats, just three months into their role as a majority conference, were flabbergasted. With a tenuous hold on the chamber, Malcolm Smith, the Democratic leader, was personally opposed to the idea, worried it would drive high-income earners out of the state. But many of his members were adamant about taxing the wealthy, and pushed him to accept the Assembly’s plan. The original proposal did not include a sunset provision. Smith pushed to end the surcharge in three years, while Assembly Speaker Sheldon Silver argued for five. And there was disagreement over the income threshold, as well. Some Democrats wanted it to be a “true” millionaires’ tax and opposed setting the bar down at $200,000 a year. “It wasn’t perfect,” said Sen. Kevin Parker, a Brooklyn Democrat. “Many of us, including me, who was a big supporter, thought that it actually should have been a much higher threshold.” The end compromise was for a lower threshold but a shorter sunset. The millionaires’ tax passed, with every Republican in the Legislature voting against it. “I did it, if it happened again, I would have done it again,” Paterson said. “But I took a lot of flack.” —Andrew J. Hawkins firstname.lastname@example.org
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Out Of The Shadows Occupy Wall Street’s strongest impact isn’t easily seen BY BRUCE GYORY The best way to understand why political pundits have consistently misread the true role of both the Tea Party and now the Occupy Wall Street protests is to remember the enduring lesson of Plato’s allegory of the cave: When we focus only on the shadows, we ignore the source of the light. Occupy Wall Street today, like the Tea Party in 2010 and MoveOn.org in 2006, will not determine the outcome of elections with their votes. Their real role has been to trigger the negative reflexes of an ever-more-angry center of the electorate. These protest movements have not brought new waves of voters to the polls. Instead they have set the framework for how the angry but vital center of the electorate views the next election. Victory since 2006 has come from the voters within what I have called
cratic president and expanding Democratic gains in both houses of Congress. In 2010 the Tea Party’s real impact was its passionate indictment of Obama polithe “40 within 40.” Nearly 40 percent of cies, which convinced moderate indepenvoters describe themselves as indepen- dents that the stimulus and health-care dents, and within that group, 40 percent reform wouldn’t work and that the federal deficit and debt should be the nation’s describe themselves as moderates. This bloc constitutes just 15 to 17 top priority. Independents broke 59–41 percent against the Democrats percent of the electorate, but in the 2010 congressional elecsince 2006 they have swung tions, returning the House to their votes in unison against Republican control. incumbents. They are anything Now the Occupy Wall but complacent; they have Street demonstrations have become increasingly populist, flared up all across the without aligning for long with country, beginning in New either the right or the left. York City, and many pundits In 2006 the MoveOn.org Bruce Gyory opine that the protesters will assault against the Iraq war alienate the middle of the influenced independents to vote sharply against the Republicans over country. I suspect they are misreading the war by 57–39 percent, according to exit the impact of Occupy Wall Street, just as polls. The result was Democratic control of liberals misread the influence of the Tea Party. both houses in Congress. Early on, liberals dismissively saw the Similarly, in 2008 the grassroots activism undergirding President Barack Obama’s Tea Party ranks as chock-full of aging and campaign helped persuade moderate exotic John Birchers who, they smugly independents that Republicans could not predicted, would offend the sensibilities be trusted to generate a recovery from of independents. Instead it took a full 18 the recession that started on their watch. months for the Tea Party to reach sharply Independents broke 51–43 percent against negative poll ratings. Polls today show voters not idenRepublicans that fall, electing a Demo-
A Flood Of Support For The Millionaires’ Tax Upstate flood damage gives GOP a reason to tax millionaires BY RICHARD BRODSKY
olitical divides sometimes mask deeper social and policy divisions—and sometimes they illuminate them. New York’s conflict over the upcoming tax cut for the state’s wealthiest taxpayers has settled into a comfortable pattern pitting Gov. Andrew Cuomo and Senate Republicans against Assembly Speaker Sheldon Silver and New York’s labor movement. It’s been a stalemate, and that’s meant the tax cut is likely to stay in place. Both sides have given strong reasons. The governor and his allies argue this is not the time for any tax increase, we need to mend our fiscal ways, and most important, Cuomo promised he wouldn’t do it and he’s going to keep that promise. Proponents argue the wealthiest are getting unfair special treatment, it isn’t a tax increase because it maintains the current rate, and we need the money to ensure schools, police, fire departments and the rest of government can function. There was little in the way of negotiation or debate. Both sides hung on grimly. And then Hurricane Irene hit us.
