Tuesday, March 31, 2009


We guess that we need to give some kind of a shout out to Crain's Insider's Erik Engquist who elevated us-over a cast of hundreds-as one of the biggest losers in the recently concluded budget battle: "Supermarkets: They struck out on their top two issues, the bottle bill and wine sales. Supermarkets didn’t want the hassle of taking back empty water bottles, and they desperately wanted to sell wine. Lobbyist Richard Lipsky suffered both defeats, and the additional blow of having the wine bill killed in part by his ally, Sen. Carl Kruger, D-Brooklyn."

Now over the past twenty five years we have been in the forefront of many battles, and as a result, a certain amount of notoriety gets attached; so much so, that at times we get undeserved credit for victories that we played a minor role in. Similarly, we often shoulder the blame for defeats that-as with the victories-were team efforts. On balance, however, this stuff all evens out. Or, as one wag once put it: "I'd rather have flunked my Wasserman test, then never to have loved at all."

Others are stepping up in response to the legislative assault on the food and beverage industry-not chagrined, but angry. Also in Crain's: "No one is more incensed at how the state budget unfolded than the United Food and Commercial Workers Local 1500, which was “treated with a lack of respect,” says organizer Pat Purcell. He blasts Sen. Daniel Squadron, D-Brooklyn, for supporting the bottle bill before anyone read it and slams the governor’s top environmental adviser, Judith Enck, for calling UFCW “tools of the supermarket industry.” Says Purcell, “We may not win everything, but at least represent us. Don’t ignore us. Don’t be condescending. Don’t seek money from us with one hand and stick your finger in your ear with the other.” The union will respond with a public campaign titled “We Matter.”

So, as we said, this is always a team issue-but anyone who puts themselves out in front will have to develop a thick skin. And as far as the wine issue goes, it ain't over yet-but that's for another post.

Bottle Bill Protest Today

There will be a bottle bill protest at an independent supermarket located in the Bronx today. The protest is being led by Nelson Eusebio, Chairman of New Yorkers Against Unfair Taxes, New York tax payers, and small business owners. The purpose of the protest is to highlight just how the expanded bottle law is a massive hidden tax on New York's consumers.

WHERE: C Town Supermarket: 1750 University Avenue Bronx, NY (near 176th and University Ave).

WHEN: Tuesday, March 31st at 12:00 PM

WHY: The expanded bottle bill is not about cans, it’s about cash; it’s aggressive tax policy disguised as environmental progress. DO NOT BE FOOLED. If passed, this unfair, misguided and hidden tax could:

1. Eliminate thousands of New York jobs;

2. Further hamper New York businesses;

3. Further damage New York’s already fragile economy;

4. Place an additional burden on the backs of hard working – and disproportionately lower and middle income – New Yorkers;

5. Mean the triumph of back-room, closed-door policy-making…and will signal the death of “transparency” in state government;

6. Represent a confiscatory state-money grab of over $100 million each year;

7. Make a mockery of “representative” Government.

This could be just the beginning of protests that might roil the structure of state government in the weeks and months ahead; perhaps even heeding Greg David's call to arms: "Any effort to change this state of affairs will have to be organized and financed by business. This is not so easy. Business groups are divided by geography: upstate, suburban and New York City. Industry groups are primarily concerned with their own parochial issues...Twice in the 1990s, which seems like the distant past, business leaders did mobilize against incumbents. In 1993, fearing the city was in grave danger under David Dinkins, executives opened their wallets for Rudy Giuliani. The next year, many did so again for George Pataki, despite the clear likelihood that Mario Cuomo would penalize them if he won reelection. In both elections, the challenger decided to run and then business decided to back the insurgent."

So, is this a similar situation? Hard to say if we're there yet; but just the thought-to borrow from the puerile Chris Matthews-sends a thrill up our leg.

Hello, He Must Be Going

The concluded budget process has turned David Paterson into Captain Spaulding, whose famous phrase was, "Hello, I must be going." As the NY Post's Jacob Gershman observes: "Paterson confirmed the fear that he's the nation's weakest governor, sealing his fate as a lame duck. It'll be up to New York's next chief executive to rescue the state from bankruptcy."

At the same time, as we have also pointed out elsewhere, this budget fiasco-with an additional $8 billion in new spending while NY business craters-opens the door wide for a challenge to Democratic hegemony: "No one will remember that he got an on-time budget or the minor victories buried in the bonanza of outlays (such as a long-overdue adjustment to hospital Medicaid reimbursements). The big story is that Paterson let lawmakers bury their heads in the sand and produce a budget that fiscal analysts are calling a "recession-proof porkfest." "We're going to run against Paterson," says a Republican source. "People will blame the governor, his party and those who do his bidding."

But it's the entire party-not to mention the state's fiscal good health-that will be threatened: "The long-term shakeout has the potential to elevate a moderate Democrat to the front of next year's governor's-race pack, stir a leadership rebellion in the Legislature and give Republicans a new lease on life."

So while it is clear, as the NY Times points out, that Shelly Silver basically slapped the other two leaders silly, it might also be true that the victory he achieved was a Pyrrhic one: "At the same time, the state’s main financial engine, Wall Street, is undergoing a profound transformation and unlikely to soon produce the tax revenues of its heyday. Some wonder if an Albany led mainly by Mr. Silver will be willing to confront that reality."

Clearly, however, Paterson was out of his depth-bending and breaking on all of the faux fiscal discipline he had articulated in the run up to the budget process, As the Times underscored in another news analysis: "But as outside analysts began poring over hundreds of pages of the budget, they said they saw little evidence of stern spending discipline, even in the face of a major recession. In closing a budget deficit that in the end surpassed $17 billion, lawmakers relied on billions of dollars in new taxes and fees, some of which may not even raise as much revenue as hoped if the economy continues to worsen. And like every Albany budget, whether in good years or bad, this one includes $170 million worth of what critics call pork-barrel spending for lawmakers’ pet projects."

So while we have complained about the poor decision making in our own little world of food and drink, it is the entire state that has been ill served by the leadership in Albany. All that's left is the voter blow back-and the WFP's short term triumph may well be short lived, as tax payers begin to realize how privileged and wealthy they really are when their payment due notices come in.

Albany to Business: "Hit the Road Jack!"

As Crain's has reported, the just concluded state budget basically poleaxes New York business: "The business community is bitterly disappointed with the state budget agreement reached Sunday in Albany, especially $7 billion in new taxes and fees. Many of the new revenues will make it more expensive to do business here, according to Ken Pokalsky, senior director of government affairs for the Business Council of New York State."

Make no mistake about it; this is a full, all out offensive against the private sector-with the governor in a foetal position, much like a man looking to avoid the physical effects of the worst possible kind of beating. A beating, is quite clear, expertly administered by that Albany black belt-Assembly Speaker Sheldon Silver.

It's almost impossible to see any sunlight in all of this: "The new budget raises the cost of health care, energy and taxes, which are the areas where businesses most need relief, he said. “On all three of those top issues, this budget makes the state less competitive,” Mr. Pokalsky said from his Albany office. “It’s hard to find the positives.”

And what's beneath all of the "shared sacrifice" rhetoric? The reality that government continues to balloon while the private sector prepares for a new version of planned shrinkage: "Kathryn Wylde, president of the Partnership for New York City, which represents many large corporations, said, “The problem is that the state is spending more than the tax base can support.”

