With election season in full swing it is time for the governor hand out some money. So in time for the election, but not too soon to yield any data, NY is rolling out Start Up NY. This program was sold to the public as a way to create new jobs by helping start up companies. These companies who partner with a local universities and get a 10 year grace period for taxes for them and their employees. Recently the Start Up board announced some winners in the Rochester Area as three location were approved for the U of R. Two are at the old Kodak Park site and the other is in Henrietta. Even if this program made sense the board fails to understand that neither of these are near the U of R. Of course these applicants for this space are not start up companies either and at least one is just relocating to these tax free zones. While this may seem like a misuse of the program the web site for Start Up NY encourages this sort of behavior. The problems with this program are many, but there is an underlying premise to this program that makes some sense. Start up companies have a lot of disadvantages, it is almost impossible for them to raise capital and they can not afford to hire the workers they need. Thus the state providing incentives would make some sense as it would decrease the failure rate of a start up company. The problem is that this program is not focusing on start up companies nor is it trying to help students at major university turn their ideas into businesses nor does it even see proximity as a requirement. It is being used like every other corporate welfare program the state has ever tried, just a way to give some businesses huge tax breaks. The granting of tax breaks to big business has a long history but has few results. Despite the good intentions of these programs they tend to go companies already in the state who use relocation to lower their costs. All these programs seem to specialize in helping the well connected and frequently use local tax breaks to fund these state projects. In effect they are unfunded mandates. COMIDA is a perfect example this uses local tax breaks to fund this state program thus costing local towns money with little positive return. Supporters claim that the jobs created put millions into the local economy through wages which offsets the lost taxes but this is not how they really work. After all giving tax breaks does not lower the amount of money needed by government it only means the rest of the people have to pay more. With property taxes this means rents go up and property values stagnate so everyone has to pay more for housing. As some of this housing is funded by government money that means taxes need to go up more and a cycle of rising costs is created. The affect is everyone has less money to spend. As our economy is fueled by consumer spending this means less growth everywhere but for the favored few with tax breaks. Which usually means no real job growth. This is held up by the numbers as Ny state job growth during the last decade has mirrored population growth for the state. Finally our economy is based upon competition. When tax breaks are granted to one company that company has a competitive edge allowing them to make a higher profit or lower prices than their competitors. Even when this results in job growth it is often at the expense of other firms without tax breaks. This is particularly evident when tax breaks are granted to commercial businesses. Just because a new restaurant opens that does not mean that more people will pay to go out to eat. Most patrons who attend the new restaurant would have gone to some other place and usually spent roughly the same amount of money. AS a result their is no real growth in our economy. Despite a long history of failure in the job creation market our leaders seem to have no other tool than tax breaks for economic development. Yet investments in education, infrastructure, and health care all have proven track records for economic growth. Our government could also start investing in the future. They could make start up money available, require banks to loan money in local areas, invest in new technologies, or even try new deal style work programs. Despite these options it seems that neither Astorino nor Cuomo have any plan other than tax breaks. Thus barring a Howie Hawkins miracle it looks like 4 more years of austerity for the rest of us.
Wednesday, July 2, 2014
Posted by Alex White at 7:46 PM
Sunday, June 15, 2014
Last week city council had open hearings about Mayor Warren's first budget, which is the sign that the process is over. As usual there are numerous problems with this budget While I will touch on the randomness of departmental purchasing and the increasing level of management in the city recreation department the real problem is that we are balancing our budget on the backs of the children of our city. The biggest single line item of the budget is the Maintenance Of Effort or MOE. This is a $119.1 million dollar transfer of city money to the City Schools. While other districts collect taxes in Rochester the city collects taxes for the district and then gives them their share. The State mandated this amount back in 2005 because the city was not paying RCSD a enough money, and for the past 10 years this is the amount the city has paid. Since this time the city budget has risen by almost 25% and they have collected 12% more taxes but the schools have had to make due with an amount set in 2005. As a result they have made cuts teachers, eliminated programs, building maintenance, and many other things. Needless to say in this time our schools have suffered. Thus it is particularly gulling that the city raised taxes by almost 3% and yet gave no more to the schools. This is shameful. Refusing to pay for education is embarrassing enough but council has found numerous other things to cut which help our residents. One of the main purposes of government is to maintain the routine things that make things work. As a result the have schedules for replacement and maintenance. These are included in the capital improvement budget and cover a variety of small expenditures for things ranging from office furniture to vehicle replacement. The Mayor has chosen to cut a number of these things like playground equipment replacement, lighting on fields in our parks, replacement of fire vehicles, street light replacements, fire communication maintenance, funding for new home buyers, affordable housing support, public art, project uplift, basketball court replacement, and many more. All this amounts to less than $5 million in funds. Yet these are all things which protect and help the children of our city and build more stable neighborhoods. In short these are more cuts to the children of our city. Of course things are not all austerity as there was plenty of money projects and big developments. They could not afford $500,000 for to promote home ownership but they could find $1.7 million for land acquisition for economic development. Replacement for playground equipment was delayed for want of $50,000 but there was more than $1.2 million for landscaping at the huge developments at Midtown and Erie Harbor. Further they increased the contingency budget by $5.7 million which will be used to give gifts to developers who are building in the city. In sum there is at least $8.6 million