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The destruction was massive across the legislators, opined that all options are on Hudson Valley, the Catskills and other the table. Much internal huffing and puffing parts of upstate New York, hitting many of ensued, and Libous pulled back, but the message was sent. our poorest communities hard. That left Cuomo rowing upstream for As should be the case, there have been the moment. Polls show broad loud and persistent calls popular support for a millionfor the state to help these aires’ tax, spurred mostly by communities. Most of these a sense the system is unfair to calls came from Repubaverage taxpayers—the same lican officeholders, led by nerve touched by Occupy Wall a number of state senators, Street. The support also sees including conservative stalmillionaires’ tax revenue as a warts like Bill Larkin and way to end savage budget cuts John Bonacic, who want the Richard Brodsky and create a real New York jobs state to pick up the 25 percent program. share of flood relief that the But Cuomo is wrestling with a serious Federal Emergency Management Administration requires. And the cries for money to complication that may overwhelm everything else, and it’s not a pleasant contain the next floods are just starting. Cuomo has been active and visible in one. Serious people in his administrathe devastated areas but won’t commit tion have calculated the cost of a massive the state’s money for two reasons. First, rebuilding effort in the billions of dollars, the state doesn’t have the money. Second, with almost no return on that investment it’s unclear how much, where and for in terms of economic activity. As important as the hardest-hit commuwhat purposes the state can get involved. nities are to the people who live there, many More on that later. As the price tag grew, so did an of those areas were struggling to survive obvious connection: If we need money to without a real economic reason to exist. rebuild, why let the upper-income tax cut Should the governor ask taxpayers to invest go through as scheduled? Millionaires’ hugely in communities that will still be tax supporters were quick to make the unable to create a working local economy? connection—and lo and behold, so did Which communities are worth the risk and which aren’t? Who will do this kind of triage? some Republicans. These are some of the ugliest and most Republican Sen. Tom Libous, one of New York’s most effective and insightful difficult governance questions any public
tifying with the lifestyle choices of Occupy Wall Street protesters but agreeing with the object of the protesters’ ire—policies that ignore the plight of middle class and especially younger voters ravaged by the remnants of the Great Recession. In time Occupy Wall Street, like the Tea Party, will probably alienate the center of the electorate—especially if it falls prey to either destruction of property or simplistic extremism in a nation beset with terribly complex economic problems. But for now, Occupy Wall Street is focusing the attention of moderate independents on a more equitable approach to federal taxation and underscoring this fall’s fundamental shift in public opinion, which now clearly prioritizes fighting unemployment over deficit reduction. A wise approach would be to keep one’s eye not on the shadows surrounding protest movements emerging from the left or the right but upon the light emanating from the enduring reaction of moderate independents to the concerns raised by those protest movements. Bruce Gyory is a political consultant at Corning Place Communications in Albany, and an adjunct professor of political science at SUNY Albany.
official can face. Almost no policy can satisfy both logic and political realities. For all his toughness and muscularity, Cuomo is not insensitive to the human consequences of these decisions, and he’s certainly not insensitive to the political consequences. So where does that leave the millionaires’ tax debate? As time goes by and the state does little to lead rebuilding efforts, pressure will build on Republican state senators to find money to solve their communities’ problems. Public opinion will continue to support a millionaires’ tax for all the reasons above. Democrats and labor unions will force the choice into the public debate and eventually into the 2012 elections. The Cuomo budget presentation due in January will probably contain a new round of massive reductions in support for schools and health care. Occupy Wall Street will keep repeating its call for a government that serves the 99 percent, not the 1 percent. Can the Senate Republicans and Cuomo stand the heat? It will take only two or three Republican defectors to change the dynamic. Cuomo perfected that model in the same-sex marriage debate. Right now, it’s too close to call. Richard Brodsky is a Senior Fellow at Demos, a NYC-based think tank, and at NYU’s Wagner School of Public Administration. He served in the state Assembly from 1983 to 2010 and chaired the corporations and environmental protection committees. He appears regularly as a contributing editor on WRNN-TV.
ThE REbooT Repowering power plants garners broad support, but financing remains elusive
By Jon Lentz
RG Energy is ready to tear down its power plant in Astoria and build a new one that’s cleaner, more efficient and more productive. “It’s the equivalent of taking an old diesel-powered truck and replacing it with a Prius,” said Jonathan Baylor, NRG’s New York development manager. And NRG isn’t the only one that supports the installation of far more efficient technology at the site of the natural gas-fired plant. Many of the plant’s neighbors back the idea, the state’s Public Service Commission has given the go-ahead, and now Gov. Andrew Cuomo is citing repowering projects like NRG’s as a source of replacement energy if he succeeds in shutting down the nuclear reactors at Indian Point. The only obstacle? NRG hasn’t found a buyer willing to sign on for a longterm contract, which it needs to secure financing. And it doesn’t expect to get the loan it needs unless the state or the city intervenes. “Our company is not able to put $1.4 billion in cash into this plant,” Baylor said. “We need to go to the capital markets, and we need some assurance of revenue.” NRG’s stalled plans reflect the challenges in financing repowering projects in New York, and touches on one of the main reasons why they are still so rare. “The industry and the producers of electricity have dragged their heels for some time in pursuing this concept energetically,” said Matthew Cordaro, an
electric-utility expert and a professor at Long Island University. “A large part is the economics of building new capacity, whatever it may be. There is uncertainty of where electric demand is going, and it’s been more uncertain in the last couple years.” Over a decade ago, building new plants
