Dec 18th - 1:24 pm
More bad fiscal news for New York today, compliments of former LG Richard Ravitch and former Fed Chair Paul Volker, who released a report identifying the most significant threats to the state’s future sustainability.
Ravitch said there is “an appalling lack of understanding of the challenges to New York’s fiscal sustainability,” adding:
This issue is of dire importance. States and their localities are responsible for delivering virtually all domestic services, but as it stands most are headed down unsustainable paths. The ability to maintain existing service levels, meet the obligations they have promised, while keeping taxes at current levels and making needed investments in education and infrastructure, is becoming increasingly more compromised.”
The report determined that the state’s tax revenue stream mainly depends on small group of wealthy New Yorkers, and its expenditures are dominated by the most expensive Medicaid and highest per-pupil K through 12 public school spending in the country. There is no indication that New York is going to be able to continue to sustain its existing tax and spend practices, and as a result, its fiscal future is on “shaky ground.”
In addition, Volker and Ravitch are raising a red flag on something that has yet been discussed in much detail: The potential impact on New York’s bottom line of a fiscal cliff deal down in D.C.
The effects of forthcoming federal tax reform efforts – such as limitations on the deductibility for state and local taxes and the exemption for municipal bonds – could hit the state hard, the duo said, and have “significant implications” for the revenues of both New York City (the state’s main economic engine) and the state.
What’s more, ootential cuts to federal grant programs could result in serious fiscal strain for the already hurting state and local governments, which rely heavily on them for social service programs.
There’s a lot more where this came from, and none of it is particularly optimistic. The report appears below. Ravitch is scheduled to join me on CapTon tonight, so tune in at 8 p.m. or 11:30 p.m. to catch that interview.
Apr 18th - 1:07 pm
Last night on the show featured my story on the fiscal troubles faced by local governments across New York state, with both Yonkers and Syracuse turning to former Lt. Gov. Richard Ravitch for help.
Ravitch, an architect of previous solutions to public financing emergencies, was upbeat in his assessment of whether municipalities can pull through this time around.
In an interview, Ravitch said a fix on the scale of the bargain reached to pull New York City out of its financial quagmire in the 70s is needed.
“Everybody did with less, paid more taxes, deferred the repayment of debt, society came together,” Ravitch said.
Looking back on those years is a popular thing to do these days.
Indeed, when Gov. Andrew Cuomo took office, he distributed copies of “The Man Who Saved New York” — a biography of Gov. Hugh Carey who helped carry out the rescue of New York City’s finances at the time.
Both Yonkers and Syracuse face large budget deficits, while the public debt of the city of Utica and Rockland County have been downgraded. Suffolk County has recently declared a fiscal emergency after County Executive Steve Bellone took over.
As documented recently in The New York Times and Wall Street Journal, the cash crunch is largely due to the growth of pensions, reliance on one-shot budgetary gimmicks and advances in state aid to cover costs.
“The question that I think we all have to face is how we’re going to pay for the benefits that we promised public employees, how we’re going to pay for the kind of health care system that we’ve created. Those are the two big question and we have to figure those out,” Ravitch said.
The Legislature and Cuomo signed off a new, less generous pension tier that saves nearly $80 billion over 30 years and, in the short term, say they’re focusing on required state spending.
A h/t is due to Grace Rauh at NY1 for gathering the sound.
Feb 13th - 1:24 pm
I spoke this afternoon with former LG Richard Ravitch, who has years of experience as a budget reformer, and he sounded not quite sold on Gov. Andrew Cuomo’s proposed Tier 6 plan, nor was his thrilled about the demonizing of public sector employees that is taking place as elected officials all over the country struggle with varying degrees of fiscal meltdown.
Ravitch, who sat down with Syracuse Mayor Stephanie Miner to discuss his role in trying to rescue the Central NY city from insolvency, initially said he thought the 401(k)-style plan Cuomo has floated is a “perfectly reasonable concept,” but then added:
“I think the issue that people have to face is that they have been using interest rate assumptions to determine the contributions necessary to existing defined benefit plans, and if those are realistic assumptions, which I’m not sure they are, then the earnings in defined contribution plans should be comparable.”
“I do think that probably that we should end up in this society – this is a national problem; it’s not unique to Syracuse, it’s not unqiue to New York State,” Ravitch added. “There are states in much worse shape like New Jersey and Illinois. There’s got to be a serious national dialogue.”