for the rich developers who enjoy tax free status but there was nothing for children. This can also be seen in the recreation department. For years I have criticized the city for cutting recreation and that trend reverses this year. Unfortunately the increased spending will not go to helping children. The city uses the time honored tactic of reorganizing the department to find ways to cut services but increase costs as the office of commissioner had its expenditures increase by $1.6 million. They found much of this money by changing Youth Services and Employment opportunities to BEST and YS. This one change saved $889,400 by reducing programs that helped children and providing summer employment add this to reduced staff and services at recreation centers and the city could afford 6 new middle level paper pushers in recreation. Of course there are a lot of other problems. The city continues to spend millions on chip and seal road maintenance which dumps gravel onto roads and into the sewers. This process may extend the life of the roads but it also damages our sewers and makes them smell awful. They also have kept the office of parking and municipal violations. This office deals with tickets the city writes but in every other city in the state this is handled by the City court which is paid for by the state. So we continue to waste three quarters of a million on a court which the state would pay for if we let them. Finally after two years of decreased management the city is once more increasing the level of management in many departments. There is also the continued problem of spending our reserves. For years the city has enjoyed a very good credit rating in part because we had enough in reserves to cover operation costs. Unfortunately this is no longer true and now we have to use Bond Anticipation Notes to cover routine cash flow problems which will cost the city $1.65 million. This along with a debt load which is 70% the legal limit and our city is starting to use up all its financial options. No analysis of the budget would be complete without some review of purchasing. In general the city continues to purchase more every year. This year they will spend more than $90 million on goods and services. For most departments spending was actually down despite rising costs, yet for Environmental services saw large increases. This makes me wonder which departments are being honest and which are being optimistic. Of course there is a bigger problem as the city has very strict controls on the spending for small amounts, but for too many purchases there are no bidding, no requests for proposal, and no understanding of what or where the spending is going. Further the city has started replacing the request for proposal process with a request for qualifications which replaces cost as the final arbiter of purchasing with a much more arbitrary procedure. As a result contracts on things like parking control systems are being awarded to companies which bid $1.2 million higher than the lowest bidder. Thus it would not be surprising to find that perhaps as much as $14 million are being wasted overpaying for things we need. So here we are with a new budget. It is balanced for right now but it is mortgaging our future and short changing our children, and weakening our neighborhoods. It is failing to maintain equipment and pushing off capital expenditures which should be routine. Yet only 3 people showed up to give council their opinion and council would grant each of these only 3 minutes to try to stop the pawning of our future.
Posted by Alex White at 6:31 PM
Wednesday, May 28, 2014
Recently I have been involved in a campaign to ban Fracking in Rochester. To some people this may seem like the standard liberal waste of time. After all no drilling company has taken out a lease in Monroe County no less in Rochester, but there are many reason we need to protect our water and city. Despite claims that fracking is save there is a mounting body of independent evidence that this is not true. The Duke University study "Increased Stray Gas Abundant in Subset of Drinking Water Wells Near Marcellus Shale Gas Extraction" found a higher risk of contamination in shallow water wells within 1KM of a gas well. This supports state findings as 4 states have confirmed more than 100 water wells have been polluted from fracking. This should not be a surprise as a 2011 EPA report found ground water contamination in North Dakota. But water contamination is only part of the problem as William Ellsworth in 2013 Science Mag reported that fracking causes micro earthquakes all the time. Though these are not large enough to cause problems much of the polluted fracking water is stored in deep water wells which cause much more dangerous earthquakes. Storage is done this way because most water treatment plants can not clean the chemicals out of the water as the city of Auburn found out to their detriment. Finally, in "Birth Outcomes and Maternal Residential Proximity to Natural Gas Development in Environmental Health Perspectives" there was found a 30% increase in birth defects for mothers in close proximity to fracking wells. So the evidence is very clear that this is a very bad process and even though no drilling leases have been filed in Rochester we still need a ban. The main reason for this is that the state is likely to legalize the process and allow local control. This may happen as soon as January 2015 and when that happens we will need a ban in place as it will make it much harder to obtain one after this. The reason no leases have been filed is that Rochester sits above the Utica Shale formation. This is similar to the Marcellus Shale but is much deeper and has less gas trapped in it. That makes this a perfect area for the storage of waste water which is still dangerous. Yet when Fracking happens in NY the fracking companies will start paying municipalities to take waste water. With a continuous shortfalls in revenues this will be a tempting way to balance the budget even if it puts people's lives and property at risk. Most importantly our water comes from two Lakes which sit right smack in the middle of fracking country. Canadice and Hemlock Lake are well protected pure water souces which are owned by the city of Rochester. Unfortunately we sold land around the lakes to the state and the state is not going to ban fracking on state land. Around this area there have been numerous fracking leases taken out and it will only be time until some are right near the lakes which form our water supply. As a result we will have to sue the state to keep these lands protected and a ban will make a much stronger argument. Two years ago Rochester City council passed a moratorium on fracking. This is a one year injuncture against the process. At the time they claimed this was done to give the legal department more time to get the legislation done. Well two years have passed and the mayor's office continues to claim a ban is tied up in legal. While legal waits, big name democrats like Chuck Schumer and Kristen Gillibrand have been touting fracking as right for NY. As a result I am forced to wonder if Rochester has the worse legal department in the world or if perhaps our elected leaders are just letting our legal window to ban fracking close, something I hope none of us will allow to happen quietly.
