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Village Voice, August
2, 2005
The Shel Game
Neil deMause
The New York
state legislature has been getting lots of props of late. Awarded the title
of "most dys functional" in the nation last year by NYU Law
School's Brennan Center for Justice, Albany's finest have earned praise for
exhibiting unprecedented functionality: passing an on-time budget for the
first time since trilobites prowled the seafloor, instituting an oversight
process for public authorities, and even closing a loophole that had
allowed state employees to dodge ethics charges by quitting their jobs.
What didn't make the papers, though, might be a better
indicator of how the people's business gets done in New York State.
In the waning hours of June 24, as legislators prepared to pack up for the
summer, Assembly Speaker Sheldon Silver's long-awaited "Marshall
Plan" for Lower Manhattan landed on
their desks. Barely an hour later, the bill had passed
unanimously—at which point staffers finally briefed legislators on
what they had just approved.
The result was what Bonnie Brower of City Project calls "one
of the most outrageous giveaway packages for business that I've seen in
years." Among the goodies for downtown businesses: a five-year waiver
of the commercial rent tax in Lower Manhattan, sales tax exemptions on
office furnishings, state-funded rent breaks of up to $5 per square foot
for businesses relocating to the World Trade Center site or to the new 7
WTC building across the street, and an expansion of the Relocation and
Employee Assistance Program providing per-employee tax breaks. Especially troubling,
says Brower, is that "there's no effort to target the benefits to
exclusively new businesses, much less to businesses that actually need
help."
How did all these plum subsidies pass without a single
nay vote? "I embarrassingly admit I did not read this bill," says
State Senator Liz Krueger—and if Krueger, one of the senate's sharpest
critics of unwarranted corporate subsidies and shady legislative process,
didn't crack the 27-page bill before casting a vote, it's a fair bet that
few of her colleagues did either.
The trick here is common in New York's "three men in a
room" government: Once Silver, senate leader Joe Bruno, and Governor
George Pataki had worked out the details, the bill
was submitted along with a "message of necessity" from the governor,
a procedural get-out-of-debate-free card for matters of extreme urgency. As
a result, the normal three-day discussion period was waived, allowing the
bill to go straight from the printer to the floor before anyone had
noticed.
Legislators like Krueger were left to question the bill
after the fact. "How much are we going to pay for this, and what's the
win?" she says. "Are we actually creating new jobs and new
economic activity, or are we just shifting them from one part of New York City to
another?"
Even now, it's hard to put a number on how much the
subsidy package will cost. A state "budget implications" memo
estimated that sales tax breaks alone would amount to an $18.1 million
annual loss to the state treasury, with the city taking a similar hit.
Commercial rent tax breaks, according to the city Office of Management and
Budget, will cost the city $39.5 million in lost revenue over the next
three years.
The big question mark, though, is the rent breaks. At $5
a square foot, on a parcel set to encompass more than 10 million square
feet, they could be a huge boon to downtown corporations—or to developer
Larry Silverstein, whose still-vacant 7 World Trade offices would look a
lot more enticing with state kickbacks for every tenant. (Silver's office
did not return phone calls on the subject.)
Moreover, this wasn't the only last- minute goody bag to
emerge from the session's final days. Other Silver-and-Bruno-approved bills
provided $150 million in state money to help build new stadiums for the
Mets and Yankees, subsidies to ethanol producers (of which, Krueger notes,
the state currently has zero), and more than $70 million in tax credits for
Besicorp, a company in Bruno's district whose majority owner just happens
to have recently spent six months in jail for illegal campaign
contributions.
Krueger, who has filed suit against
messages-of-necessity abuse and other unseemly legislative practices, notes
that some programs may be worth state subsidies—but when debate is stifled,
it's impossible to tell. "Maybe somebody could have made a good
argument for all this," she says. "But that argument wasn't made."
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