who supports NRG’s project. “You need an anchor tenant before you can get financing. You could say to the bank, ‘Lend me the money and I’ll get you tenants.’ And the bank will say, ‘Show me some tenants before I lend you some money.’ ” One reason energy buyers are leery
“It’s foolish that we haven’t been aggressively promoting this, because it both deals with our energy needs by creating more megawattage, and also reduces pollution dramatically.” in New York City was easier because Con Edison was in the business of both generating and distributing power, and could build new plants whenever they were needed, said Ashok Gupta, director of energy policy at the Natural Resources Defense Council. Because of deregulation, Con Edison was required to sell off its power plants, and multiple players came in and purchased them. The smaller power companies have trouble paying for new plants without a five- or 10-year contract from a major customer like Con Edison or the New York Power Authority. That’s where government can step in. At the request of the governor, the Public Service Commission could direct Con Edison to find a repowering project at the best price and sign a long-term contract with its operators. “It’s like in real estate,” said Gupta,
of such arrangements is that long-term contracts pose a risk: If the agreedupon prices end up being higher than the market price, the buyer loses money. Uncertainty about where prices will go, especially in a weak economic recovery, increases those risks. “But in order to get new things built, and to get the environmental benefits and displace Indian Point, the fact that Con Ed should have a couple thousand megawatts in long-term contracts is not a problem,” Gupta said. “If you have a particular societal and policy objective to achieve, which is you want older, inefficient generation replaced by newer, efficient generation, and you want to shut down Indian Point, then having Con Ed sign a contract for 500 megawatts, even with some potential risk, is worth doing.” In fact, Cuomo’s desire to shut down Indian Point for safety reasons could
be the boost that NRG is looking for. In an online chat last month, the governor raised repowering projects as one option that would help the state meet its power needs if Indian Point were shut down. “We can retrofit old plants, we can site new plants, we can improve transmission lines,” Cuomo wrote. “So if we want to find replacement power, we can.” He did not, however, commit to intervening on NRG’s behalf. NRG’s repowering project would add 440 new megawatts to the plant, resulting in a total of 1,040 megawatts. Indian Point has over 2,000 megawatts of capacity. “It’s foolish that we haven’t been aggressively promoting this, because it both deals with our energy needs by creating more megawattage and also reduces pollution dramatically,” said State Sen. Michael Gianaris, a Democrat from Queens. “That’s the one gaping hole that could have a real, significant impact on the environment that we are not pursuing aggressively enough.” Even the passage this year of a new Article X law, which streamlines the permitting process for new or retrofitted power plants, will have less impact than if government intervenes directly in calling for a repowering project, Gianaris added. “What can be more significant is when the arms of government, whether it’s the utilities or the authorities, go out to contract—which helps with the financing question—that they require the bidders to be repowering projects,” he said. “That would have a very direct and quick impact on getting these projects moving.” email@example.com NOVEMBER 14, 2011
IT’S TIME TO END LAWSUIT ABUSE AND HELP PUT NY’S ECONOMY BACK ON TRACK Individuals who have been injured deserve to be compensated for their medical and living expenses. They do not deserve being taken advantage of by greedy lawyers looking for a big payday. It’s time for New York to put a $250,000 cap on pain and suffering awards like the Governor’s Medicaid Redesign Team suggested earlier this year. This type of cap would create jobs, lower prices and improve healthcare. Lawsuit reform is needed to propel New York toward economic prosperity. A recent study found that reform would likely result in as many as 200,000 additional jobs in the state. Lawsuits are costing government in New York close to $1 billion on an annual basis—money that could be used to lower taxes or provide essential services to the state’s residents.
It is Time for Balance In New York, employers, including schools and municipalities, are automatically at fault in the case of elevation injuries.
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Correcting this imbalance would add thousands of jobs at no cost. Go to www.scaffoldlaw.org for more information.
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NOVEMBER 14, 2011
Why New York Won’t Pass Medical Malpractice Reforms BY LAURA NAHMIAS
ost everybody in New York state government agrees the state’s costly tort system needs to change—but nobody seems to think it will. The reason is simple: No one agrees on what makes tort costs in New York so high, or what can be done to lower them definitively. “New York State suffers from an extreme lack of data on medical malpractice,” J. Robert Hunter, a former federal insurance commissioner, told a group of New York lawmakers and health-care providers who assembled recently to talk about how medical malpractice reform could save the state money. While court caseloads have been declining in the few states with available data, New York tort cases have remained steady for the past decade, according to the National Center for State Courts. While the total number of case filings has fallen in the last decade from 37,499 in 1999 to 27,916 in 2009, the overall caseload has remained relatively unchanged. And while medical malpractice insurance costs vary widely for different regions in New York State, hospitals say their skyrocketing legal costs are crippling the system—creating doctor shortages in areas of practice like obstetrics and gynecology, where the risks associated with practicing are high. Last year, for instance, the Legislature considered capping noneconomic damages in medical malpractice cases at $250,000 as part of a series of Medicaid reforms, but the cap was removed from the bill in budget negotiations after it became clear it wouldn’t pass. The state’s health-care organizations, which supported the cap, still claim it is the only way to reduce the $1.6 billion annual tab for medical malpractice insurance in New York. “Some of the highest-quality hospitals
have the highest medical malpractice costs,” said Susan Waltman, an attorney for the Greater New York Hospital Association. “That means there is not a correlation, necessarily, between what your premiums and med-mal coverage costs are and the quality of the care that you deliver.” The debate over medical malpractice as a contributing factor to the nation’s health
