Take a look at this video of Assemblyman Bill Magnarelli.  Fast forward to about the 4:50 mark and listen to the question asked by the reporter Liz Benjamin.  And then listen closely to the answer given by the Assemblyman.  I was floored by what I heard.

I have one response to his statement that things like the Taylor Law, the Triborough Amendment and the Wick’s Law don’t impact his constituents…”SERIOUSLY?  Is that what you honestly believe?”  If that is the case, then Mr. Magnarelli is way out of touch with his constituents and his knowledge of the impact of these laws.  Taylor and Triborough dictate the terms and conditions for collective bargaining which, as you can read in this blog and all over the Internet, do nothing but drive up the cost of local government by tilting the playfield to benefit the union leaders as they negotiate.  The Wick’s Law has long been shown to increase construction costs for public projects by as much as 20-30%.  So to say that these things don’t impact his constituents is, well, WRONG!

It is time for our elected officials to finally take on these tough issues.  We can no longer afford the cost of state and local government.  And we should no longer have to pay for things (like guaranteed pensions) that we ourselves do not receive.  We want to create affordable communities that we are proud to call home.  It is time to unlock our future by fixing antiquated and unfair state laws!

Governor Cuomo proposed that Tier VI be added to the pension system.  It offers the choice between a traditional defined benefit plan or a defined contribution, 401K style option.  Both of these options would be provided to NEW EMPLOYEES (meaning any employee already working for the state or local government are safe).  For the defined benefit plan, future workers would have to contribute a higher percentage of their pay…4-6% based on their annual wages.  They would also have to retire later (at 65 rather than at 62) and would no longer be able to pad their pension by working overtime.  The Defined Contribution Plan (like a 401K) would allow new employees to put up to 10% of their annual salary into the plan and would allow them to take their plans with them if they ever changed careers.  Both are reasonable and responsible options.

But not everyone shares our opinion.  CSEA President Danny Donohue, in a statement he released, said, “The governor’s proposal of a 401K style option as part of Tier VI would certainly be attractive to highly paid political appointees who could max out their contribution, have it matched by the public employer and take it with them as they come and go. It’s a lot different for front-line career employees who have to worry about whether being at the mercy of Wall Street ups and downs.”  True.  You can’t argue the fact that the market plays a factor.  But why should the public sector be any different than the average middle class taxpayer. 

Mr. Donohue also called Tier VI,  “an assault on the middle class and a cheap shot at public employees.”  REALLY?  Putting aside the fact that we are talking about people who are not currently employed, what about the middle class who do not work in the public sector yet carry the  burden of supporting the current pension programs?  They are being “assaulted” with escalating property tax bills.  By implementing Tier VI taxpayers across New York State will save nearly $80 billion over the next 30 years.  That is not an insignificant sum.  And taxpayer should no longer be forced to pay for something that they themselves do not receive…a guaranteed pension.

Another naysayer, PEF President Ken Brynien, also complains about the proposed defined contribution system, “The Tier 6 proposal is nothing more than a false choice of accepting severely reduced pension benefits or joining an inefficient 401k style pension system. It would force public employees into a pension gamble that virtually guarantees a lower level of benefits.”  Again, why shouldn’t public employees “gamble” the same way private sector employees have to?  We cannot create a protected class of workers.  That is simply unfair to the roughly 92% of New York residents that are not employed by the state or local governments. 

And let’s for a moment talk about choice.  Why shouldn’t future public employees, perhaps even current employees, have a say in how their retirement money is invested?  Everyone works to earn their retirement.  And pensions were never meant to be the sole source of income for people when they retire.  So let’s allow people the choice of where they invest their money and allow them to maximize that investment.

It seems to me to be quite disingenuous to try and protect people that are not currently employed while those of us today foot a heavy bill for current retirees.  Without Tier VI, the state, and taxpayers, won’t be able to support public pensions anyway, so it won’t matter.  We need reform not only so taxpayers across the state can continue to afford to live here, but also so public employees already in the system can receive the pensions they’ve already been promised.

