Gone with the windfall

by E.J. McMahon |  | NY Torch

cash-pile-notesGovernor Andrew Cuomo’s questionable plan for allocating $5.4 billion in windfall cash* has survived, almost intact, in the agreed-upon New York State budget for the 2016 fiscal year, which starts April 1.

Consistent with Cuomo’s original vision, the allocation shortchanges basic transportation and municipal infrastructure needs. The Legislature’s few agreed-upon revisions to the governor’s original appropriations language were minor and have not reduced the potential for waste and political wheeling-dealing in the name of “economic development.”

The major items left basically intact from Cuomo’s original proposal include his appropriations of $1.5 billion for the “Upstate Revitalization Initiative” – a.k.a. the Upstate Hunger Games – and $1.275 billion for the state Thruway Authority, with added verbiage requiring the authority to report to the Legislature how the money is spent.

The amount set aside for distressed upstate health care facilities was reduced from the original $400 million to $355 million, and the savings redistributed to other healthcare purposes, including $15.5 million for Roswell Park Cancer Institute, $19.5 million for a Community Care Revolving Capital Fund, and $10 million for information technology, electronic records and billing systems associated with mental health services covered by the state’s Medicaid managed care program.**

Otherwise, the most noteworthy changes to the settlement allocation were in the appropriations language (but not amounts) in three areas: broadband Internet expansion, development projects on Long Island, and grants and loans to benefit farmers.

Broadly worded “broadband”

The original language backing up the governor’s $500 million appropriation for the “New NY Broadband Initiative” was just 26 words long, stipulating only that the money would be spent to “support the development of infrastructure to bring high-speed internet access to underserved regions throughout the state, and to support the development of other telecommunications infrastructure.”

The final bill language begins with the same passage—including that loaded phrase “other telecommunications infrastructure” (telecom lobbyists, call your offices!).  However, the final bill also says that “priority shall be given to projects that bring high-speed Internet access to unserved areas of the state, public libraries, and educational opportunity centers.”

The final bill also requires that, by June 30, 2016, the Empire State Development Corp. (ESDC) submit a report “detailing: (a) the total amount of public funds committed by this program annually; (b) total amount of private funds committed annually and, if applicable, the amount of such funds that has been invested by such parties; (c) the location of each area receiving investments under this program and the goals for each such area; (d) planned future investments by both public and private parties; and (e) such other information as the corporation deems necessary.”

Note, however: there is still no definition of “high speed Internet” (the governor pegs it at an ambitious 100 megabits per second, or maybe 25 mbps in some remote areas) or on the extent of required private investments required to leverage the funds (Cuomo suggested the ratio would be one private dollar per public dollar). Nor does it include any other criteria for project selection. Instead, ESDC will report, more than a year from now, on how it has already begun spending the money.

This is shaping up as a potential telecom slush fund – controlled, ultimately, by the governor.

Pork pie for Long Island

The original bill set aside $150 million for “transit-oriented development,” including parking garages, at the Nassau and Ronkonkoma hubs on Long Island.

The final bill is more broadly worded, appropriating the same amount for “transformative economic development projects,” further defined as those that, in the judgment of ESDC, “will catalyze private investment resulting in significant economic development reflected in the creation of temporary and permanent jobs, the growth of the commercial and residential tax base or an enhancement of the environment and quality of life for residents of Nassau or Suffolk County.”

In other words, just about anything that involves a lot of steel and concrete.

Developers of some major Long Island projects now on the drawing board (or maybe on a sideboard) no doubt are already getting their ESDC presentations ready.

Farm finagling

Cuomo’s original capital projects bill set aside $50 million for a new “Southern Tier and Hudson Valley Farm and Agricultural Enhancement Program,” including “payments to farm owners” in those regions. The final bill is subtly reworded to refer to the “Southern Tier Agricultural Industry Enhancement and Hudson Valley Farmland Protection Programs” (i.e., two different regional initiatives) and stipulates that funds can flow to non-profit groups and local governments as well as to farmers themselves.

Agriculture is pretty extensive in every region of New York State outside New York City – so why were only two regions singled out in this manner?

Likely answers:

  • in the Southern Tier, money will flow to landowners who won’t get to cash in on shale gas exploration royalties, thanks to Cuomo’s fracking ban;
  • in the Hudson Valley, in which (unlike the Southern Tier and most of upstate) there is genuine development pressure, the money will be used to preserve the bucolic view-sheds of affluent weekenders from New York City.

It’s win-win!

Meanwhile, as documented in the latest TRIP report:

More than one-third of New York’s major roads are in poor condition, while more than one-third of the state’s bridges are deficient or do not meet modern design standards

And even as New York City transit ridership hits new records, there’s a $15 billion gap in the Metropolitan Transportation Authority’s five-year capital plan.

And water mains keep breaking in old cities, such as Syracuse, that can’t afford to fix them.

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* Also as the governor originally proposed, the budget will allocate $850 million as the downpayment on a 10-year plan for reimbursing the federal government for New York’s past over-billing of the Medicaid program. Future payments under the plan reportedly will average $200 million a year.
** Not included in the budget is a recently announced $610 million payment to the state by Germany’s Commerzbank. That money will remain un-programmed, for now.  (As it happens, the Commerzbank cash would be sufficient to cover payments on the Medicaid debt for the three remaining years in the current gubernatorial term, among other things.)

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- E.J. McMahon is the Research Director at the Empire Center for Public Policy.