And not only that; as we take a look at our little piece of the poisoned pie-the state's food and beverage industries under the new expanded bottle law regime. We haven't even begun to add up the costs of the new regs; but consider the following:

(1)Mandatory RVM’s - Dealers who are part of a chain of 10 or more units who have between 40,000 and 60,000 square feet must install and maintain at least three (3) reverse vending machines, between 60,000 and 85,000 square feet must install and maintain four (4) reverse vending machines and dealers who have over 85,000 square feet must install and maintain eight (8) reverse vending machines. This provision becomes effective March 1, 2010;

(2)Handling Fee – The handling fee is increased from 2¢ to 3.5¢. This provision is effective April 1, 2009;

(3)Collection Materials – The bill provides that it will be the responsibility of the deposit initiator or distributor to provide the dealer or redemption center with a sufficient number of bags, cartons or other containers, at no cost, for the packing and handling and pick-up of empty containers that are not redeemed through reverse vending machines. Additionally, a distributor or deposit initiator may not require a dealer to load their own bags, cartons or containers onto the distributor’s vehicles;

(4)State Seizing Unclaimed Nickels – Deposits must be placed in an interest bearing segregated account for New York State. Each deposit initiator shall file a quarterly report with the Commissioner of Taxation and Finance. The state will seize 80% of the balance of the account at the close of each quarter. Where a deposit initiator pays out more nickels than they collect, they may apply for a refund from the state, but there is no guarantee that reimbursement will be paid;

(5)Registered Labels – Beginning June 1, 2009, each deposit initiator must register the container label of any beverage offered for sale in the state.

Examine each of the above regulations and you'll find an increased cost of distribution embedded like rusty spike-a harbinger of higher prices, reduced sales and less productivity; not to mention potential bankruptcies for small, ethnic bottlers.

And, as Crain's underscores, the lawmakers eschewed the one positive, revenue generating proposal that was before them: "Ironically, legislators junked the one proposed revenue enhancer that many in the business world wanted: A fee that beer-selling stores could pay for the right to sell wine. Instead, liquor stores will maintain their monopoly on wine sales."

It all makes for a rather grim prospect for job growth in one of the highest taxed, and over regulated, states in the entire country. Who knows, perhaps we can all go to work at the plethora of new redemption centers that NYPIRG envisions will flourish-claimed under the pretense of job creation-with the extra penny and a half handling fee for deposit containers?

Monday, March 30, 2009

Wine Could Still Ferment

While it is clear that, at least as it currently stands, wine is not included in the budget resolution, there is still a possibility that it will be resurrected since the state's revenue continues to free fall. As Newsday points out: "Supporters of the proposal said the decision will cost New Yorkers millions of dollars in added revenue that would have been generated by licensing and other fees. "The money that this could generate is the equivalent of retaining 4,000 state employees that now could be laid off," said David Vermillion, spokesman for a coalition supporting the change."

And as the red ink continues to mount, it is likely that the legislature will have to return in June to make adjustments to make up for the growing deficit; and by that point the $140 million of wine fees is going to get better looking by the hour. As Daily Politics points out: "The governor wouldn't rule out the possibility that this budget will have to be revisited as the state's fiscal outlook worsens - and he expects revenues to drop by at least another $2 billion to $3 billion. But he also said that has been "anticipated" in the financial plan."

Right, but Paterson's no Carly Simon; and the governor's touting of anticipation falls far short in our view-although her song's lyrics have a curious resonance for our governor and his disastrous budget: "

We can never know about the days to come
But we think about them anyway, yay
And I wonder if I'm really with you now
Or just chasin' after some finer day

Anticipation, anticipation
Is makin' me late
Is keepin' me waitin'

So, as the budget gap grows-and more stimulus is needed-we may yet recapture the Days of Wine and Roses; unless Speaker Silver remains adamant in his protection of the 80 year old state sponsored monopoly. Soon, we could be starting to hear Yogi Berra's old refrain: "It's never over, till it's over."

Low Flying Fruit

The NY Post's Dave Seifman comments on Mayor Mike's evanescence when it comes to the issue of tolls: "MAYOR BLOOMBERG adopted a low pro file in the high-stakes fight to rescue the MTA after being warned by transit advocates that his involvement could actually hurt their cause in Albany. "The politicians up there really hate the mayor," said one source. "It would be poison for him to inject himself." Yuh think?

Well, for us, this is the one reason why it might be fun to see Mike Bloomberg serve another four years-just so he can be Shelly Silver's pinata; not to mention the favorite target of some Senate Dems. But with a cash reserve of 15 billion dollars, we don't think that Miguelito will suffer all that much; although we can't wait to see the kind of poison pill that Shelly sticks into the renewal legislation on mayoral control of the schools.

Speaking of which, we had dinner the other night with some old friends-one of whom is teaching in the NYC schools as a second career. Listening to him, you wouldn't believe that the city's tabloids are occupying the real world; tales of watered down tests and funds being diverted for a testing regime designed to, well, put lipstick on a pig.

As one poster underscored on the Gothamschools website: "We do endless test prep. As much as principals might genuinely care about inspiring curiosity and giving the kids a well-rounded education, all that really matters are the scores. We didn't even get units for November and December in my school because the understanding was that we'd be doing hardcore test prep."

And, as the Public Advocate hopeful Bill De Blasio points out, it's money for testing all the time: "The Department of Education could foot the salaries of more than a thousand teachers with the money it spends measuring and promoting student performance, according to a report released today by City Council member Bill De Blasio." The DOE is hot wiring the data, and it will be left to the front group Learn NY to shuck and jive this charade forward in the upcoming debate over mayoral control.

We can't wait to see how the legislature treats this flim flamming. There's not enough disinfectant to clean this mess up-and the only thing missing here-as it is with the MTA debate-is the Wizard of Oz mayor being taken to the woodshed for his less than stellar-Pygmy like-school performance; doing less with more even while the flacks and toadies try to convince us otherwise.

Albany to Supermarkets and Bottlers: Drop Dead!

David Paterson, the governor whose poll ratings are approaching junk bond status, ignored the pleas of food industry executives and supermarket unions, and pushed through the expansion of the bottle bill that will drive another nail in the coffin of food retailers in New York City: "The agreement announced just before midnight Saturday also restores some proposed cuts in health care and higher education and expands the state's bottle law, putting nickel deposits on bottled water under the measure that currently covers only carbonated drinks."

The agreement is also being reported by NY1: "The bottle bill will also be expanded to include new nickel deposits on bottled water..." Unreported is the fact that, as far as we know, the measure includes a "NY Only" on all deposit containers-something apparently designed to stymie non-New York bottles and cans from being redeemed. Missed by all of the legislative hochems, is the fact that over 95% of downstate retailers redeem manually-and not with reverse vending machines that can spot the out of state containers.

This seemingly rational measure is, unfortunately, irrational-and devastating to all of the state's small bottlers who can't afford the duplicate lines and storage space necessary to accommodate the additional inventory requirements. So for Good-O, Inca Kola and Top Pop-just to name a few-this could, in combo with the nickel heist, really mean their demise. And, as far as the unredeemed deposits are concerned, it will lead to a nice steep price increase at the check out-a regressive tax on all of those struggling New Yorkers trying to make ends meet.

And with Coco Cola threatening to close plants in retaliation-especially in Senator Thompson's Buffalo district, the bottle bill will be a job killing measure; except in the mind of NYPIRG's Laura Haight: "Opponents, including Coca Cola bottlers, are threatening to leave the state, and say thousands of jobs may be lost if the bill becomes law. Environmentalists and redemption centers argue that an increased handling fee in the bill for stores and redemption locations will actually create more jobs."

Haight certainly can't tout any degree from the London School of Economics. If higher costs lead to plant and store closings, as they will in this case, the fact that a new government tax is sending a bit of loose change into the redemption system won't alter that scenario. As for jobs at redemption centers, you''ll be able to count them with the fingers of one hand.

Which brings us back to the supermarkets-and the governor's professed concern for promoting their growth in low income neighborhoods. Here's a synopsis from the governor's January state of the state address:

"In the New York State of the State address today, Governor David A. Paterson announced the Healthy Food/Healthy Communities Initiative, part of his signature initiative to combat the childhood-obesity epidemic. Research shows that the presence of supermarkets in communities helps to prevent obesity. The Healthy Food/Healthy Communities Initiative is modeled on a successful Pennsylvania program, the Fresh Food Financing Initiative (FFFI), which is helping to alleviate the scarcity of grocery stores in low-income communities. The fund has provided $51.8 million in grants and loans to 62 supermarkets projects across the state. In 2008, Harvard University named FFFI one of the nation’s most innovative government programs."