So the gauntlet has been dropped and the battles will begin.  But let’s not forget that anyone who started their career and counted on the current pension system to support them in retirement doesn’t have to worry.  We’re talking about future employees.

 Let’s remember that everyone pays taxes.  The state collects on everything from income tax and university tuitions to drivers’ license fees.  Each region pays more in specific areas. Per capita income is lowest in the Upstate region, so Downstate contributes a higher percentage to the state’s income tax.  While Upstate does not generate as much economic activity and income as Downstate does (despite having the second-largest population in the state), it does contribute a higher percentage to the state in the forms of motor fuel taxes as well as alcohol and cigarette taxes.  At least this makes it look like we have more fun!!

 There are other reasons for the discrepancy.  New York City receives a larger share of state-funded assistance for both transportation and Medicaid.  Think of the subway it needs to maintain and that starts to make sense.  Upstate, on the other hand, receives more of the state’s operations expenses because a disproportionate amount of prisons and universities are located in the region. 

 The reality is that we in Upstate live in a regulatory environment that is largely driven by Downstate.  What they can afford, we can’t.  It is that simple.  What we need to fix are the crazy laws and mandates that continue to hinder this process.  We can start by looking at Unshackle Upstate’s joint Let NY Work agenda and reducing the costs of construction on public and private projects.  We can readjust the pension system and employee health insurance contributions to make doing business in Upstate, and all over the state, more affordable. 

 The numbers from the Rockefeller report are not judgments, they’re facts.  There are differences in budget distribution because there are differences within the regions.  These numbers can be read as unfair or one-sided, or as a relatively balanced policy.  They can also be read as a road map.  If Downstate wants to see a larger contribution from its Upstate neighbors, then they need to support our recommended changes so our economy can thrive and we’ll have more to give. 

 Our 2012 policy agenda will be out soon.  It will outline very clearly what needs to be fixed either legislatively or through the regulatory process.  The plan should be embraced by all New York residents regardless of where they live.  The agenda is about unlocking our potential, so that we can get our economy moving…not our people.

The reality is that when you talk about workforce costs, you run afoul of those groups that would prefer to keep the status quo.  Truly, there are people out there who would prefer that we not change a thing, who believe the cost and tax structure of the state are just fine.  We shared some of their thoughts in a recent blog post, http://blog.unshackleupstate.com/2011/11/let-ny-work/.  Those same people are now out with another diatribe on the tax cap.  You can read some of it here.

Mr. Donohue wants you to believe that the cap will undermine our quality of life.  He writes, “Hard to imagine why the Governor has taken to an advertising campaign to pat himself on the back for his ‘accomplishments’ that make it harder for localities to manage their budgets and diminish the quality of life in our communities.” Once again, you and I are to believe that the tax cap will undermine our quality of life and hurt our kids.  However, the reality is that we can control spending and taxation levels, still provide all of the supports and services we have come to know and expect, and still have cost predictability for taxpayers.  We just need to fix the laws that govern cost structures.  We outlined those changes in the Let New York Work agenda, http://www.unshackleupstate.com/news/press-releases/let-ny-work.

Don’t believe the hype and the sky-is-falling rhetoric.  Don’t buy into the scare tactics that are employed to make you lose track of your emotions.  We can, and we will, fix spending and taxation levels in new York.  And we will do it the right way, the way that benefits all New Yorkers, not just a few.

So you might be wondering why this was historic.  Well, it is the first time that these organizations came together to support a common agenda.  In fact many of us were on opposite sides of the tax cap battle last year.  But we all know one thing, and that is articulated well by this Editorial from the Auburn Citizen, http://auburnpub.com/news/opinion/editorial/article_aea6d92e-05ba-11e1-a694-001cc4c03286.html, that if the cap is to be as successful as we know it can be, then mandate relief has to happen this year.