or having the system work more efficiently and in a way that cuts out negligence, I would think most Americans would think the latter was the better practice,” said Sen. John DeFrancisco, a Republican who also works as a trial attorney. DeFrancisco said that the health-care trade groups like GNYHA are content to “blame everything on lawyers,” noting that the insurance industry also should
And while the state’s trial lawyers’ association is a major sponsor of the Assembly Democrats, giving more than half a million dollars during the last election cycle, legislators of both parties and both houses also make their livings as trial attorneys, making it hard to pass tort reform in Albany. Lawyers said the issue was not just one of income but also of ideology. In states that do have caps on noneconomic damages, such as Texas, the cap has not translated to savings. And even tort-reform proponents had difficulty discussing the quantification of pain-andsuffering awards. “Pain and suffering can be subjective,” said Sen. Neil Breslin, the deputy minority leader, “but if you told me that a person was going to receive a million dollars for pain and suffering, and if you asked that person, ‘Would you rather have your leg back?’, I think that person would say, ‘I want my leg back.’ It’s an area where I think we should be very careful in restricting people’s right to sue.” Tort-reform proponents argue caps are good for society as a whole. “If there were guidelines that decreased premiums significantly, we might be able to provide more care at safety-net institutions,” Waltman said. “In a world where we’re all trying to figure out how can we provide care to whole communities, especially downstate and communities where there are many safety-net providers, that ends up being part of the trade-off.” With the perspectives seemingly hardened on both sides, no stakeholders sound particularly upbeat about the potential for substantive change next year in Albany. Asked about the potential impact of the governor’s medical malpractice reform workgroup, DeFrancisco demurred. “We’ll have another round this year, I’m sure,” he said. firstname.lastname@example.org
“If you told me that a person was going to receive a million dollars for pain and suffering, and if you asked that person, ‘Would you rather have your leg back?’, I think that person would say, ‘I want my leg back.’ ”
costs was partly settled in 2008, when the Congressional Budget Office found that medical malpractice costs account for less than 1/2 of 1 percent of total U.S. healthcare spending. But the issue has remained a hot button for some Republicans and conservative think tanks. Less clear is how much the fear of being sued leads doctors to practice defensive medicine, ordering unnecessary and expensive tests for patients to insulate themselves from liability. The only tort reform with certain cost savings, the CBO found, are caps on noneconomic damages. But caps may have an uncertain effect on patient health in general. Several studies the CBO cited drew different conclusions, linking lower malpractice costs to increases in mortality. They studied health outcomes and found positive correlations with reforms to joint and several liability, but negative correlations with caps on damages. Meanwhile, New York’s trial attorneys argue that caps on noneconomic damages are both an affront to the appellate system, which already has the ability to cap awards that are considered unreasonable, and to victims of negligence. “If you ask the patient which is preferable, simply cutting out their ability to sue,
share blame because they artificially inflate premiums by keeping excessive amounts of money in reserve for potential payouts that are never realized. New York has several pilot programs aimed at lowering tort costs in medical malpractice, such as specialized health courts where judges with medical knowledge work toward potential settlements with both plaintiffs and defendants. That program, spearheaded by Bronx Supreme Court Judge Douglas McKeon and funded through the Affordable Care Act, has drawn praise. But the health-care community is skeptical the courts can lower tort payouts, in part because of an ideological divide within the judicial community. “Judge McKeon is exceptional in his desire to help settle cases,” Waltman said. “There are judges who feel it’s not their responsibility, that they’re on the bench to try cases.” Proponents of tort reform say broad support for changes to the system among the general public haven’t translated into change in Albany. “I think a lot of that has to do with the trial attorneys’ influence on our legislators,” said Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York.
NOVEMBER 14, 2011
EXPERT ROUNDTABLE Tort Reform Sen. JiM Seward Senate Insurance Committee Chairman
Q: Are tort payouts in New York State damaging the state’s economy? JS: I’m aware of the impact of New York’s tort laws on insurance premiums, and while it’s important that injured plaintiffs are able to ensure reasonable compensation for their injury, lawsuits shouldn’t result in a windfall that everyone living in or doing business in New York pays through higher insurance costs. In that respect, it is somewhat of a drag on our
Sen. neil BreSlin Former Senate Insurance Committee Chairman
Q: Are tort payouts in New York State damaging the state’s economy? nB: They’re not so much damaging to the state’s bottom line, but they’re damaging to the insurance premiums that people pay. Sometimes they’re unfair. Sometimes they’re too much. And tort reform generally deals with two areas, medical malpractice and automobile insurance. With automobile insurance, there are several factors you would think about, as we have no-fault insurance. No-fault is, in theory, supposed to take care of a lot of very minor accidents.
aSSeMBlyMan JoSeph Morelle Assembly Insurance Committee Chairman
Q: Are tort payouts in New York State damaging the state’s economy? JM: I think that, obviously, everyone deserves their day in court to be able to seek a redress of grievances that have been caused by a whole host of conditions, whether it’s in the no-fault world, whether it’s in the construction industry. But I do think in New York you need balance. I think New York is one of the more litigious states in the country. I think it has had a negative effect on the ability to grow the economy in
Michael cardozo New York City Corporation Counsel
Q: How big a problem are torts payouts for the city’s finances? Mc: The city paid out over $565 million in the past fiscal year for tort and related claims. The growth of these payouts has been well under inflation during the Bloomberg administration, but the growth in previous decades that got us to this point was astonishing. The city’s bill is 2,600 percent more than in 1978, when the city paid only $21.4 million in such cases. Think of what the city could do if we paid less to tort plaintiffs—for example, $100 million less would pay for over 1,500 more teachers. Q: What is the political climate like in New York State for passing tort reforms?
