THE CAPITOL
www.nycapitolnews.com
NOVEMBER 2009
19
Opponents of $426 Million in ‘Sweeps’ Say State’s Long-Term Interests Ignored Renewable energy, affordable housing funds easily tapped by Gov. Paterson BY CHRIS BRAGG s unions and business interests battle over the $3.2 billion budget gap, there does appear to be at least one area of consensus: both sides support the one-time transfers of funds from public authorities’ surpluses—known as “sweeps”—that comprise $426 million of Gov. David Paterson’s gap-closing measures. The funds, which are generated by public authorities such as the Lower Manhattan Development Corporation and the New York State Thruway Authority through taxes or fees, are supposed to go to a specific economic developmentrelated purpose. Fees charged to MTA riders, for instance, go back to the MTA to cover operating expenses. Because the boards of these quasipublic agencies are controlled by Paterson, the governor can easily direct these public authorities to transfer surplus funds to the state’s general fund. Unlike other funds in his deficit-reduction package, the money from these sweeps is not under the purview of Legislature. But those affected by the loss of authority funds—including a wide range of affordable housing and environmental advocates—complain that the sweeps are shortsighted, arguing that the raids hinder economic growth while enabling the continuation of out-of-control spending. Jackson Morris, of Environmental Advocates New York, argued that one of the sweeps, a $90 million raid from a program to create green jobs and promote renewable energy research, would hurt the state’s economic interests, harm the environment and damage the state’s longterm fiscal health. “This is like sticking your finger in a dike to stop Hurricane Katrina,” he said. Union leaders seem to find the sweeps preferable to cuts in education and health care spending. Business groups, although philosophically opposed to the transfers, argue that the one-time raids are preferable to another hike in the personal income tax. “These are extraordinary times. We’re doing a lot of things we don’t want to do,” said Ken Pokalsky, legislative director of the Business Council of New York. The $90 million for green energy research were generated through the Regional Greenhouse Gas Initiative, a joint cap-and-trade program New York has entered into with nine other northeastern states. Earlier this year, Assembly Member Robert Sweeney, the chair of the Environmental Conservation Committee,
ANDREW SCHWARTZ
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Affordable housing advocates are fighting a $300 million sweep from the Battery Park City Authority introduced a bill to put this money out of the governor’s reach and instead in the hands of the Legislature, anticipating that they could be used to plug general fund gaps. But while his bill passed the Assembly, it was rebuffed by the State Senate. Sweeney said that using the funds to cover a budget shortfall would set a bad precedent for the nine other states collaborating with New York on the cap-and-trade program. “There were promises made that are being broken,” Sweeney said. Although Paterson does not need legislative approval for the sweep, he is expected to include the transfer in his final deficit-reduction bill, in an effort to share responsibility with legislators. Paterson spokesman Morgan Hook said environmental advocates should
not forget that spending for renewable energy programs has doubled under the governor’s watch.
“This is like sticking your finger in a dike to stop Hurricane Katrina,” said Jackson Morris of Environmental Advocates New York. “Every portion of the budget, including environmental expenditures, needs to contribute to the shared sacrifice necessary to address New York’s historic fiscal difficulties,” he said.
Meanwhile, Paterson has also proposed sweeping $300 million in funds from the Battery Park City (BPC) Authority in Lower Manhattan. That money is generated through property taxes and fees put on BPC developers. The money is intended to be used to build affordable housing, which helps spur the city’s private sector economy and offers long-term benefit to its residents. Now, the proposed sweep has housing advocates outraged. “The city did a tremendous amount to fund the building of Battery Park City,” said Benjamin Dulchin, executive director of the Association for Neighborhood Housing and Development. “The quid pro quo and the public benefit was supposed to be affordable housing.” The sweep from the BPC Authority would include a practice that fiscal hawks find especially repugnant: only $50 million would be plucked from the authority’s current surplus, while $250 million would be bonded out. This practice, often referred to as “backdoor lending,” has helped create a $140 billion debt among public authorities statewide. Here, however, Paterson, is facing some pushback. Unlike for many other state authorities, both the mayor and city comptroller have to sign off on any sweep of the BPC Authority funds. So far, Mayor Michael Bloomberg appears reluctant to give the money to Albany. Meanwhile, the consequences of a raid in April to help fill the then-$16 billion budget gap are being felt in the economy of Niagara County, according to local legislators there. Earlier this year, the state took $550 million from the New York Power Authority. Before the sweep, in a partnership with NYPA, the county could offer cutrate power to businesses interested in coming to Western New York by tapping some of the huge surplus, which is generated by fees paid by users of the authority’s power. Largely due to the cheap local power, Yahoo! recently broke ground on a $175 million data center in Niagara. After the raid, however, local legislators say they no longer can offer that incentive. The county has since filed a lawsuit to try and recover the funds, saying that they produced the surplus and that they, not Albany, should reap the rewards. “It’s frustrating,” said Richard Updegrove, the majority leader of the Niagara County Legislature. “We can’t provide low-cost energy anymore.” cbragg@nycapitolnews.com