But our challenges are deep.  Shortly after we released the agenda, the leadership of CSEA said, “Their bile is a perversion of reality that misrepresents the facts about very complex issues facing our state.”  There is nothing perverse in our plan.  The simple fact of the matter is that when roughly 80% of local government spending is in workforce costs, you have no choice but to cut costs in that area.

What we have advanced is a fair, reasonable, and responsible way for the elected officials in Albany to make our communities affordable.  And isn’t that what we all want at the end of the day…an ability to make our communities strong so that we can be proud to once again call New York our home?  We cannot sit back and wait for others, those entrenched groups that want nothing to change so that their gravy train can continue on, to set the agenda for New York.  It is up to us to determine what we want from our local governments and what we are willing to pay for it.  It is our choice…the largest special interest group in New York…the TAXPAYERS!

I hope that you will join us in supporting Let NY Work: A Common Agenda for the Common Good – http://unshackleupstate.com/assets/news/Let_NY_Work_-_A_Common_Agenda_for_the_Common_Good.pdf. Sign up for the Unshackle Army now to get more information in the future about this issue and many others that are important to taxpayers and private sector businesses.

But the reality is that the next step in the one-two punch of our recovery will be meaningful and significant mandate relief for local governments.  We can no longer just tinker around the edges and pretend the issues aren’t there.  So, what will that look like you ask?  Well, the only thing I can say at this point is that people that have not typically worked together are now aligning.  And they are creating a common agenda that will help make our communities affordable.

Check back here early next week.  I think you’ll like what you’ll see.

A business owner in Syracuse alerted us to the fact that the New York State Thruway Authority (NYSTA) recently made two requirements of the company:

• The sign on their building, which was 3 ft by 10 ft and faced the NYS Thruway, was too big and needed to be taken down and replaced by one that was 4 ft by 1.5 ft.  Please keep in mind that the sign is blocked by trees and thus not in full view except in the winter and spring
• The company then needed to pay NYSTA $50 to have the sign inspected and an additional $20 per year to have the sign on the building

Now, that may not seem like a big deal to many readers.  After all, it is only $70 and the company still gets to have a sign up.  And perhaps you’d be right.  However, here is the big kicker…the pinnacle of an authority overreaching…the building in question is OWNED by the company.  Yes, that’s right.  The NYSTA REQUIRED that a company could not have affix a sign to the building that it OWNS.

Now, come to find out that Section 361-A of the Public Authority Law and Part 105 of the Rules and Regulations of the Thruway Authority prohibit on premises advertising devices within 660 ft of a right of any portion of the Thruway system without a permit granted by the Authority.  And I can understand why they have the rule.  They are concerned about what may be on the advertising device and if it is appropriate.  But a company that is simply using their own building to advertise their company, a lighting company to boot, is an overreach.

It is time for the NYSTA to take a look at this section of law and rewrite it to be fair and responsible.  And they should not charge a company, if they own the building, to advertise.  That is somehow…just so wrong.

The New York State United Teachers (NYSUT) and its lobbying partner, the Alliance for Quality Education (AQE), are holding news conferences around the state to complain about this year’s school aid cuts and about the state’s newly enacted local property tax cap.  Yesterday’s NYSUT-AQE event in Albany featured an odd new twist on one of the groups’ favorite anti-cap arguments.

Today’s Albany Times Union offers this partial paraphrase of remarks by Martin Messner, president of the teachers’ union in the Schoharie School District, which was hit especially hard by Hurricane Irene:

Messner, who said he had to write down his words because he was exhausted from all the cleanup work after Tropical Storm Irene heavily damaged Schoharie, called the tax cap “mean-spirited” and said it will worsen the school budget season dramatically. He challenged any politician who supported the cap to come to Schoharie to see the destruction of virtually every business in town and more than 100 homes to see how many tax dollars would be gone.