NOVEMBER 14, 2011
economy, because it is reflected in higher insurance costs.
Responsibility bill, which would prevent trespassers from being able to sue the landowner when they’re injured on their property when they’re there illegally.
Q: If large payouts are not the cost drivers that can be controlled in torts, what are some changes you think should be made to help save money? JS: One thing we dealt with in the session this past year as part of Medicaid reform: We did create the New York State Medical Indemnity Fund, a mechanism to provide for future health-care costs of infants who have suffered birthrelated neurological injuries. This will be a special fund where rather than future costs coming out of insurance coverage, they will be paid by the fund. There are many bills introduced every year that would take these incremental steps. For example, I’m sponsoring the Trespasser
Q: Has the Legislature become more receptive to tort reforms in the past few years? JS: Certainly the need to reduce spending, tight budgets on the part of government and business, I think does force changes and does increase the likelihood of changes. That’s how we got the Medical Indemnity Fund, as an example. But only occasionally do the sun, moon and the stars all align to make changes, so that happens only occasionally in the past. And in the current environment, the economic difficulties faced by both the private and the public sector does better lend itself to some change.
However, you’re seeing a tremendous number of lawsuits that are going into the court system against the insurance companies, who haven’t paid these minor expenses, and much of that should be done administratively—and it would save the state a lot of money, but it would particularly save consumers a lot of money, to take those out of the court system.
of them wanted to leave the no-fault limitations in the court system. The insurance companies want you to wipe out any ability, for the most part, to litigate in the courts in the no-fault cases, and they want 10,000 prosecutors to stamp out the fraud that goes on in the industry. But everybody has to give a little. I believe that legislation went a long way because we had all the parties together.
Q: Has the Legislature become more receptive to tort reforms in the past few years? nB: I think they are receptive to it. The devil is in the details. I don’t think you can do it in a piecemeal way. And two years ago, we introduced a major piece of legislation that would have reformed no-fault insurance. The trial attorneys who are part of this, they wanted better definitions of serious injury, because that would help their cases, they think. Some
Q: What are significant obstacles to passing tort reform? nB: Well, it’s the insurance companies wanting damages capped. The trial lawyers want additional fees and better definitions of serious injury. It’s really bringing all the parties together and saying, “You’re each going to get a little bit, but you’re not going to get everything you want.” And the governor can do that.
New York. We want to follow the lead of other states. I think, again, the average person has the right for legitimate claims where there are legitimate issues of negligence, but I think some of the standards we have, have swung that balance to a degree where it’s an impediment for economic development and job creation. Q: Has the political climate around potential tort reforms changed in New York State to make it more feasible? JM: I think there are a number of legislators who would be interested in a conversation about, for instance, the scaffold law. Last year the governor in his budget proposed some changes as it related to malpractice reform. I think it’s a topic that merits consideration, and
Mc: The political climate in New York State has been adverse to tort reform in recent times. I am somewhat hopeful about the prospect for passing tort reforms now, because the current financial crisis and budget cuts make the cost of plaintiff-friendly tort laws acutely unaffordable for the state itself and for local governments throughout the state, as well as to taxpayers and businesses. At a time when local governments face cutting services and laying off teachers, police and firefighters, we can see clearly the cost to New Yorkers of inflated payouts to individual plaintiffs. Tort reform would create a more competitive New York business environment, which in turn would bring more jobs and higher tax revenue to the state and localities. Q: What are the specific pieces of legislation that you would like to pass to change the tort climate in New York?
it ought to be on the agenda for a conversation. If the Legislature decides that they’re comfortable with things as they are, then that’s fine, but we ought to have that conversation. We shouldn’t avoid it. I think we need to reconsider whether our standards are an impediment to our economic growth. Q: What are other pieces of legislation New York could pass to enact tort reform? JM: We have issues of product liability. We need to take it on a case-by-case basis, but I think no-fault, certainly, that’s a huge issue, and we need to be looking at some of the issues that relate to no-fault. Obviously I think we would very much like to have more arbitration cases done and get these out of the courts, but still preserve people’s right to go to court
Mc: Prevailing market interest rates for judgments: Currently defendants pay 9 percent interest—an unheardof return considering current interest rates. Predominant fault: The public should not compensate a plaintiff who is equally or primarily responsible for his or her injuries. Currently such a plaintiff can collect damages from defendants. Even if the claimant is overwhelmingly responsible for his or her injury, the claimant’s culpability proportionately reduces but does not bar recovery of damages. Reform of joint and several liability: The city, and other defendants with deep pockets, should not have to pay all damages for economic loss caused by multiple defendants when the city is 50 percent or less at fault. Capping awards for noneconomic damages would establish reasonable limitations to jury awards for pain and suffering. And the public should not have to pay excessive damage awards for “pain and suffering” for minor injuries that required only minimal treatment and care.