“…I will tell you I don’t think the burden of this serious fiscal crisis that most states and municipalities are facing in this country, I don’t think that burden should be placed only on the public employees. It’s not fair. And how you adjust for others to contribute to this is the big domestic political issue in the United States for the next five years.”
Ravitch, who was appointed LG by former Gov. David Paterson (who went to court for the right to pick his own No. 2, and then promptly froze out his choice after a disagreement over borrowing), is working with former Federal Reserve chairman and presidential adviser Paul Volcker on a comprehensive and far-reaching report about the fiscal problems of states and cities, which is expected to be released in May or June.
The full Ravitch/Miner interview will air tonight at 8 p.m.
Jun 9th - 11:33 am
Former LG Richard Ravitch is decidedly not on message with his fellow Democrats when it comes to the Medicare overhaul plan proposed by Wisconsin Rep. Paul Ryan.
While most Dems have cast the proposal as an effort to “end Medicare as we know it” – a soundbite that worked particularly well in the recent NY-26 special election – Ravitch is taking a much more pragmatic, elder statesman approach.
“I don’t believe that that proposal is the devil incarnate,” he told me during a CapTon interview last night. “I think the issues that are raised – I don’t happen to agree with Paul Ryan…I think the Ryan plan has been mischaracterized in some respects.”
“…I think both parties have been guilty of overdoing the political advantages that each represent with their rhetoric. The Republicans with their anti-public employee rhetoric and the Democrats suggesting the Republicans want to destroy every institution that we have. And the truth it, ultimately, that there’s doing to have to be a compromise.”
Ravitch said he supports a “similar” plan proposed by former Clinton advisor Alice Rivlin. Ryan actually cited Rivlin when he rolled out his Medicare reform plan, (the two had both endorsed a 2010 overhaul proposal). But she subsequently said she doesn’t support his “version” of what they worked on.
Dec 9th - 3:37 pm
LG Richard Ravitch made what is likely his last appearance in Albany as lieutenant governor for a free-wheeling speech and Q-and-A session with reporters during which he addressed his frustrations since he was appointed to the job by Gov. David Paterson almost 18 months ago.
Ravitch also joined me for a CapTon interview that will air tonight at 8 p.m. and 11:30 p.m. In the meantime, here are some outtakes from his stint at the Rockefeller Institute…
On feeling that he didn’t get enough done when he was LG:
“I understand the disincentives. I shared vicariously the pain that a lot of the good people in government feel when their ideas are ignored.”
On whether Paterson was a strong governor:
“I think he wanted to. I think it was difficult set of circumstances to succeed the way he did, and he had not had experience as an executive. But I think he tried to do the right things, absolutely.”
On why his budget reform proposal got tanked by the governor:
“That’s a difficult question to answer. I told you, I made a set of recommendations. I assume he didn’t agree with them because he didn’t push that legislation.”
“But in fairness to David, he wanted to see what the reaction was generally, and two things happened. One: The attorney general conveyed to the distinguished gentleman from the Associated Press that he was opposed to it, and that was well known very quickly.”
Dec 3rd - 3:49 pm
State Conservative Party Chairman Mike Long told me during a CapTon interview today that he views the NYC OTB bailout as a “first test” of whether the Legislature will be able to work with Governor-elect Andrew Cuomo next year in cutting wasteful spending and holding the line on taxes.
“I believe this is a real first test for all the senators – both Democrat and Republican alike,” said Long, who sent a memo to the senators earlier today, urging them to reject the OTB bailout bill when they return to Albany next Tuesday.
“Are we going to deal with the present economic crisis that we’re faced with next year, or are we going to keep on trying to kick the can down the road until there’s nobody in this state left to pay the bills?”
“…I think Andrew’s got a very big job ahead of him. If the Senate refuses to bail out OTB, it would be the first step in a long way of showing that the Legislature has the courage to do the right thing and restructure our present form of government here in New York so we can get back to paying off our debts without raising taxes.”
My interview with Long will air tonight at 8 p.m. and re-air at 11:30 p.m.
Nov 18th - 9:35 am
LG Richard Ravitch has been keeping a low profile, but that doesn’t mean he’s not hard at work chronicling the rather frightening challenges facing the state – and Governor-elect Andrew Cuomo – in the coming years.
On the heels of a report that called for an overhaul of the Medicaid program, comes another white paper from Ravitch that finds New York (unsurprisingly) lacks sufficient funds to maintain its current transportation system, let alone the money needed to expand and improve the system to keep pace with demographic and economic growth.
