New York State is in the process of collecting more than $5 $6 billion in fines and penalties from financial institutions accused of violating state or federal laws.*

What should the state do with this unprecedented windfall?  That’s one of the biggest questions facing Governor Cuomo and the Legislature in early 2015.

The Empire Center has been out front with an answer: invest in infrastructure, especially highway and bridge reconstruction work, which has become too reliant on borrowed money and is in danger of becoming seriously underfunded.

The case for infrastructure investment is laid out in a series of articles, presented here in reverse chronological order:

Putting the money into operating expenditures is a bad idea because higher spending could only be sustained with higher future taxes, we have argued. (See, for example, “New York public schools’ state-aid fantasy,” a Nov. 24, 2014, Newsday op-ed.)

By the same token, any tax cut financed with this money could only be temporary unless matched to an ironclad commitment of future spending cuts in the same amount. Since the governor and Legislature already need to cut projected spending trends by billions just to balance the next several budgets, no such commitment is on the horizon.

Bottom line: strategically targeted infrastructure investments would be the best way to use this one-shot injection of cash to produce  truly lasting benefits for all New Yorkers.

* The $5.4 billion in windfall funds budgeted for allocation beginning in fiscal 2016 is itemized by source on page 48 of the Mid-Year Update to the state’s FY 2015 Financial Plan. And on March 12, the state disclosed it would be collecting another $610 million in fines from yet another financial institution, Germany’s Commerzbank.

Payer Amount
millions of dollars
BNP Paribas 3,591
Commerzbank 610
Credit Suisse AG 715
Bank of Tokyo Mitsubishi 315
Bank of America 300
Standard Chartered Bank 300
Bank Leumi 130
Ocwen Financial 100
Citigroup 92
MetLife Parties 50
American Internationl Group 35
PricewaterhouseCoopers 25
AXA Equitable Life Insurance Co. 20
Chase 11
Other settlements (TBD) 7

About the Author

Tim Hoefer

Tim Hoefer is president & CEO of the Empire Center for Public Policy.

Read more by Tim Hoefer

You may also like

Hochul Must Reject Pension Busting

Gov. Hochul faces a challenge that will define her legacy as the state’s executive. To succeed, she must do absolutely nothing. Read More

How California Uses Medicaid to Rip You Off

Psst, have you heard about the new cheat code? It isn’t about slaying computer-generated dragons. It’s about gaming the federal Treasury—and states are rushing to cash in before Washington shuts the gimmick down. Read More

Families in New York Also Want School Choice

On March 7, Gov. Kay Ivey making Alabama the 11th state since 2011 to enact universal school choice. With its approval, it doesn’t matter if families choose to enroll at a public or private school, or to homeschool—Alabama’s state Read More

Empire Center Experts React to FY25 Budget

"This year’s budget process was an avoidable trainwreck. New York is the only state that begins its fiscal year on April 1, earlier than anyone else. This has contributed to Albany’s new, old tradition of missing deadlines, then hurriedly voting on bills before lawmakers can fully review them. Moving the fiscal year start would make the budget process more transparent and give lawmakers time to better perform their duty as the state’s board of directors." Read More

Episode 34: Introducing Z

In this episode of Messages of Necessity, Kyle Davis, Director of Public Affairs at the Empire Center, has a conversation with the organization's new Executive Director, Zilvinas Silenas (also known as Z). Together, they delve into Silenas's background an Read More

One of New York’s Biggest Medicaid Contractors Is Quietly Acquiring a Competitor

Author's note: This post has been updated to correct an error in the second paragraph. As state lawmakers debate the future of Medicaid home care, one of the program's bigg Read More

The Union Gave Them the Wrong Data. The Pols Cited It Anyway.

The episode shows the extent to which New York elected officials fail to question the state’s public employee unions—or look at data themselves. Read More

New York’s Home Health Workforce Jumped by 12 Percent in One Year

New York's home health workforce has continued its pattern of extraordinary growth, increasing by 62,000 jobs or 12 percent in a single year, according to newly released data from the U.S. Bureau of Labor Statistics.  Read More