Tearing Down The Scaffold Law A new coalition eyes reforms to a workers’ safety statute New York is the last state in the nation to hold employers entirely liable for work-site injuries. A coalition of powerful business groups and tort-reform advocates aims to change that. This is not the first time tort-reform advocates have tried to change the law, which has been in place in its current incarnation since 1969. But a new coalition that includes the powerful Business Council of New York State could inject new life into negotiations on reform, advocates suggested. “We have been trying to repeal this law for 30-plus years,” said Tom Stebbins, executive director of the Lawsuit Reform
“The argument that has been made is that it has made us a safer state, but the statistics don’t prove that.” Alliance of New York. “One of the things we’re doing this year is pushing a reform of the law rather than a repeal.” Under a bill sponsored by Assemblyman Joseph Morelle, the law would change to a “comparative negligence” standard. That means plaintiffs would have to prove they weren’t inebriated and were compliant with the site’s safety regulations in order to hold their employer liable for injuries sustained on site. The amendment is getting top billing as part of a package of proposed reforms that are supposed to help New York grow its economy, which Gov. Andrew Cuomo has said is his top priority for the rest of his term in office. The coalition members, including Unshackle Upstate, the Business Council and the New York State Association of Realtors, are also part of the Committee to Save New York, which helped push Cuomo’s legislative agenda last spring. But opponents of reform say the law protects vulnerable construction workers, who in New York are disproportionately undocumented immigrants and non–English speakers, especially at smaller construction companies. “Workers who speak little or no English and who may be in the country illegally are in no position to complain to their employer, a labor union or to the government about work-site safety lapses,” the New York State Trial Lawyers Association wrote in defense of the law. “If the scaffold law is eviscerated, one of their few remaining protections would be gone.” In New York, because so much work is done high above the ground, most fatalities on work sites happen on scaffolding,
according to the Bureau of Labor Statistics. The trial lawyers maintain that New York needs its scaffold law because it has more scaffolding than most other major cities. While the reform proposals contained in the new bill would single out smaller companies that demonstrably provided their workers with no safety training, advocates worry that placing the burden of proof on construction workers will lead to a chilling effect on legitimate claims.
That’s “pure, unadulterated nonsense,” said Mike Elmendorf, president of the Associated General Contractors of New York State. In states like Illinois, a repeal of the law lowered construction companies’ insurance premiums even as constructionrelated fatalities declined, Elmendorf said. His concern was echoed by Morelle, a Monroe County Democrat and Cuomo ally who is sponsoring the amendment.
“The argument that has been made is that it has made us a safer state, but the statistics don’t prove that,” Morelle said. “New York is one of the safer states when it comes to the construction industry, but it’s not top in the nation. Therefore you can’t point to the one provision that we have in our law as being the reason for it.” —Laura Nahmias email@example.com
The verdict is in legal reform creates jobs at no cost
Reforming New York’s antiquated legal system will create jobs, generate revenues and help spark economic growth. Visit www.lrany.org for more information about how you can help join us in the fight to bring common sense back to New York.
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NOVEMBER 14, 2011
TORT REFORM THE PLAYERS
MEDICAL MALPRACTICE New York City has become famous (or infamous) for the large judgments juries award plaintiffs in some medical malpractice trials. Hospitals and doctors claim the multimillion-dollar payouts are a major cost driver for their medical-malpractice insurance premiums, and lead doctors to order expensive tests they don’t need to avoid liability in case of lawsuits. In last year’s budget negotiations, Gov. Andrew Cuomo supported a $250,000 cap on noneconomic damages as part of his Medicaid-reform package, but the cap lacked the support it needed to pass. Those who oppose caps on damages, which several other states have implemented, suggest the medical community should do more to prevent adverse events. Other proposed reforms include changing the standards for a witness to testify as a medical expert in a trial, and the creation of specialized courts where judges with medical knowledge can meet with plaintiffs and defendants to see if settlements can be reached early in the trial process.
Proponents of tort reforms frequently take aim at Assembly Democrats as major opponents to change in state tort law, including Assembly Speaker Sheldon Silver, who is of counsel to the personal injury and medical malpractice firm of Weitz & Luxenberg. But Republican Sen. John DeFrancisco, also an attorney, is a noted opponent of tort reforms as well. Sen. Jim Seward, chairman of the Senate Insurance Committee, and former committee chairman Neil Breslin are advocates for changes in the state’s laws governing automobile accidents, which make up the vast number of the state’s tort cases.