Okay, so what's the state doing on behalf of supermarkets? Well, exactly nothing except piling on more and more regulatory and tax burdens to make operating in the state more expensive. Which is the point we have made over and over: the best thing the state and New York City can do is to tax and regulate less. And as Crain's has pointed out, the Hispanic supermarket owners going to North Carolina to open stores are not doing so because that state is issuing grants and tax breaks; it's the lower cost of doing business, stupid!

But wait! The governor is providing $10 million for a supermarket initiative that will allegedly promote supermarkets in low income neighborhoods. How droll. At the rate the state is raising taxes and fees, the $10 million will be put to good use for signs to inform the public all over the neighborhoods of the city: A Supermarket Used to be Here.

And the one measure that could actually make supermarkets more profitable-allowing wine sales-was defeated because the speaker is full bore into the liquor lobby protection racket. As Newsday opined yesterday:

"Unfortunately, liquor stores have once again killed a plan to allow sales in grocery stores Grocery stores should be able to sell wine, but the liquor lobby once again kneecapped the idea, which would have garnered the state $100 million or so in franchise fees. Liquor stores, which have an official monopoly on sales, insist on protectionism. The truck drivers who deliver the goods provided the lobbying muscle. Expanding the market for wine would have allowed Long Island's wineries to thrive and consumers to get lower prices. In return, the state could have eased the impact on liquor stores. Prohibition's legacy remains intact."

So, as the state's budget goes to its final resolution, we are facing the worst economic set of circumstances in our memory-with the anti-entrepreneurial scolds at the WFP, along with their legislative allies, doing everything within their power to drive all business from the state-fair share indeed! As the NY Times reports this morning: "It is impossible to view this budget as a path to economic recovery,” said Kenneth Adams, chief executive of the Business Council of New York State. “Businesses and jobs will hasten their departure from the state, and how can you blame them? Albany treats them with disdain.” When will the WFP, and its legislative handmaidens, understand that the government generates no economic growth; but it can sure dampen it-something that will be seen in the months ahead.

Paterson Provides an Opening for Republicans

The just concluded budget negotiation, probably cements the demise of Governor Paterson-unable to hold the line against job killing taxes and runaway state spending. Fred Dicker captures this in his characterization of the governor's hapless staff: "This is the demolition squad that conspired with the Assembly's hidebound eminence grise, Speaker Sheldon Silver, and the Senate's clueless new Democratic leadership to prepare a budget with the biggest set of destructive tax hikes in already-overtaxed New York history -- even as Wall Street collapses and suburban and upstate residents continue to flee. They've put the governor on a path to plunge even lower than the record-low 19 percent "approval" rating he received in a poll last week."

And what of the state senate, just recently captured by the Democrats? For Dean Skelos' deposed crew, this could be the proverbial opening they can drive a truck through-especially if Paterson manges to stay at the top of the ticket in 2010. As the NY Daily News reports: "The new package, which lawmakers will begin voting on Tuesday, is said to contain $5.2 billion in new taxes and fees, though critics say it's likely closer to $7 billion or $8 billion. The biggest increase is a three-year hike in the personal income tax on families making at least $300,000 that is expected to raise $4 billion. Everyday New Yorkers, businesses and the health care industry will all be hit with an array of new taxes and fees. Among those are vehicle registration fees, a cigar tax, a beer and wine tax, a utility assessment, an auto insurance surcharge, driver's license fees, a rental car tax and a registration fee for tobacco sellers. Bottled water drinkers will pay a nickel more because the drink has been added to the 5-cent bottle deposit law"

There appears to be little effort to rein in government spending, or to control the size and scope of the public sector-what happened to "shared sacrifice?" As the NY Post opines: "The $132 billion budget contains some $4 billion in income-tax hikes and $3.5 billion in other new imposts and fees. It incorporates no awareness whatsoever of New York's all-but-collapsing private-sector economy -- while treating New York's cosseted public sector quite well, thank you very much."

As for the euphemistically labeled, Working Families Party; this inaptly named crew helped to midwife the biggest assault on the state's hardest working families-its genuine middle class-while fraudulently holding the working families banner: "Well served, however, are Albany's myriad special interests: The public-employee unions and their handmaiden, the Working Families Party..."

So with state spending increasing! during a fiscal meltdown, the Albany leadership triumvirate has created a gigantic opportunity for the recrudescence of Republican rule-with two thirds of the troika being extremely vulnerable to being toppled by an irate home owner and tax payer revolt; especially if a strong standard bearer is found for 2010.

Friday, March 27, 2009

Fee Hikes Will Hurt Education

We just received the following information from Jim Calvin, the president of the convenience store association (NYACS). It sheds another light on why the proposed increase in cigarette license fees is such a bad idea.

It appears that going forward with the fee hike will jeopardize millions of dollars in lottery aid to education. Here's how. Around 60% of lottery merchants also sell tobacco products.
Budget Division estimates that the tobacco fee hike will reduce the number of tobacco outlets by 40%.If 40% of the 60% of lottery merchants lose tobacco, that means the lottery sales in 24% of retail lottery outlets will be impacted by a drop in customer traffic entering the store. How much is hard to say. What's scary is that nobody in the Budget Division has done an analysis to determine the magnitude of the resulting loss of lottery aid to education.

We can assume that when their favorite shop no longer selling tobacco, some of the displaced smokers will just go to the next closest tax-collecting store tobuy tobacco. But a significant portion of them will instead seek out untaxed,unregulated sources of cigarettes -- Native American reservations, the Internet, the black market, none of whom offer NYS lottery tickets. Thus it stands to reason that fewer smokers will be visiting tax-collecting retail stores that also sell lottery, and fewer lottery tickets will be sold because of the drop in customer count. Yes, those customers who come to the store for the primary purpose of selling lottery will still come, but those who used to come for the cigarettes and then buy lottery tickets while there, you won't see them anymore.

We understand that lottery net proceeds to education are around $2.6 billion. If the impact of shift in tobacco purchases to non-lottery venues impacts lottery sales by even 1%, that will reduce lottery aid to education by $26 million,which is greater than the $17 million in new revenue they project in 2009-2010from the tobacco retail registration fee increase itself.
Bottom line, the fee increase that's designed to reduce smoking will not only fail because it will drive smokers to the tax-free, unregulated side of the street, but it also will reduce state aid to local school districts.

Feeble Support for Small Business

As the budget clock winds down, it appears as if the legislature is prepared to stab small retailers-from all over the state-in the back. As the Daily News reports: "Lawmakers did tentatively agree to accept a slew of tax hikes that Paterson had proposed, including one to dramatically increase the fees stores pay for the right to sell cigarettes." This is simply outrageous.

Bodegas in the city of New York have lost 60%! of their cigarette sales to the black market-where untaxed smokes from Indian sources are making a mockery of the law. According to reliable sources, as much as 55% of all cigarette sales in the state are derived from the Indians-and if the proposed fee hikes go into effect, that percentage will go even higher; robbing more tax dollars from the beleaguered state treasury.

So, with the expected successful defense of Mom and Pop liquor stores-ranking high up there in the public interest-the legislature apparently will place 13,000 bodegueros at risk; a policy of planned shrinkage that has distinctive racial and ethnic overtones. Our earlier post on this topic bears repeating:

Not Feesable
As if the soda tax isn't bad enough, the governor also wants to raise the tobacco registration fees for all retailers across the state-a hike that would hurt all of the city's bodegas and newsstands already reeling because of the economic downturn.

As this report indicates, " There are staggering tax and fee increases for New York convenience stores in Governor David Paterson's proposed 2009-2010 state budget released Monday, said James Calvin, president of the New York Association of Convenience Stores (NYACS). "In trying to balance the budget amidst multi billion-dollar deficits, the administration seeks to tax, re-tax and up-tax everything we sell, transforming our stores into nothing more than tax collection vehicles for the state," he said."What this means, is that the average bodega in New York Cit that grosses under one million dollars a year will see its license fee rise from $100 to $1,000-a 900% increase.