Now, it would be one thing to suggest that school districts in flood-ravaged areas need some emergency state aid to compensate for the unprecedented and unforeseeable destruction of a large portion of their tax bases.  But Messner also seems to be arguing here that, to compensate for losses due to the severe flooding, the state should make it easier for Schoharie and other affected school districts to raise property taxes on businesses and homes unscathed by Irene.

Read the full piece by E.J here: http://www.nytorch.com/?p=4630

The flooded areas of New York do need the Governments help. What the Government can, and should, do to facilitate the rebuilding is to:

• Eliminate any Project Labor Agreement (PLA) or Prevailing Wage requirements, which also drive up construction cost;
• Advance to the Governor for his signature a bill by Sen. Ranzenhofer and Assemblyman Heastie which calls for the obtaining best value for contracts for public work and purchase contracts;
• Allow for alternative project delivery, specifically design build, which yields a greater return on investment than traditional design bid build.

And shame on those that do nothing but complain and put their hand out for more while doing nothing to make the situation better.

And as if that won’t be challenging enough, some are now also using  this as an opportunity to challenge the new property tax cap. Already we are hearing that the cap, which was passed this last session, will hinder the clean-up efforts.  Some local government officials are saying that the cap ties their hands in what can be raised to make the repairs.

In the face of such a difficult challenge and so much personal suffering, blaming the cap is easy. It lets us fall back on the excuse that “this is how we’ve always done it. “  But before we allow ourselves to go down that familiar, dead end road – and I’m sure many more attempted challenges to the cap lie ahead – let’s instead try to get creative about how we do things.

Let’s think: What can be changed that will allow local governments to rebuild, and do it cost effectively and under the cap?.  Here are a few suggestions:

• When reconstructing or repairing government buildings, suspend the Wick’s Law which by requiring  4  prime contracts raises project costs.  NYC schools have been exempt from the law for years and the savings are well documented;
• Eliminate any Project Labor Agreement (PLA) or Prevailing Wage requirements, which also drive up construction cost;
• Advance to the Governor for his signature a bill by Sen. Ranzenhofer and Assemblyman Heastie which calls for the obtaining best value for contracts for public work and purchase contracts;
• Allow for alternative project delivery, specifically design build, which yields a greater return on investment than traditional design bid build.

For years, many have argued that construction mandates make public works project more expensive.  Others say the additional cost is negligible.  Either way, Irene offers us a chance to study the effects of these laws by temporarily suspending them so that the rebuilding process can start immediately.  At the same time, we can compare project costs with past projects and determine once and for all if these construction mandates do cost more.

Our thoughts and sympathies go out to those affected by the storm.  But New York can help them rebound by fixing the construction mandates we identified.  Suspending the laws will also help our local governments control their costs so that they don’t feel the need to override the tax cap…which in the end would be another costly blow to residents of the affected areas.

So how do we make this better?  Here are a few that should be done ASAP:

1. All current employees should start contributing 3% again
2. Elected officials, at all levels of government, and all non-civil service employees should have their current defined benefit plan frozen and be moved into the SUNY/CUNY defined contribution plan
3. Tier VI needs to be created and all new employees moved into a 401K type of program (see SUNY/CUNY above)

But of course, those will all be resisted and opposed by the leadership of the public employee unions.  Already the head of the CSEA is on record that they will oppose a new Tier VI.  You can read his comments here. You can also watch an interview here. But as you read and watch, think about this:  How can you say that a retirement plan for PEOPLE THAT AREN’T CURRENTLY EMPLOYED is a “crazy option”?  You can’t represent people that at this point don’t exist on the payroll.

It is clear that they want the status quo…for our taxes to go up and up and up.  We have offered several commonsense proposals, http://www.unshackleupstate.com/news/index.cfm?page=357, that can be implemented to help give local governments more control of the taxes they collect from us to pay their bills.  It is time to deliver real mandate relief to our local governments.

The battle is heating up and 2012 is still months away.  Stay tuned.