The Health Industry
Business interests and New York City’s corporation counsel argue that antiquated laws that hold building owners and construction subcontractors liable for any accident on a construction site are expensive and go against the spirit of tort laws. New York is the last state in the country that still has such a strict scaffold law, said New York City Corporation Counsel Michael Cardozo. Tom Stebbins, president of the Lawsuit Reform Alliance of New York, agrees: “The law started in 1880, before we had workers’ compensation, before we had OSHA, so many of the states, 49 of them, when they repealed their versions of the scaffold law, they did it with the stipulation that employers must comply with OSHA standards.” The state’s trial lawyers argue the law protects New York’s disproportionately high immigrant population working in construction from being held accountable for not following rules they cannot understand or training they have never received.
The Greater New York Hospital Association (GNYHA) and the Healthcare Association of New York State (HANYS) are some of the most vocal advocates for caps on noneconomic damages in medical malpractice awards, a measure they have not yet achieved, which they blame on the influence of trial lawyers over the state Assembly.
In New York, tort law allows each defendant in a lawsuit to be found liable for the full amount of the damages, despite the degree of negligence. Proponents of reform to the law suggest this “joint and several liability” encourages a litigious climate in which parties are encouraged to sue the defendant with the most cash, instead of the entity most responsible.
The state Health Department has a role in helping to influence state policy—it was responsible for the inclusion of new projects such as the neurologically impaired infant indemnity fund within the state’s budget this year. That program, which pays health costs for infants with brain damage without assigning fault, became operational October 1 and will be administered by the new state Department of Financial Services.
New York State is one of 12 states in the country with some form of no-fault car insurance, which is supposed to curb auto-accident litigation by forcing insurance to pay regardless of who was at fault. But because New York also has a threshold over which a claimant can sue for certain damages based on types of injury, the state has seen a glut of claims in court, 36 percent of which have been determined to be fraudulent, at a cost of more than $229 million per year to the state. Several lawmakers, including Sen. Jim Seward, have tried to pass legislation that would reform the no-fault process.
The New York State Bar Association and the New York State Trial Lawyers Association have both registered opposition to proposed changes in the state’s tort laws, citing defendants’ rights to trial. Implicitly the trial lawyers’ opposition to measures such as caps on damages has an element of self-preservation, as limited payouts would also limit the fees lawyers could recover in settlements or trials.
JOINT AND SEVERAL LIABILITY
BY THE NUMBERS Standard medical malpractice insurance rates in New York State IN KINGS AND QUEENS COUNTIES INTERNAL MEDICINE:
ESTIMATED EXPENSES RELATED TO TORTS IN NEW YORK STATE
NEW AUTOMOBILE TORT CASES IN 2011:
COMMERCIAL TORT COSTS:
NEW MEDICAL MALPRACTICE CASES IN 2011:
MEDICAL MALPRACTICE TORT COSTS:
IN ROCHESTER AREA COUNTIES
$12.5 BILLION $2.2 BILLION PERSONAL TORT COSTS:
TOTAL TORT COSTS:
$37,290 IN MID-HUDSON COUNTIES INTERNAL MEDICINE:
$20.3 BILLION ESTIMATE OF TOTAL COST OF U.S. TORT SYSTEM IN 2009:
TOTAL ACTIVE TORT CASELOAD IN NEW YORK STATE IN 1999:
TOTAL ACTIVE TORT CASELOAD IN NEW YORK STATE IN 2008:
—From National Court System Online
$248.1 BILLION —Source: 2011 study by the U.S. Chamber Institute for Legal Reform
$88,715 —Source: Medical Liability Mutual Insurance Company
NOVEMBER 14, 2011
BACK & F O R T H Andrew Schwartz
Carl McCall is not shy about sharing his opinion. He did it on television as one of NY1’s “Wise Guys,” and he frequently speaks his mind to reporters on a variety of subjects. And while he has labored to push Gov. Andrew Cuomo’s agenda as a member of the Committee to Save New York, it still came as a bit of a surprise to some when the governor tapped McCall to chair the Board of Trustees of the State University of New York. McCall, who has served on the SUNY board since 2007, is no stranger to politics. He served as state comptroller from 1993 to 2002. Memorably, he and Cuomo ran against each other in a primary for governor in 2002; Cuomo dropped out at the last minute, and McCall went on to lose to George Pataki. McCall talks to The Capitol about priorities for his new role, the challenge of balancing economic development and academics at SUNY, and his feelings toward Cuomo, his former rival and current benefactor. What follows is an edited transcript. The Capitol: What are your top priorities? Carl McCall: I will focus on how to make SUNY a first-class educational institution for our students, number one. My second priority is to do everything we can to make sure that it continues to be affordable. That’s a real struggle in today’s economy. It is still a bargain; we did have to raise tuition last year, as a result [of the fact] that over the past four years, allocation from the state has been reduced by $1.4 billion. So last year we were forced to increase tuition to make up for some of that loss. But even with the tuition increase, the average in-state tuition across the state is about $5,200. It’s way below private schools and also at the lower end of what you would pay for any other public institution in the country.
affordable—high-quality and affordable.
TC: How does that compare with other large university systems, like California and Texas? CM: California is about $11,000. It compares very favorably with schools across the country, particularly those in the Northeast.
don’t like it, their families don’t like it, but we needed to do it; because a lot of the programs and courses were dropped, it meant that over the past few years we couldn’t provide full faculty for some of our courses. We had to do something to provide quality education. We were able to hire more full-time faculty, restore courses. We had to get that money because we want to give them a quality education.