Keep in mind that tobacco sales at these outlets have plummeted because of the confiscatory taxes at all levels of government-with the losses at the local level at more than $250 million a year-a 60% drop in sales! And the city will also have a commensurate increase in its fee as well.

The New York Association of Convenience Stores (NYACS) has taken the lead on the counterattack, and in a brief for legislators points out the following:"Registration fees should reflect the State’s administrative costs, not business volume, and certainly not sales of products unrelated to the license. Such fees should not be designed to punish the licensee for selling a legal product in accordance with regulations governing such commerce. These obscene increases would come at a time when our cigarette sales have dropped 65% or more over the past eight years, mainly due to the epidemic of cigarette tax evasion sanctioned by the State of New York. Essentially, the administration wants to charge us 900% to 4,900% more for the privilege of selling one-third as many cigarettes as we would be selling if they were enforcing the Tax Law equitably."

At a time when the state and city have still failed to properly interdict the illegal black market sales-particularly from Indian retailers-it is unconscionable to punish the law abiders even further; as if these fees in an economic recession were ever justifiable. The reality is that the city's 13,000 bodegas are hurting badly-with many on the verge of bankruptcy. To propose such a fee hike now means that the governor is simply out of touch with the very same streets that he grew up in-and the retailers who insure that neighborhoods remain vibrant and stable.

Bottles Still Fizzing

The final conclusion of the debate over the bottle bill's expansion will probably be the eleventh hour-as more senators express opposition to their leader on this contentious issue. This would have already been put to bed if not for the continued pushing of the governor. As the Politicker points out: "The bottle bill may not make it, although at the moment the budget remains highly fluid. A pared-down version that would extend deposits to bottled water was in a draft proposal last night, as reported this morning, but it's unclear if even that will pass. "We're still working on it," said State Senator Antoine Thompson, who has pushed for the expansion."

What's instructive here, is that it appears that the speaker has successfully excluded wine from the governor's budget-an indication that strong legislative leadership is the key to the resolution of many of these thorny budget issues. That being said, Finance Chair Kruger and a bevy of his colleagues are apparently circulating a letter of opposition that is to be handed to Malcolm Smith and his chief of staff Angelo Aponte: "The measure for bottled water was still alive on Wednesday, but may have now been nixed, according to multiple sources. State Senator Diane Savino told me earlier there is some resistance to it among Democrats in the conference."

Still, it's the feisty Kruger who remains the cynosure of the debate-something that some of the irksome folks over at the Albany Project take umbrage with. And here's how they characterize the senator: "Don't Let Gangsta Kruger Kill the Bill." Nice touch, no? Nothing like personal disparagement to elevate the legislative debate.

So, as Liz B has reported, flux is the word of the day-which is why it's all hands on deck as the sand in the hour glass pours out: "Pretty much everything in Albany is in a state of flux at the moment. The Bigger Better Bottle Bill, on which there was supposedly an agreement as of yesterday evening, is also back on the "no deal" list. The root of most problems continues to be the Senate where the Democrats' two-seat hold on the majority means anyone looking to kill a bill merely needs to pick off just one or two lawmakers to bring everything to a grinding halt."

And, as Democrat and Chronicle points out, "Proponents of adding a 5-cent deposit on bottles of water believed they had a deal late Wednesday, only to find out today that some Senate Democrats remain opposed. “There is certainly no readiness to do that here,” Sen. Pedro Espada, D-Bronx, said of the so-called bottle bill." Something to which the Times this morning lends credence: "Mr. Paterson’s proposal to allow grocery stores to sell wine appeared headed for defeat on Thursday night, as did a major expansion of the state’s recycling laws, which earlier this week appeared to have won the approval of key lawmakers."

But nothing is definite; as the NY Daily News underscores on the wine issue: "A push to allow grocery stores to sell wine appeared to be failing, though the governor was trying to salvage the idea." But overall, this isn't a good budget if you run a business in New York State-with those who defend small store owners in the minority fighting a real guard battle: "Lawmakers did tentatively agree to accept a slew of tax hikes that Paterson had proposed, including one to dramatically increase the fees stores pay for the right to sell cigarettes."

So the assembly and the governor are looking to destroy neighborhood commerce; and, in the final analysis, it will be up to the fractious senate to hold the line against disaster. Not a comforting picture overall.


The Crain's Insider (subscription) has weighed in on the bottle bill end game as well:

"As word leaked Wednesday night that Smith, Assembly Speaker Shelly Silver and Gov. Paterson had agreed on a tentative framework for expanding nickel deposits to bottled water, opponents scrambled to divide Smith’s conference. Richard Lipsky, a supermarket and bodega lobbyist who opposes the bill, claimed on his blog that the deal was quickly blocked, at least for the moment, by the “principled opposition” of Democratic Sens. Carl Kruger, Craig Johnson, Diane Savino, Hiram Monserrate, Eric Adams, Martin Dilan, Ruth Hassel-Thompson, Kevin Parker and Jeff Klein."

Still, the Insider speculates that Smith's "failure" to push this bottle bill through would, "badly undermine his ability to negotiate with Silver and the governor." Hard to see why. Did Silver's apparent can kicking of wine undermine his ability?

Smith's folks are treading water here-and the shore line appears to be receding: "But a Smith supporter doubted that the senators would vote against an entire budget bill just because it included the bottle provision." But as we told Crain's: "Even Lipsky agrees; he says Smith would have to be compelled to remove the bottle deal from budget negotiations." Not much of an agreement on our part, is it?

More Zero-Sum Misconstruing

The NY Times-who else?-joins the list of those who see the MTA crisis in rather Manichean terms; it's either tolls or the transit riders take it up the posterior: "Assembly Speaker Sheldon Silver has proposed a workable compromise that avoids such huge fare increases and service cuts. It would allow $2 tolls on the remaining bridges around Manhattan that are still toll-free. There would be a tax on payrolls in the metropolitan area and a smaller rise in fares of 8 percent. It would also get the M.T.A. out of a $1.2 billion hole that will only grow deeper without a reasonable rescue package."

But the recalcitrant naysayers in the state senate are blocking this progressive vision of, once again, handing the MTA a blank check: "As the State Senate turns its back on eight million riders a day, the M.T.A. can’t just wait. They could start preparing fare machines and scheduling delays set for June — unless Albany wakes up and comes to the rescue."

But wait, it now appears that Mike Bloomberg is ready to jump in-perhaps believing that the Albany water is safe for even he to take a dip in: "Their ears must be ringing! Hordes of angry straphangers yesterday heeded Mayor Bloomberg's call to flood state lawmakers' phone lines and get "mad as hell" at Albany's inaction on staggering fare hikes."

It reminds us of how the littlest guy in the gang waits for all of his bigger buddies to leap on the bad dudes from the other gang; and, seeing the situation under control, takes the last leap onto the pile to demonstrate his courage. But the mayor fails to offer any constructive alternatives to tolling the bridges-and, after all, why should he since he has demonstrated his hostility to outer borough drivers for the past three years.

So, once again, it is left to a small band of courageous lawmakers to demonstrate that tolls aren't the sine qua non of a transit deal. As our friend Steve Barrison points out to us: "Here the vehicle owners pay about the highest rates of parking tax, parking fines, cost of operation and maintenance, fuel taxes, city and other taxes, and most of the so called tolls fall on the backs of the hard working middle class residents of the boros and small business. The "corp. fat cats" and other quasi governmental workers, and the 240,000 "official" vehicles, and the thousands of orange government E-Z passes, and exempt, or partially so, TLC, Livery and yellow cabs, leave the heavy financial weight on those few who can't carry the burden for the inept MTA!"

Perhaps, just as Joe Biden told us in the campaign, Blooomberg, Zuckerman and Michael Daly believe that it is the patriotic duty of all city motorists to pay tolls on the bridges. After all, opposition to this scheme has already been labeled, "treasonous."