Posted by Alex White at 12:55 PM
Sunday, May 11, 2014
Since the great reformer F.D.R. ushered in the New Deal, the first 100 days of an administration have become a benchmark for any newly elected, reform-minded official to set in motion the vision upon which they campaigned. While no F.D.R., Rochester’s newly elected mayor spoke at length of bridging the divide between what she called the two Rochester’s during her campaign. The tale of two cities, one for the rich and one the poor, is not unique to Rochester and a number of democratic mayors used this narrative in their campaign. With the first 100 days now behind them, let’s look at how two mayors who campaigned on these ideas from two actual cities spent their first 100 days. New York City’s new mayor, Bill De Blaiso ran on the narrative of a divided city. Since taking office, he has ended stop and frisk policing, opposed retroactive tax breaks for condos, started a conversation on universal pre-k which led to the state funding the program, ended the free use of city resources for charter schools, appointed a reformer as commissioner of jails and began a campaign for affordable housing in NY. Sure his fights with the governor over taxing the rich have led to some negative press, and his dislike of carriage rides in central park is odd, but when it comes to working to bridge the divide, it has been quite the successful beginning. By contrast, Rochester’s new mayor, Lovely Warren, who also vowed to bridge the divide, seems to have spent much of her first 100 days, when not out-of-town, dealing with scandals and settling old scores. Since taking office, the one Rochester of public schools has seen teacher layoffs and school closures, while the other Rochester of wealthy boat owners has seen plans for publicly-financed condos around their new marina. The one Rochester of local businesses has seen increased harassment, while the other Rochester of out-of-town big box stores has seen concierge treatment to tax breaks. And, of course, the one Rochester of soaring murder rates still has stop and frisk, while the other Rochester can now apparently blame diabetes for their drunk driving. Not a good start. When it came to bridging the divide, voters were told that policy, not just personality, would change in city hall. With the first 100 days now behind us, how much longer must Rochesterians simply “believe?”
Posted by Alex White at 4:31 PM
Sunday, April 20, 2014
On Friday 4/11 more than 350 local people attended an auction run by the city for over 500 tax foreclosed properties. These folks spent more than half a million dollars to purchase these properties and will invest more than $5 million into these buildings to create roughly 700 new mostly low cost housing units through out the city. The most amazing thing about this is that it is all being done without significant public financing and no tax breaks. Meanwhile in Midtown sits the midtown tower. This building was recently owned by the city but they sold it along with three other parcels and a parking lot to Buckingham properties for $4 even though the city estimated its value at $700,000. Rochester has also given Buckingham properties $10.7 million and the state has found another $5 million. All this will create 177 apartments. While these are two very different types of property, it seems to me that one of these is a far better deal for Rochester than the other. While at the auction the city raised money, revitalized neighborhoods, stimulated investment, and created housing the others will cost a lot of money, get millions in tax breaks, and will create more vacant houses in our neighborhood. Perhaps there is a lesson here.
Posted by Alex White at 6:24 PM
Thursday, April 3, 2014
It is budget time again in the city of Rochester and once more we have an almost $30 million deficit. Like every year the city has tried to address this problem by begging Albany for more money as it seems that this is the only tool we seem to have. Unfortunately I do not believe the $6 million that Albany has gifted us is enough. After all it seems that our city council has no limit on their ability spend money. Last month at the council meeting there were a number of proposals like $50,000 to design repairs for the Rochester Police Department Special Operations facility, $485,000 to implement these design, $269,000 to design the conversion of N Clinton and St Paul to 2 way streets, $7,000 to the army corp of engineers to dredge the rive at port, $213,000 for building modernization for libraries, and $2,642,500 for implementation of a standard coordinated revenue and control system for all City-owned parking garages I was struck by both the size and randomness of the numbers. I understand that planning is important and that to convert streets from one way to two way takes more than a line of yellow paint but $269,000 seems like an awful lot to plan this change particularly when $7000 dredges the port of Rochester. Of course one of the problems is that all these projects were not bid out but were done through a request for proposal. If these proposals had been bid out then we would have gotten the lowest cost but in a request for proposal cost is only 10% of the criteria used for determining the winning proposal. As a result it is more important to have a slick proposal, a proven track record, and an experienced team than a low bid. This was reinforced by a representative of Ber-National Automation Inc of Rochester who bid a million dollars less on the parking garage project but lost to an out of town bidder. Now it is important to have companies that can complete project but this needs to be balanced with the need for effective use of our tax dollars. That night in march council spend around $1.5 million more than they should have. So at this rate the extra $6 million the state sent us will only last 4 months and so this is just another reason why we can afford nice things.
Posted by Alex White at 4:29 PM