TC: There’s been some pushback on the 2020 plan. What’s your response to that? CM: When I went to college, I protested the costs. Everybody does. We have the benefits of significant contributions from the state, but since the state’s own resources have been challenged, it’s going to impact state agencies. Last year there was nowhere else to turn for money, so we had what I believe to be a modest increase in terms of tuition. I’m sure students
“When I went to college, I protested the costs. Everybody does.”
TC: It’s still a struggle for some students, right? CM: It is. Even though last year we increased tuition, students who have the least amount of financial ability will not have to pay the increased amount. It will be waived for students in a particular category. TC: Will you be looking to increase funding for tuition-assistance programs? CM: Two things we have to do: We want to increase tuition assistance, which is still generous. We have a program based on need. So even though those costs are low, some costs will be eliminated or defrayed for those students who don’t have the ability. We have got to make this
TC: What is the work dynamic between you and the SUNY Chancellor, Nancy Zimpher? CM: We’re blessed to have somebody with the reputation and energy that Nancy Zimpher has. We’re very pleased with what she’s doing. My job as the chairman is to support her and help her in any way she sees fit, and to make sure the board is working together to provide the support she deserves. TC: Do you believe the SUNY reportcard system needs to be more transparent and detailed?
CM: We have got to show them that the money they are investing in this college is producing a good product. That’s the purpose of the report card. We listen to the criticisms, and we’re going to do everything to make sure everything we do here is totally transparent. TC: What role will you have in working with Governor Cuomo’s regional economic development councils? CM: Our colleges across the state have been involved in economic development. The colleges bring a lot to the table. If in a given community you are doing economic development, you need to know which jobs are in demand and what skills you need. The university is going to be training people to do those jobs and understand what the real economic opportunities are. We applaud the governor for including us in these councils. TC: How do you strike the right balance between academics and economic development? CM: One thing we need is first-class academic facilities. The governor’s 2020 program is a commitment to put $140 million into our four university centers. It’s attracted an additional $700 million for major construction projects that will provide jobs and economic development in those facilities. We end up with some first-class educational facilities. We’re going to have a new medical school in Buffalo, a research center in Stony Brook. They are hardly in conflict; they are in support of academics. TC: You are an outspoken person. How will your personality impact promoting SUNY schools? CM: I will let more people know what a treasure this is for our state. We hope we can get from the public the support we need and let them know this is a firstclass educational institution. We have to look at the educational pipeline. We need
to be engaged with the K-to-12 enterprises to make sure they are prepared to be here. We have to make sure we are preparing our teachers to do the kind of job we need to get done in the K-to-12 processes, so they are prepared for college courses.
TC: Was it your decision to pull out of an endorsement event for a Dutchess County executive candidate? CM: I have a house in Dutchess County. Three months ago I agreed to attend a fund-raiser for a young fellow running for Dutchess County executive. Once I took this position, it was clear to me I shouldn’t do that—or do anything politically. So I’m not going to endorse any political candidates or get involved in any political campaigns. I don’t want people to think there is any conflict there. TC: You were the last AfricanAmerican to hold statewide political office. Do you perceive a lack of diversity in political office these days? CM: We want the young students to know that if they do their work and get a good education, that there are no limits on them. They can hold citywide and statewide office. I think diversity is helpful; it brings in new ideas and new energy. It’s what we need in our political life. TC: You and the governor used to be political rivals. Do the two of you privately joke about that part of your past? CM: Yeah, we do. In politics, there are no permanent friends or permanent enemies, only permanent interests. When your interests are aligned with another person’s interests, you work together. And my interests very much align with Andrew Cuomo’s. We need to provide an effective and efficient government service to our people. We have to change public attitude. There’s such a loss of confidence in government. As former comptroller, I’m very aware of the fiscal problems we face. We’ve got to manage our fiscal affairs in a better manner. Andrew Cuomo wants to do that, I want to do that, so we’re together. TC: Do you support the governor’s decision to end the tax on the highincome bracket in New York? CM: Whatever you do that makes New York less competitive isn’t good. I support the governor. This should be done on the federal level. Across the nation, we will see people paying taxes according to their income. —Andrew J. Hawkins firstname.lastname@example.org NOVEMBER 14, 2011
There’s still time to restore fiscal sanity in New York State. The progressive income tax — some call it a “millionaires tax” — is set to expire Dec. 31. By allowing that to happen, state lawmakers will be giving New York’s wealthiest citizens a $5 billion tax cut at a time when the rest of us are sacrificing so much. That $5 billion should be used to fund education, health care, and services for children and other vulnerable New Yorkers. It should be used to create jobs and rebuild a stronger New York.
the tax cut for millionaires!
Richard C. Iannuzzi, President Andrew Pallotta, Executive Vice President Maria Neira, Vice President Kathleen M. Donahue, Vice President Lee Cutler, Secretary-Treasurer
Representing more than 600,000 professionals in education and health care.
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