Thursday, March 26, 2009

Daly's Gangrene

Talk about an obsession-and more piling on; that's what we make of Michael Daly's shrill column attacking the three amigos, senators Kruger, Espada and Diaz, today in the NY Daily News: "Does the fare go up or do we establish tolls on the East and Harlem River bridges? It is one or the other. Anybody with any feeling for this city would say it has to be the tolls. We are not a metropolis of automobiles like Los Angeles or Houston or those other burgs beyond the Hudson."

So, in a supposed zero-sum game-and it's a good thing we're not talking about intellect here-the only choice for Daly is a Hobson's one: tolls or fare hikes. And in the process, he joins with Morticia in attacking the pols who beg to differ: "Which is why nearly every major figure in the city - politicians, labor leaders, community activists, even patrician Metropolitan Transportation Authority board members - support the so-called Ravitch plan to minimize a fare hike and stave off service cuts by charging motorists who cross into Manhattan. The unfortunate exception is the "Gang of Three," a trio of state senators from the city: Carl (Cars) Kruger of Brooklyn, along with Ruben (Road Rally) Diaz Sr. and Pedro (Escalade) Espada, both of the Bronx."

And off he goes, losing brain cells in direct proportion to the decibel levels of invective he spews: "The three began the year threatening to go over to the Republicans and scuttle the Democratic majority if they did not get what they wanted. Diaz was worried about gay marriage. Espada imagined he might be majority leader. Kruger wanted - and got - the chairmanship of the Finance Committee, along with a special budget. The word for that stuff is "shakedown." Then, the odious three went from their shakedown to opposing tolls for a few thousand motorists at the expense of 4 million straphangers. The word for that is treason. And they are not just betraying the city."

No Michael, treason is when billionaires conspire to overturn the will of the people and re-install royalty in City Hall-all done with Daly apparently experiencing a severe case of lockjaw. So odiousness is closer to home than Daly realizes-or perhaps he does, but values the paycheck over the genuine sense of outrage that a real populist-and not someone merely mimicking the popular will-would exhibit when democracy was being suborned.

The reality here is that there are any number of ways-short of tolls-that could be devised to save the transit system. Alternative funding mechanisms are available that wouldn't burden every single bodeguero in Manhattan who travels almost every day over to Jetro on Hamilton Avenue in Brooklyn to purchase merchandise; not to mention the thousands of commuters who really have little access to decent transit in their outlying neighborhoods.

But the Daly's of the world, feasting on the carrion of their wealthy benefactors, need to resort to obloquy in the place of reasoned debate. And in the process, the jackals at the MTA are able to sit back as mentally challenged toadies divert attention away from their years of malfeasance.

Bottle Bursts

All of Albany was buzzing yesterday with news that the Bigger, Better Bottle Bill was going to expand as a result of a deal that had apparently been struck by legislative leaders with the governor. As the NY Times reports this morning:

"Gov. David A. Paterson and legislative leaders have reached tentative agreements on major cuts to health care spending and a significant expansion of recycling laws, legislators, aides and lobbyists who have been briefed on the negotiations said Wednesday evening...The agreement on recycling would require consumers to pay a nickel deposit on bottles of water for the first time, much as they do on bottled beer, soda and other beverages. The deal would also force beverage distributors to give up most of the millions of dollars in unclaimed deposits they are currently allowed to keep. Retailers would also be able to charge distributors a higher fee for every bottle they collect from consumers."

Well, something happened on the way to the printer-and the Times simply got ahead of itself-along with the NY Daily News which told us this morning: "State lawmakers are close to a budget deal to whack 20% from anti-smoking programs, sources said Wednesday night.
They're also close to agreement to expand the 5-cent bottle deposit to cover water and are considering raising salaries for home health care workers - although hospital and nursing home cuts are still on the table."

When word of the deal started to get out the Alliance and its allies-food retailers and soda company reps-mobilized; and by nightfall we counted at least 14 senators who had balked over the deal. The Times catches a whiff of what was in the works: "The legislation, known by supporters as the Bigger Better Bottle Bill, has passed the Assembly several times in recent years only to die in the Senate, which had been controlled by Republicans until this year. The bill is staunchly opposed by a coalition of beverage companies and grocers. But the deal could still fall apart in the Senate, where the chairman of the Finance Committee, Carl Kruger of Brooklyn, and other Democrats oppose it. “I was very upset when I heard about it,” Mr. Kruger said on Wednesday. “Let’s see what the morning brings as the negotiations continue to go forward.”

And, as Cat Stevens used to sing, "Morning has broken..." With the morning comes the reality that the senate apparently lacks the requisite votes to pass this regressive tax on consumers; one that will hurt struggling food retailers, particularly in NYC, and small ethnic bottlers such as Good-O. The short term death of the measure, however, doesn't mean that the expansion is forever interred. It could still be jimmied into the current budget if our coalition doesn't remain vigilant; nothing is over until the ink dries! And we definitely expect its resurrection as a stand alone bill before the session ends.

Which means that the opponents of the expansion who worked so hard yesterday-with particular kudos to the labor folks at the RWDSU, UFCW and the Teamsters-must stay focused, regroup and prepare for a big battle ahead. For now, hats off to Senator Kruger and the amigos-as well as others like Craig Johnson, Diane Savino, Hiram Monseratte, Eric Adams, Martin Dilan, Hassel Thompson, Kevin Parker and Jeff Klein. Their principled opposition has-until further notice-saved the day.

Wednesday, March 25, 2009

Wining and Dining

As we mentioned in our previous post, the worsening budget deficit is boosting the wine in grocery store issue; and the Indian cigarette tax collection as well. Here's Mike Gormley's incisive AP story: "Proposals to sell wine in supermarkets and collect cigarette taxes on Indian reservations are gaining ground in the Legislature as they are promoted as ways to raise millions in revenues in tough times. A week before the new fiscal year, a new projection shows the budget deficit deepening by $2.2 billion and Gov. David Paterson says he must resort to layoffs for the first time in more than a decade to shed 8,900 jobs."

And the previously cited NY Times story puts to rest all of the scare tactics of the Last Store Standing coalition-drunk driving, closed stores, lost jobs; all a chimera conjured up in the fertile mind of Mike McKeon. The reality here is that NY State's in trouble, and the $160 million in fees are badly needed to close the budget gap that is now approaching $16 billion.

As Gormley points out: "On Tuesday, a coalition of grocery stores, bodegas, wine sellers and vintners pushed for a law to allow wine to be sold in supermarkets, as it is in 35 states. They say it will create thousands of jobs from western New York farms to factories in central New York to bodegas in the Bronx while giving a boost to New York's wine industry and tourism. "We view wine as table food," said Nicholas D'Agostino III, president of D'Agostino Supermarkets based in Westchester County. "Consumers deserve the same choice and convenience that consumers get in these states." They say sales will increase state revenues by $160 million in the first two years, save New Yorkers $80 million in lower prices through greater competition and add 2,000 net jobs."

And as far as the Indians are concerned: "Calling it "the forgotten billion-dollar stimulus," the New York Association of Convenience Stores and anti-smoking groups pushed for Paterson to enforce a law that would collect sales tax on cigarettes sold by tribes worth hundreds of millions of dollars a year in revenue. Although treaties allow Indians to avoid sales tax, their non-Indian customers are supposed to pay, according to the state."

Tough times demand tough measures; but the situation here is pretty easy. Open the market up to competition, collect the license fees and the Indian taxes, and watch as the sky doesn't fall.

Time for a Wine Toast

As the Crain's Insider reports this morning (subscription), the rapidly enlarging budget shortfall could possibly enhance the effort to allow supermarkets to sell wine: "The need for more revenue bolsters the case for allowing supermarkets and other beer sellers to sell wine. Liquor stores, which enjoy a monopoly on wine sales, sometimes argue that smaller businesses won’t be able to get loans to pay the proposed fee for a wine-selling license, and that the state won’t reap the $100 million it forecasts. But the budget deal needs to be balanced only on paper, and the wine plan will facilitate that. With more sales outlets, wine sales would increase, benefiting growers."