“In this period of austerity, national economic uncertainty, unpredictability of federal funding, and rising social service costs there is an increasing risk that funding for infrastructure investments will be curbed to dangerous levels,” Ravitch said in a press release.
“To preserve safety and prepare for economic recovery, the state must craft a multi-year transportation capital investment strategy that sets clear and attainable priorities, identifies reliable revenues, and balances competing regional demands.”
Ravitch wants the state to adopt a “responsibly-sized” five-year transportation capital plans that prioritizes projects according to safety needs. He thinks replacement of the Tappan Zee and Kosciuszko bridges, which are at the end of their useful lives, should take precedence.
He’s also floating the dreaded toll idea (something he suggested for the MTA bailout and was promptly shot down by outer borough lawmakers), calling for streamlining environmental reviews and enacting legislation to permit the use of “design-build” contracts.
Ravitch will be joining me for a CapTon interview tonight to discuss his latest report. Tune in at 8 p.m. or 11:30 p.m.
Sep 20th - 11:50 am
Here’s a copy of LG Richard Ravitch’s report on curbing the cost of Medicaid, which he calls the “largest single driver of the state’s growing expenditures.”
The report makes some controversial proposals to a system known as the “Cadillac” of Medicaid programs (because it covers so much), including changing the way reimbursement rates are set, a complete state takeover of the responsibilities now borne by the counties, reform of the medical malpractice system and a push for a higher federal contribution.
It remains to be seen how this report is received by Gov. David Paterson, who fought all the way to the state’s highest court for the right to appoint Ravitch to his old LG post, but then undercut his No. 2 when his plan to save New York from its fiscal mess included borrowing. After much hemming and hawing, the governor finally flatly rejected Ravitch’s proposals.
Paterson and Ravitch tried for a while to keep up appearances, but eventually settled into their current situation, which, as far as I can tell, entails very little direct communication.
Jul 29th - 12:33 pm
In the wake of the initial stories about the David Johnson domestic violence mess and Gov. David Paterson’s involvement in it, Senate Finance Vice Chair Liz Krueger called on the governor to cede budget negotiating responsibilities to his hand-picked LG Richard Ravitch.
Not only did that not happen, but the governor ended up going in the complete opposite direction, essentially sidelining the man he had fought all the way to the state’s highest court to appoint and publicly trashing his budget borrowing proposal.
Krueger joined me on “Capital Tonight” after yesterday’s gavel-in, gavel-out session and said she couldn’t comment on the Kaye report because she hadn’t yet had a chance to read it.
But she also said she still believes the budget negotiations would have gone smoother had Ravitch been at the table.
“Now, nobody has a crystal ball, so I’m not telling you that we would have been done now or even that I would have liked the budget better because I always knew I was not going to like the budget this year,” Krueger said.
“…But I don’t think three and a half months later, we are going to come out with a better set of options than we would have in April, and I still believe that Dick Ravitch being at the table negotiating could and would have helped the process.”
Jul 8th - 9:13 am
Is the break-up between Gov. David Paterson and his hand-picked lieutenant governor, Richard Ravitch, finally official?
The two men have been at odds for months, with Ravitch saying he has been shut out of budget negotiations (placing the blame largely on Paterson’s chief of staff, Larry Schwartz) and Paterson publicly rejecting his LG’s budget borrowing plan.
Now, according to developer Donald Trump, the governor is saying he “made a mistake” in appointing Ravitch last summer – a controversial and historic move that Paterson fought all the way to the state’s top court to implement.
Trump, who has never been a Ravitch fan and vehemently opposed his appointment, said during a “Good Day NY” interview yesterday that the governor now agrees with his assessment that the LG should not have been appointed.
“I was right about Richard Ravitch,” Trump said. “Richard Ravitch is somebody who doesn’t have it, OK? He never did, and I understood that. A lot of people didn’t.”
“Paterson appointed him. I told Paterson: By the way you made a mistake. He told me the other day he agrees with me, that he made a mistake. He told me that the other day on the telephone. He made a big mistake with Richard Ravitch.”
Trump’s anti-Ravitch rant came at about the 2:24-minute mark of this video amid his sounding off about how much his dislikes Columbia University President Lee Bollinger, whom Trump called a “moron.”
UPDATE: Paterson spokesman Morgan Hook insists Paterson told Trump no such thing. His statement appears in full after the jump.