Still, the inside plying of the special interests has made this more difficult than it should be; it seems that there are those in the assembly in particular, who care more for the 2500 liquor stores than they do for city supermarkets and the state's consumers-something that we emphasized to WCBS2 last night: "It would be good for supermarkets, particularly in New York city, because we have been losing supermarkets, 300 in the last five years," said Richard Lipsky of Gristedes. And supermarket operators say increased competition would save consumers some $80 million."

But the Channel 2 story fell short of balance-giving greater time for the liquor store owner to state erroneous information without rebuttal concerning job loss: "I just want to point out to you if this bill passes, to my right is a Food Emporium, to my left is another small kosher market, both of whom would be eager to start selling wines," Wartels said. Wartels also said it could put many of the state's more than 2,700 liquor stores out of business. It's not just liquor store profits that are at issue. Wartels' store employs 11 people and the owner told CBS 2 HD if the bill passes, some of these jobs could be at risk."

Fascinating tale, but what's missing here is the fact that the situation that owner Martells fears, is enacted without harm in all of the 35 states that allow wine to be sold in grocery stores-and frequently side by side in the same shopping centers. And the job issue is simply a canard; since if business did shift in an unlikely zero-sum game, good-mostly union-jobs would be created at the supermarkets.

But what about the danger of increased underage drinking? Another canard-check out today's Dining and Wine section of the NY Times: "As for the argument that wine in supermarkets will facilitate underage drinking, it doesn’t seem to be true in the states that permit supermarket sales. “What do kids drink?” asked Rick Garza, the deputy director of the Liquor Control Board in Washington State, which has permitted supermarkets to sell wine since 1969. “In Washington they drink primarily beer and spirits, not wine. People in the prevention community will tell you that very seldom do we have youth-access issues around wine.”

But the opponents, undeterred, keep pouring out the disinformation-wrapping it, like two day old fish, around the small store protection facade: "We don’t see any great public clamoring for this,” said Michael McKeon, a spokesman for Last Store on Main Street, the evocatively named coalition opposing the proposal. “This is an idea wholly generated by the big stores — solely a money grab.”

Of course, this assertion is undermined by the reality of the NYC retail market: "It would be like a dream come true,” said David Grotenstein, the general manager for Union Market, which has two high-end stores in Park Slope, Brooklyn. “It’s like the lost cross-merchandising element of retail — we seem so backward and primitive here in New York.” Hardly big box, is he?

But there is legitimate concern that the governor's proposal needs to be bolstered-with liquor stores being allowed to enter into the 21st century-an idea that has good support in the legislature with Senator Espada's bill to permit the liquor stores to expand. As the Times points out: "Nobody supporting the bill would begrudge some concessions to wine and liquor stores, which right now are not permitted to sell cheeses, bread and other foods that would naturally pair with wine. They can’t even sell beer, which is sold in groceries, delis and convenience stores. If groceries are permitted to sell wine, perhaps wine shops ought to be able to sell cheese and beer."

All the liquor lobby offers, however, is intransigence: "Mr. McKeon of Last Store on Main Street disparages such concessions. He asserts that the proposal will not generate nearly the revenue that the governor projects and predicts that 1,000 of the state’s 2,700 wine and liquor stores will have to close...It’s absolutely a joke that we’re going to compete with Whole Foods and Wal-Mart,” he said. “The mom-and-pop stores, they don’t need to change the law.”

No, the joke lies with McKeon's deceptive trade practices-and with those in the legislature who want to stand for square-against New York's consumers-for an archaic monopoly. The budget is in free fall, consumers are parched, and it's time to change this obsolete law.

Cig Hell

A shout out to the Daily News' Ken Lovett who has been tracking the cigarette fee debacle. As he pointed out yesterday, there's no real enthusiasm on either side of the aisle for the measure: "Gov. Paterson's plan to raise fees on stores that sell cigarettes drew fire Monday from Democrats and Republicans..."Why doesn't he just say we're against small businesses," said Assemblyman Micah Kellner (D-Manhattan). "It's an absurd proposal, particularly in hard times."

And one lawmaker immediately saw the connection to the government's failure to collect taxes from Indian retailers: "State Sen. Dale Volker, a Buffalo Republican, called it "wrong and dangerous to drive social policy with tax policy." Volker said the plan is a double whammy to owners of small stores. On the one hand, they will be charged more. On the other, he said, they are at a competitive disadvantage because the Paterson administration has not gone after taxes owed for the sale of cigarettes to non-Indians on reservations."

As usual, health advocates believe that fewer outlets will mean less consumption: "Health Commissioner Dr. Richard Daines said if fewer stores sell cigarettes, more people will quit smoking." But over half of all cigarettes sold in NY State are sold-untaxed-through Indian retailers; and that is why the current proposal amounts to a double whammy on store owners: "Meanwhile, a report released Monday by the New York Association of Convenience Stores says the state is losing $1 billion a year by not going after taxes for cigarettes sold on Indian reservations. Paterson budget spokesman Jeffrey Gordon said he hadn't seen the report."

Ah, continued hear no evil, see no evil; while stores continue to close. Here's a case were the state's tax revenues have literally gone up in smoke.

The Silence of the Lambs

The NY Times ran an interesting analysis yesterday of the poor state of the Democratic party in New York-and what this depleted status meant for the upcoming mayoralty: "The situation has already led some Democrats to be pessimistic about the party’s prospects in the mayoral race, nearly eight months before Election Day. “Frankly, I don’t see the party organizing against him,” Assemblyman N. Nick Perry, a Brooklyn Democrat, said about Mr. Bloomberg. “I don’t see the party committing a lot of its scarce resources to what most would consider an unlikely win.”

But this lead us to musing on one of our favorite topics-the inverse proportionality between Mike Bloomberg's performance and his approval ratings-ratings that remain high while most New Yorkers find it difficult to warm up to him. Bloomberg, for his part, remains Popeyesque; the "I am who I am, and that's all that I am refrain: "On Tuesday morning, in a new poll from Quinnipiac University, Mr. Bloomberg was given high marks for job performance but was perceived by New Yorkers as cold and unable to relate to their problems."

So, while Bloomberg remains thoroughly unlikable, he continues to stay rather incongruously stratospheric when it comes to most polls. Why the disconnect? If we were to place our finger on this disparity, we think that the culprit must be the media; an entity that has, for over seven years, remained thoroughly incurious at investigating the mayor's job performance; and the gap between how the mayor portrays his achievements and the real world evidence that we believe tells a different tale (although, as of late, that has begun to change just a bit-with more media scrutiny being evinced).

The problem here, as with all things Bloomberg, is the power of the purse-and Mike's ability to toss around millions as if they were pennies from heaven. With so many of the local dailies on the verge of collapse, Mike Bloomberg remains always available as a potential White Knight-which leads to an obsequiousness bordering on courtier status; to wit, the flipping on term limits demonstrated by all three of the locals.

And what's with the NY Post, writing a schools puff piece on a daily basis in the run up to the debate over mayoral control? So incessant has the bleating been, that they almost convinced us that our schools are reaching Utopian status-and that the 78% increase in the local school budget has given us our money's worth. Here's the latest on a polll that "supports" mayoral control-with the headline transcending the real conclusions in the survey: "Overall, 47 percent of voters approve of the way Mayor Bloomberg has run the schools, compared to 40 percent who give him a thumbs-down. But when voters were asked if the mayor should share power over the schools with the City Council, the results shift: 53 percent support joint authority, and 37 percent don't."

So, with the prospect of a mayor going to break all time election spending records to achieve immortal status, we will not be able to rely on the press to really go after him on his exaggerated campaign claims; certainly not to the extent that the tabloids diminish, deconstruct and demonize lesser pols. After all, Mike's part of the Billionaire Boys Club and, as a consequence, is beyond real reproach.

Tuesday, March 24, 2009

Stimulate This!

Kudos to Liz Benjamin for linking to the NYACS sponsored study on the Indian cigarette tax revenue that the state is leaving uncollected-over $1billion! As the report underscores: "New tax revenues (including sales tax receipts) from the taxation of Native-American retail sales of cigarettes to non-tribal customers would be in the vicinity of $1billion. These new revenue sources would help close the projected budget deficit of $13.7 billion in the upcoming fiscal year."

Incredibly, the governor has not only excluded any of these revenues from his budget projections, but-adding insult to injury-is looking to raise the cigarette licensing fees by 900% for those retailers who are charging and collecting the levies. This insult was featured yesterday in a NY1 story that pointed out: "Governor Paterson's proposal to raise the $100 registration fee store owners pay for the right to sell tobacco products is drawing the ire of small business owners and advocates."

What's the state's windfall here? A measly $18 million; but for store owners, it's a real fiscal pain at a time when stores are closing their doors in record numbers-and that goes for the city's newsstand owners as well. As Rob Bookman, counsel to the Newsstand Operators Association told the station: "It would hurt the little guy the most...They can't stop selling it, they must have the product. They'd lose too many customers who buy other products if they didn't have that. They wouldn't come into the store. So it's truly taking $900 out of the pockets of the small business owners of the city of New York at a time when they could least afford it."

And, as we told NY1, the plan would have a zero impact on public health-simply driving smokers further into the illegal black market that is already bleeding tax dollars away from the state's treasury; just another reason why the governor's approval ratings are sinking faster than AIG stock. Paterson needs to go on the warpath against the black market, and not small store owners struggling to stay afloat in these rough economic times.

Obsessive Compulsion

What is there to make of the obsessive compulsive behavior over at the editorial offices of the New York Daily News? By our count, yesterday's editorial on the MTA-and the roughing up of the state senate-is at least the seventh that the paper has run on the subject. Here's Johnny One Note at work: "Good morning to our readers on city subways and buses. We regret to inform you that state Senate Majority Leader Malcolm Smith will today start the legal process for raising your fares and cutting your service."

Well, even the most obtuse News reader should have gotten the point, so why the continued onslaught? As someone speculated with us, the answer may lie with the omnipresent Mike Bloomberg-someone who has been very low profile when it comes to the toll issue; as the News reported yesterday.

Perhaps, as with the school governance issue, the mayor is using a sophisticated surrogate strategy to deal with his bete noir-the Byzantine Albany labyrinth; after all, his outspoken advocacy of tolls would be-as our uncle once coined the phrase-The Kiss of Death. That's just how popular Typhoid Mike is in the state capitol.

So is it out of the realm of possibility to imagine that Morticia of 33rd Street-hemorrhaging money, and bleeding the News to death's door-would be a willing beard for Mike the Mogul? Can anyone Karaoke to that old Fontana Bass song, Rescue Me? But what's most egregious in this incessant bleating, is the fact that the paper fails in its responsibility to hold the MTA accountable in any way for the approaching "doomsday."

Here's the familiar refrain: "The numbers are no joke. They will start to get nailed down today when the Metropolitan Transportation Authority finance committee votes. And the MTA has no choice but to approve the hikes, thanks to Smith, Skelos and their members in both the Democratic and Republican parties. Fast approaching is the day the MTA board votes to close subway lines and bus routes, again thanks to Smith, Skelos & Co. They've been warned for months that the region's mass transit is nearing doomsday. While Gov. Paterson and Assembly Speaker Sheldon Silver have backed a rescue that entails imposing a modest payroll tax and tolls on the East River and Harlem River bridges, Smith and Skelos have shown no such courage."

Haven't we heard this all before? What could be a more toxic asset than the MTA? And what could be more irresponsible than a continuing blank check for the prodigal agency, which went ahead yesterday with its fare increases and service cuts? Even many transit riders living in the districts of the unholy senators opposing tolls manage to see this more clearly than Morticia-as the NY Times revealed yesterday:

"But interviews with residents in these districts revealed that the holdout legislators have tapped into a concern shared by many of their constituents, even among those where it might be least unexpected: transit riders. And while toll opponents made up a spirited minority among straphangers interviewed in recent days, their views stood out, because they were both unexpected and passionately held."

And some riders exhibited more acumen than the entire News editorial board: "Several subway riders said they opposed both tolls and higher fares and expressed a deep distrust of the transportation authority. “The whole organization is very inefficient,” said Boris Gertsberg, 33, a software developer who lives in Mr. Kruger’s district in Brooklyn and takes the subway daily to his office in Manhattan. He said he did not drive a car but was still against tolls. “I don’t think looking at hiking fares or putting tolls is the right way to solve the budgetary crisis they’re in,” he said."

So let the News continue its special-and suborned?-pleading. Kudos to the senate holdouts who rightfully focus attention on the malfeasance of the MTA; and who refuse to bailout the agency unless it is radically transformed.

Monday, March 23, 2009

Talk About Leaving Money on the Table

In Albany today we will be joining the New York State Association of Convenience Stores (NYACS) in a press conference highlighting the fact that the state has a round a billion dollars in untapped funds it's not even trying to get at during this budget crisis-untaxed Indian cigarettes. As the NYACs press release tells us: "Supporters of fair tax collection today released an economic study confirming for the first time that the hemorrhage of State revenue resulting from untaxed sales of cigarettes by Native American tribes has now reached $1 Billion a year.
The analysis performed by Brian O’Connor Ph.D. for the New York Association of Convenience Stores shows that if the Paterson administration were enforcing the existing state law requiring collection of cigarette taxes on tribal sales to non-Indian customers, it would yield new tax revenue “in the proximity of $1 billion.”

Incredible! And no one has used the current crisis to simply implement a workable scheme to tap these funds at the source-the manufacturer who ships the product directly into the state: "Calling it “the forgotten billion-dollar stimulus,” NYACS and allies in the quest to bring about fair tax collection held a press conference in Albany today to urge Governor Paterson and legislative leaders not to forego this major source of new revenue as they negotiate a new budget due to take effect April 1. “With businesses and consumers being asked to absorb billions in spending cuts, new taxes, and fee increases, it would be fiscally irresponsible to craft a budget without tapping into this recurring revenue stream,” said James Calvin, President of the New York Association of Convenience Stores."

And on top of this, the state is proposing that cigarette licensing fees-for those legitimate, tax paying retailers-be boosted by 900%. making it even more difficult for them to compete against the tax cheats. As we said over a month ago: "At a time when the state and city have still failed to properly interdict the illegal black market sales-particularly from Indian retailers-it is unconscionable to punish the law abiders even further; as if these fees in an economic recession were ever justifiable. The reality is that the city's 13,000 bodegas are hurting badly-with many on the verge of bankruptcy. To propose such a fee hike now means that the governor is simply out of touch with the very same streets that he grew up in-and the retailers who insure that neighborhoods remain vibrant and stable."

Which is precisely what the NY Daily News highlights this morning: "Gov. Paterson wants to snuff out cigarette sales by drastically raising fees for stores that sell them, the Daily News has learned. Paterson's budget office projects cigarettes and other tobacco products would be sold at 40% fewer stores if his proposal is adopted."

Can you say, major disconnect? As we told the News: "Richard Lipsky, spokesman for the Neighborhood Retail Alliance, warned the proposal wouldn't stop people from smoking but would boost sales on the Internet and black market." So much for what the governor describes as a "health care initiative." Not only is it not going to accomplish its health care objective, it will drive another nail into the health of local small stores.

So instead of this misdirection, the governor and the legislature needs to grab the $1 billion on the table-and save the small businesses from unnecessary further misery. This is a path that all clear thinking legislators should pursue with vigor.

Lockjaw Mike

As the NY Daily News' Adam Lisberg reports, our wealthy overseer Mike Bloomberg has been as quiet as a church mouse over the entire MTA debacle-even while he can be found pontificating on the country's financial woes on national television: "Every bus and subway rider in New York is about to get punched in the wallet, and all Mayor Bloomberg is doing is standing around watching."

Why the silence? Well, given his rapport with Albany pols, his sideline silence may be the best hope for straphangers looking for relief: "This might be the perfect time for a bully pulpit-loving mayor to try twisting arms in Albany to save MTA riders - except he's still wiping egg off his face from the last time he tried it. The congestion pricing debacle - when Bloomberg wrestled his version of a toll plan through the City Council but got outmaneuvered in the Assembly - left him burned, say people who work with him. So when Richard Ravitch proposed a detailed, thoughtful plan for saving the MTA in December, the mayor figured the best thing he could do was stay out of its way."

And if he's re-elected, we can expect that anything he tries to get out of the state capitol will be mostly dead on arrival: "A broad coalition of unions, business groups and good-government organizations is pressing the Senate Democrats to approve the tolls-and-tax package - but Bloomberg, who works with all of them, is content to let them do the lifting. His political team knows that Bloomberg has little hope of peeling away recalcitrant Democrats, after giving $500,000 to Republicans last year in their failed attempt to keep the Senate in GOP hands."

And what does the this billionaire juggernaut do when faced with the impasse? Punt! And place the onus on the Democratic Party: "But so far, he hasn't used that $500,000 as leverage on the GOP either. For half a million bucks, a mayor ought to be able to at least buy a few upstate Republicans to vote for tolls on bridges they never drive, right? Bloomberg ducked a question about that last week, saying, "It's going to have to be the Democratic senators to come together with the Democratic Assembly people and a Democratic governor and solve this problem."

So, tell us again, why this is guy Mr. Indispensable, someone whose elevation to a third term is needed to address the fiscal challenges of out time? This doesn't bode well for Bloomberg's fight over mayoral control-oh, we forgot, he's shucking and ducking on that one as well-hiding behind a coalition funded by his own money muscle and the public largess that he controls.

Thursday, March 19, 2009

Bloomberg's School Glaze

Buried in the middle of a brilliant piece by Jacob Gershman in today's NY Post is the following observation on the educational version of money for nothing: "Mayor Bloomberg's budget essentially froze public education spending. The stimulus wipes out about 80 percent of the cuts that he and Paterson proposed, pouring nearly another $1 billion on the city's schools. Bloomberg's total education budget is now expected to grow by 3.5 percent. To puts things in perspective: The state and city will be spending 78 percent more on our schools than when Bloomberg took office.

Now, what Gershman is commenting on is the Albany version of the Shell game-nice, huh? This is the game that uses the sense of economic crisis to increase taxes while simultaneously doing absolutely nothing to trim the fat out of the state budget. It devolves from the Alinsky style crisis mongering that the WFP's Dan Cantor is mimicking to great effect: "When pressed, Cantor added some clarity: "Like Rahm Emanuel, we don't believe in wasting a crisis." He's sure about one thing, however: "Every dollar we get means some poor kid somewhere doesn't get hurt so badly."

But, as the education scenario above underscores, more money is rarely the sine qua non of enhanced service delivery. This is the Social Democratic version of Roberto Michel's dissection of the bureaucratic impulse. Michels, in his classic work Political Parties, observed that: “The social revolution would not effect any real modification of the internal structure of the mass. The socialists might conquer, but not socialism, which would perish in the moment of its adherents’ triumph.”

Along with the educational prospects of the poor child who is still, without the choices that the children of Obama, Bloomberg and Klein are offered, left to suffer within the confines of well-funded, but under performing, NYC educational bureaucracy. Which brings us inevitably to the upcoming battle over mayoral control; something that WNYC has focused a keen eye on (via Liz).

What the station does is to examine the make up of Learn NY, a supposedly independent group formed to back re-authorization of mayoral control of the schools. As one skeptic points out: "Learn NY is being funded inadvertently, not directly, through the mayor. He’s done great P.R. I think its very sad that he’s using parents in this way, and that the real fact is we have to look to see if the mayor has been successful in what he says that he’s brought to New York City. And if you look at the facts, not the spin, the eighth grade scores in math and English are totally flat."

Well, the scores may be flat, but the budget's certainly robust-and if the team is way over the salary cap, but it's winning championships, who could complain, right? Apparently, however, the city school performance is closer to that of it's local NBA team; where huge spending sprees in the pursuit of excellence, have given the fans very little to cheer about.

But the skeptic is correct; the mayor does great PR-and is aided and abetted by the lack of curiosity in the local media. So what about the "funded inadvertently" claim? How inadvertent does anyone who examines the situation think it really is? "Learn NY has filled other assembly hearings with parents, many of them from charter schools. It’s hired the political consulting and polling firm Global Strategy Group, which worked for Attorney General Andrew Cuomo and Congressman Charles Rangel. Learn NY claims to have raised $3 million. But it won’t say who’s funding its campaign and because it’s a non-profit it doesn’t have to. The group DOES maintain it’s NOT funded by Mayor Bloomberg."

Quite the grass roots outfit, no? A three million dollar budget, and the mayor's an innocent bystander/recipient of the sweat equity of neighborhood folks. All that's missing here is the orchestra: "Geoffrey Canada chairs the board of Learn NY. He’s also Chief Executive of the Harlem Children’s Zone – which runs a network of services for families, plus two charter schools. Canada says Learn NY is supported by private foundations who don’t wish to be identified, but which are longtime contributors to the schools. A spokesman for the mayor also says the group gets no money from Bloomberg and is completely independent. Canada says he incorporated Learn NY last summer, before Bloomberg declared his intention to seek a third term. He says it’s an important issue for him in Harlem, because too many people were passing the buck before the mayor took charge."

Canada's a good guy, but to claim he's a free agent is to test the credulity of even the most gullible: "Geoffrey Canada’s Harlem Childen’s Zone has received almost $388 million in contracts from the city and the Education Department over the past decade, according to records from the comptroller’s office. Two other board members of Learn NY are Reverend Calvin Butts of the Abyssinian Baptist Church, and Sister Paulette LoMonaco of Good Shepherd Services. Their organizations have done almost $400 million worth of combined business with the city over the last decade. Canada acknowledges that raises legitimate questions about what he stands to gain or lose."

Which makes him, at least in comparison to Mike Bloomberg, a regular Diogenes: "Last year, Canada was also among a group of non-profit leaders who supported Mayor Bloomberg’s call to abolish term limits. That led to questions about whether they were pressured by City Hall, something they denied. But Chris Keeley, Associate Director of Common Cause New York, sees a similar pattern in this campaign to keep mayoral control of the schools."

And Keeley's not alone; particularly since the mayor's wealth insinuates itself into all of these public policy debates that ultimately redound to Bloomberg's own self interest: "The underlying message when the mayor would ask for participation in a board is, what if you say no? The implicit message, and that’s not to say that the mayor does that, but it is a power dynamic that exists. If somebody is providing finances for your organization and they ask you for a favor it can be difficult to say no. About 40 community based organizations and charter schools have joined Learn NY. Many of them get city funding. There’s no evidence Mayor Bloomberg pressured them to join. But last September, Klein, Bloomberg, and Geoffrey Canada hosted a breakfast at City Hall with foundation heads and business leaders. Deputy Mayor Dennis Walcott was also there. He says no one was asked to campaign for mayoral control – though attendees were shown a powerpoint presentation about the system’s success."

And since Bloomberg now wants to masquerade as a Republican, can we call all of this astroturfing the real elephant in the room? After all, if Bloomberg went to sell this stuff in Albany by his lonesome, how does anyone think it would work out? Say West Side Stadium three times: "Coalitions may be especially important for Bloomberg, whose relationships with Albany lawmakers have been strained. His signature plans for a West Side stadium and congestion pricing on the East River bridges died in Albany. April Humphrey represents a group that is fighting to put checks and balances on the mayor’s power, called the "Campaign for Better Schools". She concedes it’s politically smart for someone as respected as Geoffrey Canada to lead a group supporting mayoral control, instead of Bloomberg and his chancellor."

All of this is purposefully designed to put a populist patina on the mayor's school and re-election agendas; while at the same time gilding a rather wilted school performance lily. WNYC deserves kudos for this piece, and we hope it sets a trend in the needed deconstruction of the Myth of Mike.